[praveen789]

This has got to be the biggest hogwash and trick used to deceive people as if some major reduction has happened. Just look at how it looks for someone who earns INR 10 lakhs and was claiming deduction of INR 2 lakhs (INR 1.5 lakhs under 80C and 50k standard deduction):



You add even a minimum HRA and the 'new' tax regime starts becoming costlier than the existing one.

[gupta_chd]

This is a biggest let down for the salaried class. Nobody would opt for this new regime. This is only to make fool of tax payers.

[sj_koova]

I wonder why this government is always ignore salaried class.
I feel like Nirmala Seetharaman asking whether you want to die by hanging or drowning.
Most pathetic fact is, media is boosting it as big deal without going into the details.
FM wanted to do an eyewash and media gives full marketing support to her as if two choices for death is the best thing ever a government has done for salaried class.


Seriously disappointed

[Researcher]

Originally Posted by praveen789

This has got to be the biggest hogwash and trick used to deceive people as if some major reduction has happened. Just look at how it looks for someone who earns INR 10 lakhs and was claiming deduction of INR 2 lakhs (INR 1.5 lakhs under 80C and 50k standard deduction):
Attachment 1963230
You add even a minimum HRA and the 'new' tax regime starts becoming costlier than the existing one.

You have summed it up pretty well, except that there is no income tax till ₹5 lacs (not 5% from ₹2.5 lacs till ₹5 lacs as per your calculation) as per the slide from the budget website. So that reduces ₹12,500.

Sources:
Link: https://www.indiabudget.gov.in/bh.php
File: bh1.pdf

[praveen789]

Originally Posted by Researcher

You have summed it up pretty well, except that there is no income tax till ₹5 lacs (not 5% from ₹2.5 lacs till ₹5 lacs as per your calculation) as per the slide from the budget website. So that reduces ₹12,500.
Attachment 1963245
Sources:
Link: https://www.indiabudget.gov.in/bh.php
File: Attachment 1963244

I hope that is indeed the case as that will tilt the favour for a few people atleast. From what I understood, the tax was 0 only if your total income is less than 5 lakhs. In other words, 5% for 2.5-5 lakhs continues if total income is more than 5 lakhs.

[padmrajravi]

Originally Posted by praveen789

This has got to be the biggest hogwash and trick used to deceive people as if some major reduction has happened. Just look at how it looks for someone who earns INR 10 lakhs and was claiming deduction of INR 2 lakhs (INR 1.5 lakhs under 80C and 50k standard deduction):

You add even a minimum HRA and the 'new' tax regime starts becoming costlier than the existing one.

This calculation is wrong. For someone with 10 lakhs income in old tax scheme, will have an 8 lakh taxable income after 2 lakh deduction. The tax would be as follows.

First 2.5 lakh - Exempted.
2.5 lakh to 5 lakh = .05 * 250000 = 12500
5 - 8 lakh = .2 * 3,00,000 = 60,000

A total of Rs 72500.

In the new tax scheme this would be,

First 5 lakh - Exempted.
5 - 7.5 lakh = .1 * 2,50,000 = 25000
7.5 lakh - 10 lakh = .15 * 250000 = 37500

Total = Rs 62500

So a benefit of 10000 Rs as per the new scheme. This will go up as you salary increase. People in 10 - 20 lakhs income scheme will get some substantial benefit.

[sdp1975]

If I choose the new scheme, can I switch back to the old scheme later ?

[RahuKetu]

Originally Posted by padmrajravi

So a benefit of 10000 Rs as per the new scheme. This will go up as you salary increase. People in 10 - 20 lakhs income scheme will get some substantial benefit.

New optional personal income taxation :

5 L to 7.5 L at 10%
7.5L to 10 L at 15%
10 L to 12.5 L at 20%
12.5 L to 15 L at 25%
Above 15 at 30%

Note: this is an optional regime. If one opts for this tax structure, then he/ she will not be allowed to claim any deductions for investment on insurance , home loans , elss mutual funds etc.

One can still continue in older tax regime and can avail various exemptions. I feel that we may opt older tax regime as last year for our benefit. People who don't save will go with new tax regime which is not good in long term in my opinion. Government is encouraging spending but they shouldn't discourage at least minimum savings required in long term.

[raksrules]

I am dumb at maths so can anyone tell me what would be tax as per old and new scheme for someone who earns 20L per year?

[sandhyab]

Originally Posted by padmrajravi

So a benefit of 10000 Rs as per the new scheme. This will go up as you salary increase. People in 10 - 20 lakhs income scheme will get some substantial benefit.

I am not sure that will be the case since in your calculation you didn't consider the various exemptions that were possible, and it seems in the new budget they are taking away the exemptions. Just need to check the list of 70 exemptions that are being supposedly being removed.

[NICHE]

Originally Posted by raksrules

I am dumb at maths so can anyone tell me what would be tax as per old and new scheme for someone who earns 20L per year?

Old tax for 20 lakhs (On the assumption that the exemptions are 150000 in 80C and 50000 in NPS) =
250000*0 + 250000*0.05 + 500000*0.2 + 800000*0.3 = 352500

New tax = 500000*0 + 250000*0.1 + 250000*0.15 + 250000*0.2 + 250000*0.25 + 500000*0.3 = 325000

[kavensri]

Originally Posted by NICHE

Old tax for 20 lakhs (
On the assumption that the exemptions are 150000 in 80C and 50000 in NPS)

I guess, you missed standard deduction of 50000? Also, if one has taken medical insurance premium for parents, then another 50000 added.
So, i did the math and found that one will end up paying more with the new scheme. I have not considered other exemptions like House Rent Allowance. So, if we consider those things, then the loss is even more with the new scheme.

[PPS]

I am not an expert in these things, but I guess it would be correct to say that
those who are self employed like businessmen,doctors,lawyers,etc stay unaffected with Budget 2020 ?

[SilentEngine]

Originally Posted by kavensri

I guess, you missed standard deduction of 50000? Also, if one has taken medical insurance premium for parents, then another 50000 added.

So, i did the math and found that one will end up paying more with the new scheme. I have not considered other exemptions like House Rent Allowance. So, if we consider those things, then the loss is even more with the new scheme.

And there is interest component of home loan as well. It makes no sense to anyone who is already using various exemptions, to now to switch to new regime.

https://www.moneycontrol.com/news/bu...s-4892691.html

[kavensri]

Originally Posted by SilentEngine

And there is interest component of home loan as well. It makes no sense to anyone who is already using various exemptions, to now to switch to new regime.

I completely agree with you. We have HRA, LTA, Medicial Check-up for Self and Parents, expense towards special diseases, etc which all were tax exempted.

But you know what, it is very clear that this govt wants to get rid of all the exemptions and we may see that the old scheme completely disappearing from next year.

I have one question, there is no clarity of NPS payment through employer's contribution (this is not the 50k NPS payment which comes under different section) and Super Annuation payments? These two are currently tax exempted, so i don't know what happens to these deductions.