Budget 2020: The government today tweaked income tax rates and deduction to bring a marginal relief for the common man. "Those earning upto Rs 5 lakh in a year will pay no tax,"announced FM Nirmala Sitharaman in her second budget speech but added, "new income tax rates will be optional."

This means the scheme is applicable for those who are ready to forego deductions and exemptions that they were availing. 


Revised tax slabs

For income between Rs 7.5 lakh and Rs 10 lakh per annum , the government reduced the tax rate from 15 percent to from 20 percent.

For individuals earning between Rs 7.5 lakh - 10 lakh, they will now be charged at 15%.

People having income between 10-12.5 lakh, the tax rate has been reduced to 20 %

For those earning between 12.5 lakh - Rs 15 lakh, new charge would be 25%

Incomes above Rs 15 lakh no exemption - continues at 30%.

The proposal would lead to a revenue sacrifice of Rs 40,000 crore per annum, Sitharaman added.

The minister further said that the new regime will be optional and the people can continue with old regime if they desire so.

Observing that there are about 100 tax exemptions and deductions, she said that 70 of them are being removed in the new simplified tax regime, while the remaining will be reviewed and examined in due course.

Citing an example, she said, a person earning Rs 15 lakh per annum would be able to save Rs 78,000 in taxes by opting for the new tax regime.

"A person earning Rs 15 lakh per anum and not availing any deductions will pay Rs 1.95 lakh tax in place of Rs 2.73 lakh now,"said Sitharaman.