New Delhi, January 29: Speculations are rife that Finance Minister Nirmala Sitharaman may rejig the tax rates in the Union Budget 2020-21, in a bid to relieve the middle class burdened by the deepening economic slowdown. Experts are of the view that the government may lower the income tax rates in an attempt to increase the purchasing power of people. The potential move will be aimed at giving an impetus to consumer spending and demand. Hike in Import Duty on 300 Non-Essential Goods Likely in Nirmala Sitharaman's Bahi Khata Apart From Curb on Duty-Free Liquor.

According to reports, the government may add a new tax slab for those earning an annual income between Rs 7 lakh to Rs 10 lakh. Further, the Finance Ministry may also end up reducing the tax rates for those earning above Rs 5 lakh. Here's a look at the prevailing tax rates.

Current Income Tax Slabs and Rates

Income Slabs (Individual below 60 years of age) Tax Rates Income Slabs (resident & above 60 years but below 80 years) Tax Rates Income Slabs (resident & above 80 years) Tax Rates
Total income up to Rs. 2.5 Lac NIL Total income up to Rs. 3.00 Lac NIL NA NA
Total income exceeds Rs. 2.5 Lac but less than Rs.5 Lac 5% on amount exceeding Rs. 2.5 Lac Total income exceeds Rs. 3 Lac but less than Rs.5 Lac 10% on amount exceeding Rs. 3.00 Lac Total income up to Rs. 5 Lac NIL
Total income exceeds Rs. 5 Lac but less than Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 25,000 Total income exceeds Rs. 5 Lac but less than Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 20,000 Total income exceeds Rs. 5 Lac but less than Rs.10 Lac 20% on Income exceeding Rs. 5 Lac
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000 Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,20,000 Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac

The current tax slabs were proposed by former Finance Minister Piyush Goyal, who had presented the fiscal roadmap for April-July 2019 ahead of the Lok Sabha elections. His successor, Nirmala Sitharaman, retained the tax rates while presenting the first full-term Budget of the second Narendra Modi-led government at the Centre.

As per the tax slab as cited above, those with an annual income of upto Rs 2.5 lakhs are exempted from paying income tax. Those earning above Rs 2.5 lakh and upto Rs 5 lakh would have to pay a tax of 5 percent on their income exceeding Rs 3 lakh. The tax rate increases to 20 percent for those earning beyond Rs 5 lakh (with the taxable component being the amount above Rs 5 lakh) and 30 percent for those earning beyond Rs 10 lakh per annum.

(The above story first appeared on LatestLY on Jan 31, 2020 12:00 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).