[sandhyab]

Originally Posted by kavensri

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.

Seriously, I understand that the government is doing a lot for other sections of the society but why squeeze the salaried class for all its got. Increase the gambit of total no. of taxpayers but no, let's squeeze these tax payers dry

[SilentEngine]

One more thing that will result in more tax outgo for certain tax payers: Dividends are now taxable in the hands of the receivers. Those on the highest tax bracket will now end up paying more than the current rate of 15% DDT.

Originally Posted by Budget 2020

FM proposes to remove DDT, dividend will be taxed at the hands of the recipient at applicable rates, says FM.

Revenue loss of Rs 25,000 cr because of doing away with DDT, says FM

Originally Posted by sandhyab

Seriously, I understand that the government is doing a lot for other sections of the society but why squeeze the salaried class for all its got. Increase the gambit of total no. of taxpayers but no, let's squeeze these tax payers dry

Which other sections of the society? May be few select corporates, but in general the budget has been a big disappointment overall as expressed by stock market movements today.

[Sunil2307]

What I think next year, or latest the year after they will just remove all exemptions, and shift to the no exemptions regime.

She did mention that there were 100 exemptions and 70 of these have now been removed. Any idea about which of these have been removed?

[condor]

Not clear on the implications of not taking exemption, yet. So not sure. A calculator kind of app will be helpful to all.


Even in previous year tax structure, the max exemption was being played up. However, not everyone takes all of these - example, I myself dont take Higher Education & HRA. So the max exemptions are not always applicable. I will need to see how it impacts for my fin outlay, and hence the calculator comes in handy.

[meerkat]

Originally Posted by condor

Not clear on the implications of not taking exemption, yet. So not sure. A calculator kind of app will be helpful to all.

Easy enough to form a rough idea using any simple calculator that you may already have access to! Calculate the tax liability (as per the new rates) on the gross income (before any exemptions) you've reported in this year's return. Compare with the tax you've paid this year. :-).
.

[BlackMamba24]

Confusing as hell until any circular is received from IT department. So far these regimes would be different for every person as everyone doesn’t take all the exemptions, so the new regime would be beneficial to some. But in long run if we don’t do savings that can impact all of is negatively.
For NPS, employer contribution will be taxed after 7.5L/yr.

[kavensri]

Originally Posted by BlackMamba24

For NPS, employer contribution will be taxed after 7.5L/yr.

If i understand correctly, this 7.5l ceiling includes Employer's PF contribution, Employer's NPS contribution and Super Annuation (SA) contribution.
Earlier, there was no upper limit for Employer's PF contribution and Employer's NPS contribution, but there was already a ceiling of 1.5l for SA.
Overall, they are just trying to squeeze the salaried people as much as possible.

[SilentEngine]

Originally Posted by condor

Not clear on the implications of not taking exemption, yet. So not sure. A calculator kind of app will be helpful to all.


Even in previous year tax structure, the max exemption was being played up. However, not everyone takes all of these - example, I myself dont take Higher Education & HRA. So the max exemptions are not always applicable. I will need to see how it impacts for my fin outlay, and hence the calculator comes in handy.

Exemption of 2.5L is the breakeven point for those in the highest tax slabs.

Let's see some no-brainer exemptions that were helpful:
1. Standard deduction: 0.5L
2. 80C: 1.5L
3. 80D: 0.25L

Just the above three add up to 2.25. It won't be to hard for anyone to get another 0.25L exception with various other options available:
1. 80D for parents (0.5L)
2. Additional NPS contribution (0.5L)
3. Home loan interest (2.0L)
4. LTA
5. HRA

I see no reason for anyone to even consider the new regime at all.

[m8002?]

This is just great PR. It will not change anything on ground.
First, they reduce tax on profits. No impact as most companies are in loss.
Now, they reduce tax under such conditions that no one will take them.

Classic case of selling people a cake when they cant afford a roti.

[doxinboy]

Its frustrating for salaried class and the new dads. Why would they want to tax Barbie, my baby girl loves it. The already exorbitant Mattel and Hasbro toys are going to be dearer. I guess the government want to drag the toy manufacturers to setup their plants in India. By that time my little one would have grown out of the doll trap. So nothing for me in this budget *sad face*

[condor]

Then again, our taxation structure is a complicated mess. The new option can be a starting point for simplifying tax structure. But one casualty will be the savings /investment area, and definitely LIC will take a hit.

[DigitalOne]

New tax structure is a fundamental shift of approach. There will be cases where people have to pay more taxes if they opt for the new tax structure, and there will be (fewer) cases where the people have to pay lesser tax. There will be resistance but on the whole, it is a simplification and a good first step.

I see too many youngsters signing fake rent receipts to claim paltry HRA tax benefits, and it pains to see how stupid rules can make people behave corrupt. Removing medical allowance and having just standard deduction couple of years back removed the Medical bills corruption. This simplification if it brings about a change in at least a few to be honest, it would be a positive.

[saket77]

The only bad I see in this new tax regime is that it discourages savings and in that way, it encourages spending. The government wants some public spending to spur the growth, so that's alright, but given that there's is no Govt. social security scheme like medical facilities or old age pension which benefits the middle class; it might come to bite those later who don't save for future. In a country where we are still trying to impart investment & security ideas like mutual funds, insurance, etc. this can hit hard.

[kavensri]

Originally Posted by DigitalOne

I see too many youngsters signing fake rent receipts to claim paltry HRA tax benefits, and it pains to see how stupid rules can make people behave corrupt.

I completely agree with you. Working in IT for more than 20 years, i have seen how my colleagues used to submit fake bills for HRA, LTA, Medical bills. In some cases, i have seen people submitting house rent bills that shows them paying rent to their non-working father/mother/spouse!
In the last budget, they got rid of medical bills thing and it is good if they can get rid of these house rent bills and LTA completely.

[m8002?]

Originally Posted by kavensri

I completely agree with you. Working in IT for more than 20 years, i have seen how my colleagues used to submit fake bills for HRA, LTA, Medical bills. In some cases, i have seen people submitting house rent bills that shows them paying rent to their non-working father/mother/spouse!
In the last budget, they got rid of medical bills thing and it is good if they can get rid of these house rent bills and LTA completely.

My understanding is that its perfectly legal to pay rent to your parents if you are staying in their house. But one cannot claim rent paid to spouse.

On Medical bills, people used to fake them 15 years back when the limit was reasonable. With inflation and the general increase in consulting fees and medicines, one doesnt have to fake the bills anymore. Just collect them and you can easily cross the limits, especially with dependent parents.