India has set a new personal income tax regime.
In the annual budget for 2020 announced today (Feb. 1), finance minister Nirmala Sitharaman said that taxpayers, should they choose to forego all exemptions, will now pay across six tax slabs, as opposed to three earlier.
These are what the new slabs look like (Those aged above 60 and 80 get additional tax rebates):
This regime is optional. Taxpayers can choose to forego all exemptions and avail the new lower tax slabs. Or, they can stick to the old tax regime.
Experts have said earlier that cutting income tax rates would not be prudent for a government already struggling with widening fiscal deficit. While rates could be eased to hand Indians more disposable incomes, and thus stimulate demand, this would impact the already shrinking government revenues.
The new tax regime will cost India’s exchequer a loss of Rs40,000 crore ($5.59 billion), according to Sitharaman.