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    Ahead of Budget 2020, here's a look at the current income tax slabs

    Ahead of Budget 2020, here's a look at the current income tax slabs

    Ahead of Budget 2020, here's a look at the current income tax slabs
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    By Anshul   IST (Published)

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    According to the current rules, income tax rate on resident individuals varies based on their age.

    Union Finance Minister Nirmala Sitharaman will present the full-year Budget for the financial year 2020-21 on February 1, 2020. In her first Budget announcement in July 2019, Sitharaman made no changes to the personal tax rates and slabs. However, in the interim Budget announced in February 2019, some cutbacks were announced for individuals. The interim Budget was presented by then finance minister Piyush Goyal.
    With only a day left before the Budget, let’s take a look at the existing tax slabs:
    According to the current rules, the income tax rate on resident individuals varies based on their age. A slab system functions across the country, where different tax rates have been prescribed for different slabs.
    There are three categories of individual taxpayers: Individuals (below the age of 60 years) which include residents as well as non-residents, resident senior citizens (60 years and above but below 80 years of age) and resident super senior citizens (above 80 years of age).
    Tax rates for individuals below 60 years of age
    If the total income of an individual is not more than Rs 2.5 lakh, the tax rate is nil. If the income falls in Rs 2.5 lakh-Rs 5 lakh bracket, 5 percent income tax is payable. However, those earning up to Rs 5 lakh can claim a rebate of Rs 12,500 under Section 87A of the Income Tax (I-T) Act.
    “This can effectively bring down the tax outgo to zero,” said Naveen Wadhwa, Deputy General Manager, Taxmann, a tax advisory firm.
    For individuals earning Rs 5 lakh to Rs 10 lakh, tax is deducted at the rate of 20 percent. If the total income of an individual is more than Rs 10 lakh, 20 percent tax is payable. An additional 4 percent health and education cess are applicable on the tax amount.
    Deductions
    Investors can consider instruments that earn deductions under Section 80C and Section 80D to avoid tax liabilities, according to tax experts.
    Under Section 80C of the Income Tax Act, 1961, taxpayers can avail tax deductions of up to Rs 1.5 lakh a year by investing in options such as Public Provident Fund (PPF), Equity-linked saving scheme (ELSS), Unit-linked insurance plan (ULIP) and National Pension System (NPS), among others.
    Investors can avail income tax exemption under Section 80D, based on the premiums paid on health policies. According to Sandeep Sehgal, Director-Tax and Regulatory, Ashok Maheshwary & Associates LLP, one can buy a medical insurance and claim deduction up to Rs 25,000 for medical insurance premium under Section 80D.
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