Budget 2020: 5 money-related changes that will have an impact on your pocket
Budget 2020: Finance Minister Nirmala Sitharaman made several tax-related announcements in Budget speech on Saturday that are likely to have an impact on your money. The finance minister said that the budget had provisions to boost the income and purchasing power of taxpayers.
Budget 2020: Finance Minister Nirmala Sitharaman made several tax-related announcements in Budget speech on Saturday that are likely to have an impact on your money. The finance minister said that the budget had provisions to boost the income and purchasing power of taxpayers. The new tax regime with lesser rates is one major step in this direction. The taxpayers were also looking at other measures like easier loans, cheaper homes, and more money in hand. Some of these were addressed while some were not. Here is a look at five tax-related changes that will have an impact on your money -
New Tax Regime
Probably, the biggest announcement to come from Budget 2020, the new tax regime aims to give more money to taxpayers by introducing new rates. However, the taxpayers will have the option to continue using the older slabs. The tax under the proposed new tax slabs are -
- An income taxpayer earning from Rs 2.5 lakh to 5 lakh to pay 5 per cent;
- An income taxpayer earning from Rs 5 lakh to 7.5 lakh to pay 10 per cent;
- An income taxpayer earning from Rs 7.5 lakh to Rs 10 lakh to pay 15 per cent;
- An income taxpayer earning from Rs 10 lakh to 12.5 lakh to pay 20 per cent only;
- An income taxpayer earning from Rs 12.5 lakh to Rs 15 lakh to pay 25 per cent income tax; and
- A taxpayer earning above Rs 15 lakh per annum will have to pay 30 per cent of one's income.
Removal of DDT
The finance minister has proposed to abolish the (Dividend Distribution Tax) which means that the dividend will now be taxed at the hand of the receiver at the applicable marginal rate. The move is expected to benefit the investors who fall in the lowest tax bracket. As of now, the dividend announced by the companies is taxed at 15 per cent.
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Tax on retirement products
Under the new tax regime, people with higher income won't be able to save on retirement products such as provident fund, superannuation funds or the New Pension Scheme (NPS). The new budget says that contribution by employers of more than Rs 7.5 lakh to a superannuation or provident fund or the NPS will now be taxed.
"There is no combined upper limit for the purpose of deduction on the amount of contribution made by the employer. This is giving undue benefit to employees earning high salary income," Budget documents say. This means that taxpayers may have to get their CTC re-worked.
Higher insurance cover
A welcome move in the budget was the increase in insurance cover on bank deposits from Rs 1 lakh to Rs 5 lakh. The decision came in the wake of PMC incident. It will help boost the confidence of investors and allow them to put more money in banks.
The Budget introduced a proposal for real estate developers, allowing them to sell their property at a discount of 10 per cent from the circle rates. This would help homebuyers get cheaper flats. Earlier, the developers were allowed to sell their property at a discount of 5 per cent only.
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