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Income-Tax-Slab-Financial-Year-2020-21

 

Income Tax Slab Financial Year 2020-21

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Introduction-

So here comes my blog to explain Income Tax Slabs under Budget 2020 for the assessment year 2021-22.

In budget 2020 the finance minister has introduced new tax regime with an option for the taxpayers whether to opt new or old tax regime. An individual who is currently availing more deductions & exemption under the Income Tax Act may choose to avail and continue to pay tax in the old regime.
 
See the related post : How to E-file Income Tax Return
 

All Deductions under Section 80C to 80E (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, 80TTA/80TTB etc.) Standard deduction, House rent allowance, Interest paid on housing loan, Children education allowance, Leave Travel Allowance, Other special allowances etc. will not be claimable under new tax regime. Deduction under section 80JJAA (for new employment) can still be claimed.

   

However, the National Pension System (NPS) tax break under section 80CCD (2) will continue. Even if you switch to the new regime, the deduction can help you save significantly if your employer offers the option. Employer’s contribution of up to 10 % of salary (i.e. basic pay plus dearness allowance) is eligible for tax relief under section 80CCD (2) (for government employees this limit is 14%.)

 

Income Tax Slab rates are as under-

Income Tax Slabs

Existing Tax Rate

New Tax Rate

Health and Education Cess

Income up to Rs 2,50,000

No tax

No tax

-

Income from Rs 2,50,000 – 5,00,000

5%

5%

4% of Income Tax

Income from Rs 5,00,000 – 7,50,000

20%

10%

4% of Income Tax

Income from Rs 7,50,000 – 10,00,000

20%

15%

4% of Income Tax

Income from Rs 10,00,000 – 12,50,000

30%

20%

4% of Income Tax

Income from Rs 12,50,000 – 15,00,000

30%

25%

4% of Income Tax

Income more than Rs 15,00,000

30%

30%

4% of Income Tax

   
Condition 1- If the taxpayers have availed deductions i.e. Standard deduction, Deduction under section 80C, 80D, Interest on housing loan etc.

Example 1-

If Mr. X has Gross Total Income of Rs. 20,00,000 for the financial year 2020-2021 and having some investments under income tax, how to calculate taxable income and tax amount under Old Tax Regime & New Tax Regime?

Solution-

Particulars

Under Old Tax Regime

Under New Tax Regime

 

 

 

Calculation

 

Calculation

Gross Total Income

20,00,000

 

20,00,000

Less:- Deductions

 

 

 

Standard Deduction

50,000

4,25,000

0

0

Under Section 80C

1,50,000

0

Under Section 80D

25,000

0

Interest on Housing Loan 24(B)

2,00,000

0

Taxable Income

 

15,75,000

 

20,00,000

 
See the related post : How to File Revise TDS Return
 

Based on above figure as example 1, calculation of tax amount under Old Tax Regime & New Tax Regime are as under-

Particulars

Under Old Tax Regime

 

Under New Tax Regime

 

 

 

 

Calculation

 

 

Calculation

Taxable Income

15,75,000,

Taxable Income

20,00,000

Tax Slabs

Tax Rate

Tax Amount

Total Tax Liability

Tax Rate

Tax Amount

Total Tax Liability

up to Rs 2,50,000

0

0

2,85,000

0

0

3,37,500

Rs 2,50,000 – Rs 5,00,000

5%

12,500

5%

12,500

Rs 5,00,000 – Rs 7,50,000

20%

50,000

10%

25,000

Rs 7,50,000 – Rs 10,00,000

20%

50,000

15%

37,500

Rs 10,00,000 – Rs 12,50,000

30%

75,000

20%

50,000

Rs 12,50,000 – Rs 15,00,000

30%

75,000

25%

62,500

Above Rs 15,00,000

30%

22,500

30%

1,50,000

Total Tax Liability (Ex. Cess)

 

 

Rs. 2,85,000

Total Tax Liability (Ex. Cess)

 

Rs. 3,37,500

 

 
Condition 2- If the taxpayers have availed deductions i.e. Standard deduction, Deduction under section 80C, 80D, etc.

Example 2-

If Mr. X has Gross Total Income of Rs. 10,00,000 for the financial year 2020-2021 and having some investments under income tax, how to calculate taxable income and tax amount under Old Tax Regime & New Tax Regime?

Solution-

Particulars

Under Old Tax Regime

Under New Tax Regime

 

 

 

Calculation

 

Calculation

Gross Total Income

10,00,000

 

10,00,000

Less:- Deductions

 

 

 

Standard Deduction

50,000

2,25,000

0

0

Under Section 80C

1,50,000

0

Under Section 80D

25,000

0

Taxable Income

 

7,75,000

 

10,00,000

   

Based on above figures as example 2, calculation of tax amount under Old Tax Regime & New Tax Regime are as under-

Particulars

Under Old Tax Regime

 

Under New Tax Regime

 

 

 

 

Calculation

 

 

Calculation

Taxable Income

7,75,000,

Taxable Income

10,00,000

Tax Slabs

Tax Rate

Tax Amount

Total Tax Liability

Tax Rate

Tax Amount

Total Tax Liability

up to Rs 2,50,000

0

0

67,500

0

0

75,000

Rs 2,50,000 – Rs 5,00,000

5%

12,500

5%

12,500

Rs 5,00,000 – Rs 7,50,000

20%

50,000

10%

25,000

Rs 7,50,000 – Rs 10,00,000

20%

5,000

15%

37,500

Total Tax Liability (Excluding Cess)

 

 

Rs. 67,500

Total Tax Liability (Excluding Cess)

 

Rs. 75,000

   
Condition 3- If the taxpayers have not made any investment during the year-

Example 3-

If Mr. X has Gross Total Income of Rs. 8,00,000 for the financial year 2020-2021 and have not made any investments under income tax, how to calculate taxable income and tax amount under Old Tax Regime & New Tax Regime?

Solution-

Particulars

Under Old Tax Regime

Under New Tax Regime

 

 

 

Calculation

 

Calculation

Gross Total Income

8,00,000

 

8,00,000

Less:- Standard Deduction

50,000

0

0

Taxable Income

 

7,50,000

 

8,00,000

   

Based on above figures as example 3, calculation of tax amount under Old Tax Regime & New Tax Regime are as under-

Particulars

Under Old Tax Regime

 

Under New Tax Regime

 

 

 

 

Calculation

 

 

Calculation

Taxable Income

7,50,000,

Taxable Income

8,00,000

Tax Slabs

Tax Rate

Tax Amount

Total Tax Liability

Tax Rate

Tax Amount

Total Tax Liability

up to Rs 2,50,000

0

0

62,500

0

0

45,000

Rs 2,50,000 – Rs 5,00,000

5%

12,500

5%

12,500

Rs 5,00,000 – Rs 7,50,000

20%

50,000

10%

25,000

Rs 7,50,000 – Rs 10,00,000

 

 

15%

7,500

Total Tax Liability (Excluding Cess)

 

 

Rs. 62,500

Total Tax Liability (Excluding Cess)

 

Rs. 45,000

   



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