The Finance Minister announced the Union Budget for Financial Year 2020-21 on Feb 1, 2020, in the Parliament. Through the introduction of the budget, the Finance Ministry has introduced a New Tax System under which there will be Income Tax Slabs 
| Income Tax Slab | Tax Rate |
|---|---|
| Up to Rs 2.5 lakh | Nil |
| Rs 2.5 lakh to Rs 5 lakh | 5% |
| Rs 5 lakh to Rs 7.5 lakh | 10% |
| Rs 7.5 lakh to Rs 10 lakh | 15% |
| Rs 10 lakh to Rs 12.5 lakh | 20% |
| Rs 12.5 lakh to Rs 15 lakh | 25% |
| Rs 15 lakh and above | 30% |
The idea of new tax slabs was taken from the deep study of the tax system of other economies. According to a study, the country having fewer Income tax slabs face more issues. Fewer tax slabs lead to an increase in discrimination of taxpayers and create problems for the taxpayers of low-income groups. The slabs are to be introduced from April 1, 2020, officially.
“People say there should be one or two slabs but that would be highly inequitable… Rates would have to be steep if we have one or two slabs. The income tax structure has to be progressive. We studied slabs in developing countries, developed countries, neighboring countries before these were worked out,” said Ajay Bhushan Pandey, the Revenue Secretary.
The New Tax System is for those taxpayers who opt-out of exemptions and deductions of the older tax system and is completely optional.
End of Tax Exemption
The Finance Minister said that all the previous exemptions provided to the taxpayers will be scrapped slowly and a new smooth system will be brought in force. The taxpayers having a total income of more than INR 15 Lakhs will now be able to save up to 78,000 through the new tax system. Moreover, it will also benefit the low-income group as they will be charged lower tax rates. Giving the option of leaving the exemptions is the first step towards a simple tax system.
Singapore Has 11 and China 7 Tax Slabs
Pandey said that the introduction of more tax slabs will not be harmful to the economy instead it will benefit the taxpayers of all income groups. “The system will show tax liability in pre-field forms,” he said. Singapore has 11 tax slabs and China has 7 tax slabs with the highest tax at 45%. Both countries retain good economic positions in the world and are the perfect example of the successful implementation of more tax slabs.
Pandey also said that the government will issue a notification as soon as the bill related to Income Tax Dispute Settlement Scheme 
No Pressure
The Revenue Secretary has asked the officials to explain the pros and cons to those taxpayers with whom a continuous dispute is going on to help them understand the scheme properly and make an informed decision. “We are facilitating… We are not forcing anyone… A person must be given a choice. They have been asked to reach out to explain the pros and cons of the scheme.” said Pandey.
