In a bid to save the taxpayers from harassment, the Centre on Saturday proposed a mechanism to address the pressing problem.
Finance Minister Nirmala Sitharaman, who presented the Union Budget 2020-21 in the Lok Sabha today, said that taxpayer charter to be instituted in the charter.
She said that taxpayer charter will be instituted in the charter, a part of our statutes. "We remain committed to taking measures to ensure citizens are free of tax harassment," she said.
According to the new regime of personal income tax, individual taxpayers will pay tax at a reduced rate of 10 per cent for income between Rs 5 lakh and 7.5 lakh against the current rate of 20 per cent.
"Those with an income between Rs 7.5 lakh and Rs 10 lakh will pay tax at 15 per cent against the current 20 per cent. Those with income between Rs 10 and Rs 12.5 lakh will pay tax at 20 per cent, down from 30 per cent," she said.
The Finance Minister further said that tax rates for income between Rs 12.5 lakh and Rs 15 lakh will be 25 per cent under the new regime.
"To provide significant relief to individual taxpayers and simplify the tax law, a new regime of personal income tax to be introduced," she said.
To boost start-ups, the tax burden on employees due to tax on Employee Stock Options (ESOPS) has been deferred by five years or till they leave the company or when they sell, whichever is earliest.
Around 70 of more than 100 income tax deductions and exemptions have been removed, in order to simplify the tax system and lower tax rates, said the minister, adding that substantial tax benefit will accrue to individual taxpayers under the new personal income tax regime.
* Those earning up to Rs 5 lakh in a year will pay no tax.
* Income between Rs 5-7.5 lakh, the tax rate is 10 pc.
* Income between Rs 7.5-10 lakh, the tax rate is 15 pc.
* Income between Rs 10-12.5 lakh, tax rate cut to 20 pc from 30 pc.
* Income above 15 lakh rupees will continue to be taxed at 30 pc.
* A person earning Rs 15 lakh per anum and not availing any deductions will now pay Rs 1.95 lakh tax in place of Rs 2.73 lakh.
* The new personal income tax regime entails an estimated revenue foregone amounting to Rs 40,000 crore per year.