New income tax bill: Finance Minister Nirmala Sitharaman presented the new income tax bill in the Lok Sabha on February 13. This bill is currently with the selection committee and it will take some time to become a law, but its provisions have already made it a topic of discussion among taxpayers.
For your information, let us tell you that no change has been made in the income tax slab in the new bill, nor is any amendment proposed in the capital gains tax. The main objective of this bill is to simplify the language of tax related rules, so that it becomes easier for the common man to understand and implement it.
However, there is a big change that you should be aware of. If you pay tax by choosing the old tax regime, then you will be well aware of the various tax saving options under Section 80C. Investments like Equity-Linked Savings Scheme (ELSS), Public Provident Fund (PPF), life insurance premium, National Pension System (NPS), and tax-saver deposits come under this section. All these options get tax exemption of up to Rs 1.5 lakh.
Provisions of 80C now in 123
There has been a big change regarding 80C in the new bill. All the exemptions available under 80C will now come under section 123. According to this section, “Any individual or Hindu Undivided Family (HUF) will get exemption on the amount paid or deposited in the tax year, which will be equal to the total of the amounts given in Schedule XV, but this exemption will not exceed Rs 1.5 lakh.”
“Section 123 in the new Income Tax Bill is in line with Section 80C of the current Income Tax Act 1961. This should be read along with Schedule XV, which is part of the bill and gives a detailed description of various tax saving options under Section 80C.”
What has changed in the new bill?
This new Income Tax Bill is 622 pages long and contains 536 sections. Whereas, the current Income Tax Act has 298 sections in 823 pages. The new bill has a section on every section of the current Income Tax Act, except those sections which have become irrelevant now.
According to Ajay Rotti, founder of Tax Compass, “The Income Tax Act of 1961 contains sections 80, 80C, 80D, 80E etc. The last section number in the current Income Tax Act is 298. But the new bill has re-numbered the sections, which may increase the number of sections to more than 500. However, overall this bill simplifies the tax laws.”
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