Union Budget 2020 for Individual & HUF

Today we will discuss very important changes proposed in Union Budget 2020 relating to Income Tax Provision for Individual and HUF

Our Finance Minister has proposed 2 regime for taxation, one was old regime with regular deductions and exemptions and other is New Regime proposed under Section 115 bac

New Tax Regime Explained

A new Section 115 BAC is being introduced whereby an individual and HUF can opt to pay tax as per new tax rates in case it forgo some major exemptions and deductions available as below:

1. Any Deduction u/s 80C (LIC, Tution fees etc), 80CCD for Self Contribution of RS 50000, 80D (Mediclaim etc), 80G (Donation), 80GG (Rent) or any other similar deduction EXCEPT Section 80CCD Employer Contribution to National Pension Scheme

1. Standard Deduction of Rs.50,000/-

23. Interest on Housing Loan – Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law)

1. Leave Travel Concession

1. House Rent Allowance

1. Additional Depreciation

1. Various Business Deduction u/s 32AD, 33AB, 35, 35AD, 35CCC, 80IA, 80IB, 80IAC etc.

1. in the case of income in the nature of family pension, a deduction of a sum equal to 1/3^rd of such income or fifteen thousand rupees, whichever is less.

Some of major exemptions / Deductions claimed are still available under new regime:

1. 80CCD Employer Contribution to National Pension Scheme

1. Interest received on PPF, Tax Free Bonds etc

1. Sum Received on Maturity of LIC as earlier

1. Agriculture income

1. Sharer of Firm profit in hand of partner

1. Gratuity, Workmen Compensation , Leave Encashment, provident Fund, Commuted pension as earlier

The option shall be exercised as below:

1. a) No Business Income – every previous year along with the return of income with Due date of ITR
2. b) If having business Income – The option once exercised for a previous year shall be valid for that previous year and all subsequent years and needs to be exercised before due date of ITR. The option can be withdrawn only once and thereafter, the individual or HUF shall never be eligible to exercise option under this section, except where such individual or HUF ceases to have any business income

Now we will discuss whether we should go for new or old regime based on various scenario as below:

Scenario

1) if assesse having No HRA or Section 80 Deductions – New Regime will be beneficial as below:

2) if assesse having House Property Loss or Section 80 Deductions—Old Regime will be beneficial as below:

3) if assesse having HRA or 80GG and or Section 80 Deductions- – Old Regime will be beneficial as below:

4) if salaried assesse having only NPS from Employer –  New Regime will be beneficial as below: