Those who surrender exemptions may opt for lower tax slab
New Delhi : Finance Minister Nirmala Sitharaman on Saturday announced significant income tax cuts in her Budget speech. For fiscal 2021, she announced the fiscal deficit at 3.5 per cent as the country looked for ways to boost state funding to shore up a sagging economy that has put pressure on Prime Minister Narendra Modi.
The income tax cuts that Ms Sitharaman announced are:
5% tax for income between Rs 2.5-5 lakh
10% tax for income between Rs 5-7.5 lakh as against 20%
15% tax for income between Rs 7.5-10 lakh as against 20%
20% tax for income between Rs 10-12.5 lakh as against 30%
25% tax for income between Rs 12.5-15 lakh as against 30%
30% tax for income above Rs 15 lakh
The government has set a new rule that the people can opt for reduced tax rates if they give up exemptions or can pay the tax on old rates while claiming the exemptions.
According to analyst, people will now be able to calculate which option is better suited for them and they can decide accordingly.
The other big announcement in the Budget includes Rs 2.83 lakh crore into the sprawling farm sector and crores more into a central water scheme to get broader economic growth back up from its lowest in a decade.
To help generate revenue, she also announced the government will reduce stakes in the country's largest insurer LIC as part of its divestment programme. No other disinvestment move was announced.