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    Budget 2020: Check the income tax liability on a salary of Rs 12.5 lakh per year

    Budget 2020: Check the income tax liability on a salary of Rs 12.5 lakh per year

    Budget 2020: Check the income tax liability on a salary of Rs 12.5 lakh per year
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    By Anshul   IST (Published)

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    An option has been provided to the taxpayer to pay tax as per existing slabs by availing deduction/exemptions.

    Union Budget 2020 introduced a new tax structure for individuals. Under the proposed income tax structure, an individual will not be able to claim specified deductions and exemptions. However, an option has been provided to the taxpayer to pay tax as per existing slabs by availing deduction/exemptions.
    In words of Divya Baweja, Partner, Deloitte India, "The taxpayer will have to analyse the actual benefit before opting for the existing or the proposed structure."
    (Also read:
    Deloitte India has provided a calculation, assuming that the person earns Rs 12.5 lakh per year. This calculation is based on the assumption that the individual claims only Rs 1.5 lakh deduction available under Section 80C of the I-T Act. This has not taken into account the other specified deductions and exemptions. Health and education cess at the rate of 4 percent have been levied on the tax plus surcharge wherever applicable.
    If a taxpayer earns Rs 12.5 lakh a year, the net income after deduction comes to Rs 1,11,0000. Under the old regime, an individual is required to pay tax at the rate of 30 percent in this case, which means he/she will pay Rs 1,48,200 as tax.
    Under the proposal, individuals with an annual income of Rs 12.5 lakh will be required to pay tax at a reduced rate of 20 percent. This means the taxpayer will pay Rs 1,30,000 as tax. No deductions can be claimed in this case.
    Conclusion
    According to this calculation, salaried individuals earning Rs 12.5 lakh will have to pay Rs 18,200 less as income tax under the new regime if they are willing to forego exemption under Section 80C.
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