Union Budget 2020: Middle income salaried class likely to benefit from proposed changes in tax slab
New Delhi | Jagran Business Desk: The middle-class tax payers are likely to benefit from the upcoming Budget 2020 as they finally get to cheer lower tax rates on their hard earned incomes that are likely to be implemented as part of Budget proposals, reported IANS. The Budget 2020 will take the sops announced in the pre-election interim budget further by changing the personal income tax rates for the salaried in lower and middle income groups. This may be done through changes in the tax slabs.
Those individuals having annual income between Rs 2.5-Rs 10 lakh are likely to be taxed at the rate of 10 per cent while people earning between Rs 10-20 lakh might pay tax at a lower rate of 20 per cent. However, the tax exemption limit may, remain unchanged at Rs 2.5 lakh.
The changes are being might into effect to provide relief to salaried middle income class individuals who were left out of government';s stimulus measures announced in September 2019 that slashed income tax rate for the corporate sector to encourage investment climate in a slowing economy.
It is being designed partially on the lines of recommendations given by a task force on the New Direct Tax Code which submitted its report to the Finance Minister in August last year. The report is still being examined by the ministry.
Currently, basic exemption limit is Rs 2.5 lakh per annum and income between Rs 2.5-5 lakh is taxed at 5 per cent. Those in the income bracket of Rs 5-10 lakh are taxed at 20 per cent (1.47 crore taxpayers) and those above Rs 10 lakh are taxed at 30 per cent rate. There is also a three-layered surcharge for the super rich in the salary brackets of Rs 1 crore, Rs 2 crore and Rs 5 crore.
Apart from slabs for income upto Rs 20 lakh, the task force on Direct tax Code has suggested tax rate of 30 per cent for income between Rs 20 lakh and Rs 2 crore and a new tax rate of 35 per cent without surcharges for all those earning over Rs 2 crore.
A large section of the middle income salaried class are likely to benefit the proposed changes in tax slab.
According to the Central Board of Direct Taxes (CBDT), more than 27 per cent of the 5.52 crore individual taxpayers who filed returns for 2017-18 had an income between Rs 5 lakh and Rs 10 lakh.
In the pre-election 2019 interim budget, the government had announced full tax rebate to taxpayers earning up to Rs 5 lakh a year. Unfortunately, the subsequent full-time budget did not offer income tax sops for the middle income salaried class.
The welfare measures by the government is expected to add further stress to its finances as it may reset the fiscal deficit target for FY 2020-21.
Posted By: James Kuanal