Income Tax 01 Feb,2020
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Impact of new scheme on salaried persons
Editorial Team

Impact of new scheme on salaried persons

The Finance Minister, Mrs. Nirmala Sitharaman, presented the Union Budget for the year 2020. It is the second full budget presented by her. A new scheme has been proposed for an Individual or HUF, wherein tax shall be levied at following rate subject to fulfilment of certain conditions:

Net Income Range Tax rate
Up to Rs. 2,50,000 -
Rs. 2,50,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 7,50,000 10%
Rs. 7,50,000 to Rs. 10,00,000 15%
Rs. 10,00,000 to Rs. 12,50,000 20%
Rs. 12,50,000 to Rs. 15,00,000 25%
Above Rs. 15,00,000 30%

We have analysed the impact of such scheme for a salaried class individual having salary income of Rs. 10 lakhs, 20 lakhs and 30 lakhs.

PARTICULARS  Salary: Rs. 10 lakhs  Salary: Rs. 20 lakhs  Salary: Rs. 30 lakhs
 New Regime  Old Regime  New Regime  Old Regime  New Regime  Old Regime
Basic Salary (50% of Gross Salary)  5,00,000  5,00,000  10,00,000  10,00,000  15,00,000  15,00,000
Add: Allowances            
Other allowances  2,00,000  2,00,000  4,00,000  4,00,000  6,00,000  6,00,000
HRA  2,00,000  2,00,000  4,00,000  4,00,000  6,00,000  6,00,000
Leave Travel Allowance (LTA)  1,00,000  1,00,000  2,00,000  2,00,000  3,00,000  3,00,000
Gross Salary (A)  10,00,000  10,00,000  20,00,000  20,00,000  30,00,000  30,00,000
Less: Deductions            
(a) HRA (monthly rent is Rs. 25,000)  -  -2,00,000  -  -2,00,000  -  -1,50,000
(b) LTA (Rs. 80,000 is exempt from tax)  -  -80,000  -  -80,000  -  -80,000
(c) Standard Deduction  -  -50,000  -  -50,000  -  -50,000
Taxable Salary (B)  10,00,000  6,70,000  20,00,000  16,70,000  30,00,000  27,20,000
           
Less: Loss under the head house property  -  -2,00,000  -  -2,00,000  -  -2,00,000
           
Gross Total Income  10,00,000  4,70,000  20,00,000  14,70,000  30,00,000  25,20,000
Less : Deductions under Chapter VI-A(C)            
(a) Section 80C  -  1,00,000  -  1,00,000  -  1,00,000
(b) Section 80CCD(1)  -  50,000  -  50,000  -  50,000
(c) Section 80CCD(2)  50,000  50,000  50,000  50,000  50,000  50,000
(d) Section 80D  -  50,000  -  50,000  -  50,000
Taxable Income (D) = (B - C)  9,50,000  2,20,000  19,50,000  12,20,000  29,50,000  22,70,000
Income-tax  67,500  -  3,22,500  1,78,500  6,22,500  4,93,500
Add: Surcharge  -  -  -  -  -  -
Add: Education cess  2,700  -  12,900  7,140  24,900  19,740
Total Tax Liability (E)  70,200  -  3,35,400  1,85,640  6,47,400  5,13,240
Net Tax Savings/(Loss)  -70,200  -1,49,760  -1,34,160