Union budget 2020 on personal income tax - are you happy?

[avikz]

The question is very simple! On 1st Feb, we had our Union Budget 2020 presented by our finance minister Nirmala Sitharaman. Apart from the other budgetary allocations, I want to emphasize on personal income tax matter. We have a new tax slabs introduced with reduced number of exemptions and we also have an option to remain in the old tax rate with all the benefits. Below is the new tax slab.



Are you really happy with it? I personally feel it is an eyewash as it brings no relief to the higher income group people. voice your opinions!

[1714150783]

1714150783

[1714150783]

1714150783

[akram143]

If higher they were asking then lower they will get because people will find ways to evade tax easily rather than paying 30% to this shit government which will be used for nothing again.Only employees will get effect of this new income tax rate changes because their tax will be cut down from their basic before it enters into the bank accounts.

[akhjob]

Are you really happy with it? I personally feel it is an eyewash as it brings no relief to the higher income group people. voice your opinions!

There is nothing much in offer for the lower income groups as well. Most of the employees who fall under the 5-7.5 Lakh slab, will be filing NIL statements taking the exemptions and deductions into account. But as per the new slab, they have to pay 10% tax. So, I'm sure that most will prefer the existing tax slabs with exemptions and deductions when filing the taxes. The new scheme is purely unnecessary for the lower class in my opinion. This is just another propaganda to show that they had lowered the tax numbers, but in truth, nothing has changed. There is nothing new in this budget, so there is nothing to cheer or be unhappy.

[erikalui]

They have confused the middle-class by offering new tax rates as the new tax rates don't allow for exemptions so it like "heads I win tails you lose". The are offering a cut at the same time not giving any relief to tax payers

[amishmanish]

With every such move that the Modi govt pulls off, it just goes to show that it is playing into the hands of the pro-capitalism lobby that doesn't care about equitable welfare. Here is what i think is going to happen. They introduce slightly more graduated tax slabs and give you an option to "forego the exemptions". For the majority of people, exemptions are on their savings. In fact, tax exemption is one of the motives for a savings. In the next few iterations, they will say, "See, we have introduced the new tax slab system, the old system is now no longer applicable==>No exemptions".

The reason being that lot of economists grudge the Indian savings rate. Indians are conservative spenders who will save before spending. Compare this with developed, consumerist countries like the USA where borrowing and spending is encouraged at all costs while keeping the manpower tied to mortgages and loans. This is just a stepping stone to removing exemptions and thus removing the motivation to save for tax rebates. This will also be shoved down the middle classes throats in the name of economic restructuring/ reform.

[iram3130]

I dont know whether someone noticed or not but the Tax slabs looks like this..


Frankly speaking, The Modi government is not doing anything in economics to help the lower class population or middle class population. According to a survey, more than 28% of the working population in India is considered as Middle class and these are the people who should be given importance when it comes to increase the GDP and the growth of the country.

I agree to Amish regarding the mindset of Indians as Conservative Spenders and the Modi government is trying aggressively to make the population spend more and more. Hopefully, we will not become like that otherwise we will loose our identity. 

[akram143]

Indian government have a shit calculation about poverty line,if you are earning more than 40 INR perday then you are above poverty line.

Anyone can lead a shittiest lifestyle with that money?

[webtricks]

It's entirely wrong how people interpreted new tax regime introduced by Finance Minister. There is no reason why we shall criticize this because old regime is still effective. New regime is actually a smart move to combat economic slowdown, let me tell you how:

So lots of people complained that India's GDP is slowing down since demonetisation and it's actually true. Demonetisation is one of the worst decision of NDA government. The economy whose GDP was growing at the speed of 7.5-8% suddently fell below 5%. So this budget has to include several measures to bring back economy on track. And this alternative tax regime is one of the most effective measure.

Let's discuss it. First of all if your income is above Rs. 17 lakhs then it is almost impossible to gain any comparative beenfit from new regime so it is advisable to file return as per old regime. But fun fact is that 98.7% people who file return report their income below Rs. 10 lakh. So lots of people going to get benefit from this scheme.

There is the concept of Net Disposable Income in economics. Income left after paying personal income tax from personal Income is known as NDY or Net Disposable Income. NDY can be either saved or consumed. In older regime, people were forced to save in order to reduce their tax. But multiplier effect of savings is lower than the multiplier effect of consumption. Also most part of the GDP in India is calculated via Expenditure Method (Government Spending + Personal Spending + Spending on Infrastructure + (Exports - Imports) = National Income).

In new regime, people will have more income at their disposal so overall expenditure in economy will increase which will accelerate GDP must faster than saving.

For example, my salary is Rs. 8 lakh. In old regime, my tax would be Rs. 65000 (20% on 2.5 lakhs and 5% on 2.5 lakhs plus 3%) without exemption. Now in order to claim deduction under Section 80C suppose I invested Rs. 1.5 lakhs in ELSS Mutual funds. Now my tax will drop to Rs. 33000. However, my net disposable income will be around Rs. 5.5-5.7 lakhs and my Rs. 1.5 lakh will be locked down for 3 years.

In new scheme, my tax will be Rs. 41000. My net disposable income will be Rs. 7-7.2 lakhs which I can use on my own discretion. I can invest it in Debt Mutual Funds which are less risky than ELSS MF which we can't do same in old degime as debt funds aren't available for deduction u/s 80C.

Hope things are more clear to you all. However, even I feel budget wasn't up to expectations. I was expecting more perks for industrial sector but government only gave tax benefits to new manufacturing businesses and startups. Nothing revolutionary in budget.

[deadley]

In new regime, people will have more income at their disposal so overall expenditure in economy will increase which will accelerate GDP must faster than saving.

For example, my salary is Rs. 8 lakh. In old regime, my tax would be Rs. 65000 (20% on 2.5 lakhs and 5% on 2.5 lakhs plus 3%) without exemption. Now in order to claim deduction under Section 80C suppose I invested Rs. 1.5 lakhs in ELSS Mutual funds. Now my tax will drop to Rs. 33000. However, my net disposable income will be around Rs. 5.5-5.7 lakhs and my Rs. 1.5 lakh will be locked down for 3 years.

In new scheme, my tax will be Rs. 41000. My net disposable income will be Rs. 7-7.2 lakhs which I can use on my own discretion. I can invest it in Debt Mutual Funds which are less risky than ELSS MF which we can't do same in old degime as debt funds aren't available for deduction u/s 80C.

Hope things are more clear to you all. However, even I feel budget wasn't up to expectations. I was expecting more perks for industrial sector but government only gave tax benefits to new manufacturing businesses and startups. Nothing revolutionary in budget.

In your salary part there is  100 perks that is exempted under old regime and in new regime 70/100  taxable like HRA, other thing ELSS earning is tax free and debt investment will be taxable, so calculate everything before thinking that new tax regime is good.

In your 8 Lakhs income if you use all perks and tax saving instruments, your tax will be around 10-20k max. If you are not using that talk to your HR, he/she will be help you to save tax to redesign your CTC.

In India there is nothing post retirement from govt, if Govt discourage people from investing it will hurt mostly Indian after retirement because If they don't invest for their retirement god knows, how they will survive after retirement.
.
It's not public responsibilities to increase GDP by reduce investment/saving and spending more, it's govt. responsibility to attract more investment and build more factories and businesses so they will create more jobs so more people will have earning and so they will able to spend freely.

[akram143]

It's not public responsibilities to increase GDP by reduce investment/saving and spending more, it's govt. responsibility to attract more investment and build more factories and businesses so they will create more jobs so more people will have earning and so they will able to spend freely.

But ruling party never cares about increasing the job opportunities all they want religious talks so they can win more seats.

I remember a speech from BJB leader who said you can make more money by starting your road side shop when someone asked what you are going to do increase the employment opportunities for graduates.

So they are clear they want more tax but they don't care about people in what way they can earn money.
Who knows India would be a much better country if we still under the ruling of English people.

[bipin444444]

It shocked me when the government shows their 17 and 18 paise come from tax and GST of 1 rupee. And it shows how much middle class struggling.

[avikz]

Below is a simple illustration of the new tax regime. High income class people are the most effected one, it seems! However, people below 5 lakh/annum are enjoying the free income!