New Delhi: In what may be a huge benefit for the common man, the forthcoming Union Budget 2020 in July is likely to announce a major revamp of personal income tax slabs in order to bring down the tax liabilities across segments.
In a move to boost the individual disposable income, the new slabs will be in sync with the Direct Tax Code panel’s suggestions, and will also include a hike in the exemption limit to Rs 5 lakh.
As part of the Budget proposals to be presented by Finance Minister Nirmala Sitharaman in February 2020, the decision was taken to bridge the gap between tax incidence on corporate income and income of other persons.
According to the new proposal, now, individuals with annual income between Rs 2.5 to Rs 10 lakh will be taxed at the rate of 10 per cent, while those earning between Rs 10-20 lakh may get a relief on tax rate at 20 per cent.
It is important to note that despite the rejig on tax slabs, most tax exemptions for investments, including social security schemes like pension and health insurance may continue at the existing rate.
Notably, in the pre-election interim budget, the Union government had announced full tax rebate to individuals earning up to Rs 5 lakh per annum. However, in the subsequent budget, after the Modi government took charge, the Finance Ministry dissolved offers on the income tax sops for the middle-income salaried class.