New Delhi: In a major step to boost growth and put the economy back on track, Union finance minister Nirmala Sithraman on Saturday announced tax cuts. As per the simplified new personal income tax regime to be effective from April 1, 2020, those earning up to Rs 5 lakh have been exempted from paying any tax.
Those earning between Rs 5 lakh and Rs 7.5 lakh will now be paying 10% tax, down from the existing 20%. Between Rs 7.5 lakh to Rs 10 lakh earnings per annum, the tax outgo would be 15%, down from 20%.
For all those earning between Rs 10 lakh and Rs 12.5 lakh per annum, the tax rate has been fixed at 20%, down from 30%, for per annum earnings of Rs 12.5 lakh to Rs 15 lakh, the tax rate will be 25% and for all those earning Rs 15 lakh and above, the tax rate remains the same at 30%.
Giving an example, the FM said that anyone earning Rs 15 lakh per annum, would end up saving up to Rs 78,000 if he or she is not availing any deduction as is available under the existing tax regime.
The new tax regime is optional and would be available to those who are willing to forego some exemptions and some deductions, the finance minister said.
The move would cost the government coffers an estimated Rs 40,000 crore.