Current vs. New Income Tax Slabs Comparison Photo Credit: Times Now Current vs. New Income Tax Slabs Comparison

Union Budget 2020 speech has ended and with a cheer from the middle class. The Finance Minister, Nirmala Sitharaman has announced a new Income Tax regime, offering to the tax-payers of the country a chance to save as much as 73,000 in their year tax payments. The new income tax slabs proposed in Union Budget 2020 has proposed a six tier tax slabs as against the previous four tier tax slabs. Here is a quick comparison between the Income Tax Slabs for 2019 and Income Tab Slabs for 2020 (New Regime).

It is important to note that while the finer points of the Income tax slabs are awaited, the basic as announced in the Union Budget speech are provided and compared in the table below.

Tax Slabs Current Rate Proposed Rate Income upto 2,50,000 No Tax No Tax Rs. 2,50,001 - Rs. 5,00,000 5% No Tax Rs. 5,00,001 - Rs. 7.50,000 20% 10% Rs. 7,50,001 - Rs. 10,00,000 20% 15% Rs. 10,00,001 - Rs. 12,50,000 30% 20% Rs. 12,50,001 - Rs. 15,00,000 30% 25% Above 15 lakh 30% 30%

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The basic rub of the old and the new rates is that it is optional. So, should one stay with the old or current rates or should one opt for the new tax regime. Interestingly, as explained in the table below, for someone whose annual income is 15 lakh, the new and the existing tax slabs would not result in any savings. Also Read | Big relief for taxpayers! 20% tax cut to 10% for those earning between Rs 5-7.5 lakh

However, for those whose salary is about Rs. 7,50,000 and the corpus of investments done are primarily for saving tax, the new regime would make more sense and provide larger liquidity. With the income tax slabs reduced, the person would be able to save 10% on the tax as income upto 5 lakh rupees would be exempt. With 1.5 lakh compulsory saving, the person would be charged 20% on a sum of 1 lakh which would be 20,000. However, under the new regime, the tax amount would be 10% of 2.5 lakhs which would amount to Rs. 25,000. The individual may be paying Rs. 5000 more in taxes but would not have to make an investiment of 1.5 lakh rupees.