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Budget 2020 Key Highlights. Income Tax, Exemptions, Slabs,

Budget 2020 Key Highlights. Income Tax, Exemptions, Slabs,

Budget 2020 Key Highlights for Common Man. Know Impact of Budget on Income Tax, Exemptions, Slabs with Dividend Tax, Rates, Disinvestment

 

Budget 2020 Key Highlights, Tax Rates, Exemptions

Budget 2020 is focused on 

  • High Ways, Corridors, Express ways with 1.7 Lakh crore allocated in Road Infrastructure. Also, 100 more Airports to be opened by 2024 under Udaan Scheme
  • Substantial Investment in Hospitals, Education, Quantum Technology, Renewable Energy, Rural Development and Agricultural Sector
  • Also, Rs 12,300 crore allocated for Swacch Bharat in FY 2020 - 21 and Rs 4400 Crore to Counter Increasing Air pollution in India

 

Disinvestment

  • LIC (54 Years Insurance Provider) with corpus of close to 10 Lakh Crore for the First Time will have Government selling parts of its holding through IPO. This would be the biggest IPO in Indian Stock Exchange and can make LIC directly entering in Navratna Companies List at time of listing
  • Also, additional Stake Sale will be done in IDBI

 

Target Growth

  • GDP Growth of 10% is what Projected by Finance Minister with a Projected Fiscal Deficit aimed at 3.5%

 

Income Tax Slab Rates

Below are Income Tax Slabs for FY 2020 - 21 as announced in Union Budget 2020 - New Regime without any Deductions

Type -1 (New Tax Rates without any Deductions) 

Income Range

Revised Income Tax Rates (FY 2020-21)

Upto Rs. 2.5 Lakh Taxable Income Nil - Full Tax Rebate
Rs 2,50,001 to Rs 5,00,000 5% Income Tax
Rs 5,00,001 to Rs 7,50,000 Rs 12,500 + 10% of Income over Rs 5 Lakh
Rs. 7,50,001 to Rs. 10,00,000 Rs 37,500 + 15% on income above 7.5 Lakh
Rs 10,00,001 to Rs 12,50,000 Rs 75,000 + 20% on Income above 10 Lakh
Rs 12,50,001 to Rs 15,00,000 Rs 1.25 Lakh + 25% on Income above 12.5 Lakh
Above Rs. 15 Lakh Rs 1,87,500 + 30% on income above 15 Lakh
  • Education Cess of 2% Continues 
  • No Exemptions will be applicable in it
  • Additional Surcharge of 10% for Income in between Rs 50 Lakh to 1 Crore / 15% for Income above Rs 1 Crore

 

Type -2 (Old Tax Rates with Deductions)

Also, is optional you can opt for Type 2 too, if makes investments to reduce your tax liability.

Income Range Income Tax Rates (FY 2020 -21)
Upto Rs. 2.5 Lakh Taxable Income Nil - Full Tax Rebate
Rs 2,50,001 to Rs 5,00,000 5% Income Tax
Rs. 5,00,001 to Rs. 10,00,000 Rs 12500 + 20% on income above 5 Lakh
Above Rs. 10 Lakh Rs 1,12,500 + 30% on income above 10 Lakh
  • Education Cess of 2% Continues 
  • Around 70 Tax Deductions been removed to simplify tax system. List will be shared
  • Additional Surcharge of 10% for Income in between Rs 50 Lakh to 1 Crore / 15% for Income above Rs 1 Crore

 

Whats Key Takeaways of Budget for Common Man

  • Insurance Cover Guarantee for Fixed Deposits raised from existing Rs 1 Lakh to Rs 5 Lakh
  • Income Tax Slabs are Lower and Middle Income Group having Income in range of Rs 5,00,000 to Rs 15,00,000 to get advantage with lower Tax Rates
  • No Tax on Dividend Distribution Tax. However, Dividend to be part of Income and tax will be Computed accordingly - This is a big negative for those who are in Higher Income Bracket as the dividends would now be taxed as per applicable slab. A Big Blow to Investors in higher Tax Bracket
  • Long Terms Capital Gain Tax still remains. It was much expected to be removed, but sadly no change in LTCG
  • Affordable Housing Promoted through Tax Holidays
  • 'Vivaad se Vishwas Scheme' wherein Taxpayers will only pay the disputed tax and not penalties if they pay dues by 31st March 2020

Due to Dividends now forming a part of Income and no change in Long term Capital Gain - the Budget is negative for Common Man / Investor and thus will get a beating from Stock Markets for couple of sessions.

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