Budget 2020: People have high expectations from Finance Minister Nirmala Sitharaman to take bold steps in the upcoming Union Budget to give strong stimulus to boost the weak demand.
Budget 2020: People have high expectations from Finance Minister Nirmala Sitharaman to take bold steps in the upcoming Union Budget to give strong stimulus to boost the weak demand, so that the slowing economy may be brought back on growth track.
In order to boost the demand, steps may be taken to increase the disposable income in the hands of the consumers.
While for poor people, who are out of tax net, opportunity to earn higher income is important to consume more, taxpayers would have higher disposable income if tax outgo is reduced.
So, experts are hoping that there may be some relief in income tax, which would reduce the tax liability to make more cash available in the hands of taxpayers to spend.
“Either the tax rates would be reduced or the slabs would be widened,” said CA Karan Batra, Founder and CEO of CharteredClub.com.
As per the current rates, no tax is payable on taxable income up to Rs 2.5 lakh by normal citizens, while senior citizens between 60 years and 80 years of age don’t have to pay any tax on taxable income up to Rs 3 lakh. The limit is up to Rs 5 lakh for super senior citizens of 80 years or more age.
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Above the zero-tax limit, 5 per cent tax is charged on the income up to Rs 5 lakh, 20 per cent tax on taxable income between Rs 5 lakh and Rs 10 lakh, while 30 per cent tax is levied on taxable income over Rs 10 lakh.
Apart from the above tax rates, 4 per cent health and education cess is also applied. Moreover, taxpayers also need to pay surcharges as in four slabs – 10 per cent on income between Rs 50 lakh and Rs 1 crore, 15 per cent on income between Rs 1 crore and Rs 2 crore, 25 per cent on income between Rs 2 crore and Rs 5 crore and 37 per cent surcharge on taxable income over Rs 5 lakh.
While the 5 per cent income tax rate is applied on taxable income between Rs 2.5 lakh and Rs 5 lakh for normal citizens, tax rebate up to Rs 12,500 will be given to taxpayers having taxable income up to Rs 5 lakh. So, no tax will be payable by individuals having taxable income up to Rs 5 lakh in the Assessment Year (AY) 2020-21 (financial year 2019-20).
So, it is expected that instead of tax rebate, the limit of nil tax slab may be increased to avail the benefit to all the taxpayers. The tax rates may also be lowered to reduce the tax outgo and increase the disposable income in the hands of the taxpayers.