Income Tax Slab 2020-21
On Saturday, Finance Minister Nirmala Sitharaman has announced Union Budget 2020 for financial year 2020-21. In Latest Union budget 2020, Government has done changes in Income Tax Slab 2020-21. So, after presented the union budget, many people have lot of confusion about new income tax slab. Questions arises in people mind that which income tax is better new or old? Will you get benefit of deduction now or not? If new income tax slab is adopted then you can go for old income tax slab or not. So, in this article, we are going to discuss All Income Tax Related Questions aroused from Budget and also given answer of it to clear all your confusion.
All Income Tax Related Questions Answered
1) After Enter In New Income Tax Slab, Can It Return To Old Income Tax Slab:
In next financial year, People, if you choose new income tax slab and after that you think that it’s better to choose old income tax slab then he can go back to old income tax slab again. But the condition in this is that there must be no income of business etc. except the job of such person. Experts Say, in a year if any of people has home loan or other investment then it is better to stay in old income tax slab and in some year, person thinks that he does not have any home loan or other major investment that year then new slab must be adopted again.
2) What are deductions left in new income tax system?
Balwant Jain, Tax Expert says “Biggest Thing regarding new income tax slab is most of deductions have eliminated. Most of the people take advantage of income tax after investing, there are total 70 deductions abolished. These 70 deductions include all those deductions found under section 80C, 80D. If we focus on important point then only investment made by employer in NPS (New Pension Scheme) is left.
In total, Government make more than hundred concessions but on getting the advantage of new income tax slab you need to leave those 70 deductions in tax. These deductions include travel allowance (LTA), house rent (HRA), entertainment allowance, standard deduction up to Rs 50,000 for salaried class.
Expert says that concessions under section 80C, 80D, 24 of income tax will also eliminate in new income tax slab. Under Sec 80C PPF, NSC, ULIPs, tuition fees, insurance, mutual funds, ELSS, pension funds, home loan principal, term deposits in banks, 5-year deposits at the post office and Sukanya Samriddhi Yojana so people who used to take advantage of tax exemption by financing, will not get it at the new income tax rates. Apart from this, under section 80D, income tax exemption on health insurance will also eliminated.
Concessions Will Survive in New Income Tax Slab Are:
In new income tax slab, concessions will continue to available like cash in lieu of retirement on retirement, VRS amount up to Rs 5 lakh, death-less retirement benefits, pensions, EPF fund withdrawals, scholarship funds for education, public interest. Under the NPS, Amount received as an honor for any work done in, short term withdrawals and maturity amount.
3) Is New Income Tax Slab Is Beneficial To Person Doing Job?
Generally, the new income tax slab is not beneficial for those people having salaries below Rs. 13 lakh P.A. Besides LTA and HRA, Salaried people get standard deduction of Rs. 50,000. If, people adopt new income tax slab, will not get benefit of contribution to provident fund, tuition fees of children, insurance premium, home loan etc. Therefore, new income tax slab is not suitable for most jobbers.
4) Whether Income Tax Up To 5 Lakh Is Taxed
Many people confuse regarding this whether annual income of Rs. 5 lakh is tax free or not. In fact, new income tax slab or old income tax slab, income from Rs. 2.5 lakh to Rs. 5 lakh has been taxed at 5%. Because of this, many people think that tax on income up to 5 lakh is zero.
In last year budget, government made special arrangement of rebate for those with income between 2.5 lakh to 5 lakh. If people income is 5 lakh or less then whatever tax is, government will give special rebate and reduce it to zero. Behind this thinking is that people earn less than 5 lakh get relief. This special rebate is up to a maximum of 12,500 rupees (maximum tax on 2.5 lakhs per 5 per cent). This special rebate has not eliminate in this budget i.e. people will also get benefit of it in next financial year. So, there is no tax income up to Rs. 5 lakh.
Will NRI have to pay Income tax?
Due to general budget, People living out of India have suffered major setback. In this new income tax slab, NRIs will need to pay tax on their Indian earnings. All over the world, Income earned from NRI would be tax. In this case, Finance minister has given clarification with conservation with Business today that tax will take on Indian earnings of NRI. Till the class was free from tax mess and tax experts consider that this government step is setback for Indian People who live outside the country only to save tax.
So People this is answer of all income tax related questions aroused from Union Budget 2020-21. Hope the given answers of questions take away all your confusion regarding income tax slab 2020-21. For more updates on Union budget 2020-21, keep visiting our web portal newzbullet.com and also get more national / international news.