FM announces simplified income tax regime for individuals; revises fiscal deficit target to 3.8%

Finance Minister, who presented the Union Budget 2020-21 today in the Parliament has revised the fiscal deficit for the ongoing financial year to 3.8 per cent from 3.3 per cent. She keeps the fiscal deficit target for the upcoming financial year 2020-21 at 3.5per cent of the GDP.

Besides, the Finance Minister has proposed a new simplified individual tax regime for the financial year 2020-21. The revised tax slabs will lead to an Rs40,000 crore revenue loss for the government.

Those who fall under the income range Rs0-2.5 lakhs will not have to pay any tax, while those who earn between Rs2.5-5 lakhs will fall under the tax bracket of 5%. Those under the income range of Rs5-7.5 lakh will fall under the tax slab of 10%. Those with an annual income of Rs7.5-10 lakh will fall under the tax slab is 15%, while those in Rs10-12.5 lakhs range will fall under tax slab of 20%.

Similarly, people with income under Rs12.5-5 lakhs will fall under the tax bracket of 25% and those with income above Rs15 lakh will fall under 30% slab.

The new income tax is optional for the taxpayers and it comes without any standard deductions and exemptions. The government will have a revenue loss of Rs40,000 crore as a consequence of income tax rate tweaking.

New Income Tax Regime and comparison with the tax regime of FY20