Finance Minister Nirmala Sitharaman during her budget speech on Saturday (1 February) announced the abolition of the Dividend Distribution Tax (DDT). Henceforth dividend will only be taxed at the hands of the recipients via applicable rates.
Also taxation on ESOPs deferred to five years; to be taxed only at the selling of shares or 5 years which ever is earlier.
The Finance Minister also introduced a new Income Tax regime under which tax payers will have to pay significantly lower taxes if they decide to forgo existing exemptions.
Under the new regime an individual taxpayer will be required 10 per cent for 5 lakh to 7.5 lakh as opposed to the current rate of 20 per cent if he or she agrees to forego exemptions.
In case of income from Rs 7.5 lakh to Rs 10 lakh the taxpayer will be required to pay 15 per cent under the simplified regime.
In case of Rs 10 lakh to Rs 12.5 lakh, taxpayers will be required to pay Rs 20 per cent instead of the current 30 per cent. In case of Rs 12.5 lakh to Rs 15 lakh a tax rate of Rs 25 per cent will be in force.
There will be no income tax charged till the income of Rs 5 lakh and a 30 per cent rate will be charged for those earning over Rs 15 lakh.
The taxpayer will have an option to either opt for the old or new tax regime.
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