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Budget 2020: Direct Tax & Indirect Tax Highlight!

The Budget 2020 was deemed as a Do or Die Budget for the Incumbent Finance Minister Nirmala Sitharaman. Considering the recent Economic Slowdown, the Budget was expected to provide relief for the Tax Payers.

There we have it… The Budget has been announced and New Tax Reforms have been made. Let’s take a look…

Direct Tax

Personal Income Tax Slab!

The FinMin took a mid-route on the much-awaited Income Tax Slab rate. FM Nirmala Sitharaman gave taxpayers 2-options(or are these “options” creating more confusion?).

1. Claim deductions and pay tax under the Older Income Tax slab rate.

2. Don’t claim deductions and pay tax as per the New Income Tax slab rates. The new Income Tax Slab rates are:

Under the New Tax Regime announced, the taxpayer can choose which Income Tax slab rate should their income be taxed. However, they might have to forgo the deductions they can claim.

Contracting the Deductions

From available deductions have been reduced from previously 100 to now early 30. That was a real Shocker!

FinMin announced that Individuals opting for New Tax System will not be able to claim Deductions. But, if you choose to follow the Old Tax System, you will still be able to claim deductions. This is made people thinking as to what tax system is better for them?

Dividend Distribution Tax abolished

The controversial DDT, which companies had to pay on Dividend Distribution to shareholders, is abolished.

The dividend is now taxable for the shareholders. Failing to do so would mean that violators will receive Income Tax Notices.

Indirect Taxes

According to Nirmala Sitharaman, “GST has integrated the country economically”. Announcements made in Budget 2020

Three Spearhead Schemes for India

The Finance Minister announced three Schemes under which the Budget was classified.

Aspirational India

Economic Development

Caring Society

I feel that contrasting to what Finance Minister wanted to do with this Budget, the effect is entirely opposite. She aimed to simplify Income tax but ended up making it more confusing. There are discussions everywhere as to what is the better way to file Taxes…With or Without Deductions?

If individuals decided to pay taxes without claiming deductions under “New Regime”, they will end up paying more. Then again, it all boils down to what your personal finance goal is?

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