This Personal Income Tax Slab for FY 2020 21 paves the way for significant relief, especially for Middle Class Taxpayers
The Official press release published in PIB is given below
New Personal Income Tax Regime to be optional for the taxpayers
New rates entail estimated revenue forgone of Rs 40,000 Crore per year
While presenting the Union Budget 2020-21 in Parliament today, the Union Minister for Finance & Corporate Affairs, Smt Nirmala Sitharaman said, “The new tax regime shall be optional for the tax payers.” She further said that an individual who is currently availing more deductions and exemptions under the Income Tax Act may choose to avail them and continue to pay tax in the old regime.
The New personal Income tax regime proposes the following tax structure:
| Taxable Income Slab (Rs.) | Existing Tax Rates | New Tax Rates |
| 0-2.5 Lakh | Exempt | Exempt |
| 2.5-5 Lakh | 5% | 5% |
| 5-7.5 Lakh | 20% | 10% |
| 7.5-10 Lakh | 20% | 15% |
| 10-12.5 Lakh | 30% | 20% |
| 12.5-15 Lakh | 30% | 25% |
| Above 15 Lakh | 30% | 30% |
The new tax regime will be optional for the taxpayers. As per the Memorandum explaining the provision in the Finance Bill, the option shall be exercised for every previous year where the individual or the HUF has no business income and in other cases the option once exercised for a previous year shall be valid for that previous year and all subsequent years. The option shall become invalid for a previous year or previous years as the case may be if the individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply.
The new personal income tax rates will entail estimated revenue forgone of Rs 40,000 crore per year. Smt Sitharaman said, “We have also initiated measures to prefill the income tax return so that an individual who opts for the new regime would need no assistance from an expert to file his return and pay income tax.” The Finance Minister said that in order to simplify the income tax system, she has reviewed all the exemptions and deductions incorporated over the past several decades.”
In the Budget, around 70 of the existing exemptions and deductions of different nature (more than 100) have been proposed to be removed. Remaining exemptions and deductions will be reviewed and rationalised in the coming years with a view to further simplifying the tax system and lowering the tax rate
The rates of Personal Income Tax Slab for Financial Year 2019-20
If Income Tax Slab regime FY 2019-20 is beneficial than the new Tax Slab 2020-21, the individual will be allowed to continue the 2019-20 Income tax Slabs in 2020-21 financial Year
New Income Tax Slab 2020-21 is optional .
The Income Tax Slab for Financial Year 2019-20 is
| Income Tax Slab 2019-20 | Individuals Below the Age Of 60 Years |
| Up to Rs.2,50,000 | Nil |
| Rs.2,50,001 to 5,00,000 | 5% |
| Rs.5,00,001 to 10,00,000 | Rs.12,500 + 20% of total income exceeding Rs.5,00,000 |
| Above Rs. 10,00,000 | Rs.1,12,500 + 30% of total income exceeding Rs.10,00,000 |
Tax payers can choose either new Tax slab or Old Income tax slab for assessing the income tax for Financial year 2020-2021