Income Tax Slabs In Budget 2020: Government Cuts Income Tax Rates For Those Willing To Give Up Exemptions

The Narendra Modi-led government offered an optional relief to individual taxpayers as it looks to bolster consumption and flagging economic growth.

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Finance Minister also said the government has removed around 70 exemptions in the new income tax regime in order to simplify it and make sure that citizens can file their tax returns without the help of any advisers.

The personal tax changes will result in a loss of Rs 40,000 crore to the exchequer.

The new personal tax regime, coupled with the removal of dividend distribution tax, could lead to higher burden for some investors. “Dividends will be taxed in the hands of the shareholders at regular tax rate and in case of high net worth individuals at the maximum marginal rates of 43 percent,” said Girish Vanvari, founder of Transaction Square.

“The expectation was that the shareholders should be taxed at concessional rates. Further, no exemptions for individuals would mean discouragement for small savings, which are fixed deposits, insurance, housing interest, etc,” Vanvari said.

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