Income Tax Slab for F.Y 2020-21 & A. Y- 2021-22 with compression of Old Slab

Income Tax Slab for F.Y 2020-21 & A. Y- 2021-22 with compression of Old Slab:-
Dear Readers,
As we all are aware of that under the Existing regime in India income tax is levied on individual taxpayers on the basis of a slab system.
The rate of tax rates have been prescribed for different slabs, different categories with increasing of rate of tax with income.
Existing tax regime:
There are three categories of individual taxpayers:
  • Individuals (below the age of 60 years), which includes residents as well as non-residents
  • Resident senior citizens (60 years and above but below the age of 80 years)
  • Resident super senior citizens (above 80 years of age)
As we know that there are different slabs for each category of taxpayers. We here try to discuss income tax Slab as per old regime and new regime.
Tax Slab as per old Regime 
Income Tax Slabs & Rates for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2020-21 – Part I
 
 
 
 
 
 
Income Tax Slab
Rate of Tax
0 to 2,50,000
Nil
2,50,001 to 5,00,000
5% of Exceeding Rs. 2.5 Lakh (I,e-12500/-)
5,00,001 to 10,00,000
12,500+ 20% Exceeding Rs. 5 Lakh
Above 10,00,000
1,12,500+ 30% Exceeding Rs. 10 Lakh
 
Income Tax Slabs & Rates for Individual Tax Payers & HUF (More Than 60 Years but less than 80 Years Old) for FY 2020-21 – Part II
Income Tax Slab
Rate of Tax
0 to 3,00,000
Nil
3,00,001 to 5,00,000
5% of Exceeding Rs. 3 Lakh (I,e-10,000/-)
5,00,001 to 10,00,000
10,000+ 20% Exceeding Rs. 5 Lakh
Above 10,00,000
1,10,000+ 30% Exceeding Rs. 10 Lakh
 
Income Tax Slabs & Rates for Individual Tax Payers & HUF (More Than 80 Years Old) for FY 2020-21 – Part III
Income Tax Slab
Rate of Tax
0 to 5,00,000
Nil
3,00,001 to 5,00,000
5% of Exceeding Rs. 3 Lakh (I,e-10,000/-)
5,00,001 to 10,00,000
20% Exceeding Rs. 5 Lakh
Above 10,00,000
1,00,000+ 30% Exceeding Rs. 10 Lakh
 
 
Lets Calculate the Tax as per Old Regime with a Example.
Source Of Income
Age below 60 Y
Age 60 to 80 Y
Age above 80 Y
Salary:- 4,50,000
 
 
 
Less:- Standard Deduction Rs. 50000/-
4,00,000
4,00,000
4,00,000
Income From H.P
2,00,000
2,00,000
2,00,000
Other Income
   50,000
   50,000
   50,000
Gross Total Income
6,50,000
6,50,000
6,50,000
Less:- Deduction u/s 80C
1,50,000
1,50,000
1,50,000
Total Income (Taxable Income)
5,00,000
5,00,000
5,00,000
Income Tax:-
12,500
10,000
0
Less:- Rebate 87A (Maximum-12,500)
12,500
10,000
0
Tax Payable
Nil
Nil
Nil
 
Summary of understanding under old Tax Regime
  1. All deduction is available for calculating of tax liabilities.
  2. Rebate u/s 87A available for Maximum Rs. 12,500/-.
  3. If scrutiny the tax liabilities than find out that there is no any tax payable till Rs. 5 Lakh
  4. As per rebate u/s 87A there is no any impact of Category of age group.
 
 
The Budget 2020 introduced a new income tax regime for individual taxpayers. Which is totally option for the tax payer, to opt New Tax option or Old?
However, the option for such concessional tax regime requires the taxpayer to forego certain specified deductions. The list of deduction is listed below:-
  1.  Clauses referred in section 10 as follows:
  1. Clause (5) - Leave travel concession;
  2. Clause (13A) - House rent allowance;
  3. Clause (14) - Special allowance detailed in Rule 2BB (such as children education allowance, hostel allowance, transport allowance, per diem allowance, uniform allowance, etc.);
  4. Clause (17) - Allowances to MPs/MLAs;
  5. Clause (32) - Allowance for clubbing of income of minor;
 
  1. Exemption for SEZ unit under section 10AA;
  2. Standard deduction, deduction for entertainment allowance and employment / professional tax as contained in Section 16;
  3. Interest under section 24 in respect of self-occupied or vacant property (loss under the head IFHP for rented house shall not be allowed to be set off under any other head and would be allowed to be c/f as per extant law);
  4. Additional depreciation under section 32(1)(iia);
  5. Deductions under sections 32AD, 33AB and 33ABA;
  6. Various deductions for donation or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA) of section 35;
  7. Deduction under section 35AD or 35CCC;
  8. Deduction from family pension under clause (iia) of section 57;
  9. Any deduction under chapter VI-A (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, etc.). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
Income Tax Slab
Rate of Tax
0 to 2,50,000
Nil
2,50,001 to 5,00,000
5% of Exceeding Rs. 2.5 Lakh (I,e-12500/- with deduction u/s 87A)
5,00,001 to 7,50,000
10% Exceeding Rs. 5 Lakh
7,50,001 to 10,00,000
15% Exceeding Rs. 7.5 Lakh
10,00,001 to 12,50,000
20% Exceeding Rs. 10 Lakh
12,50,001 to 15,00,000
25% Exceeding Rs. 12.50 Lakh
Above 15,00,000
30% Exceeding Rs. 12.50 Lakh
We here try to compute the Income Tax of above example into New tax Regime.
 
Assumption;-
  • The taxpayer having 80 C deduction 1,50,000/-
  • They are excited about new tax regime.
  • They want to know summery of New tax Regime
  • They want to know Pros and Cons of New Tax Regime, so they can comment them self.
Computation as per New Tax Slab:-
Source Of Income
Age below 60 Y
Age 60 to 80 Y
Age above 80 Y
Salary:- 4,50,000
4,50,000
4,50,000
4,50,000
Less:- Standard Deduction Rs. 50000/- (Not Allowed)
 
 
 
Income From H.P
2,00,000
2,00,000
2,00,000
Other Income
   50,000
   50,000
   50,000
Gross Total Income
7,00,000
7,00,000
7,00,000
Tax Less:- Deduction u/s 80C (Deduction Not allowed)
1,50,000
1,50,000
1,50,000
Total Income (Taxable Income)
7,00,000
7,00,000
7,00,000
0 to 2,50,000
Nil
Nil
Nil
2,50,001 to 5,00,000
12,500
12,500
12,500
5,00,001 to 7,50,000
20,000
20,000
20,000
Tax Amount (Rs.)
42,500
42,500
42,500
*** Deduction U/s Can not avail because the Income of the taxpayer exceed Rs. 5,00,000/-
 
 
Tax as per Old slab:-
Source Of Income
Age below 60 Y
Age 60 to 80 Y
Age above 80 Y
Salary:- 4,50,000
 
 
 
Less:- Standard Deduction Rs. 50000/-
4,00,000
4,00,000
4,00,000
Income From H.P
2,00,000
2,00,000
2,00,000
Other Income
   50,000
   50,000
   50,000
Gross Total Income
6,50,000
6,50,000
6,50,000
Less:- Deduction u/s 80C
1,50,000
1,50,000
1,50,000
Total Income (Taxable Income)
5,00,000
5,00,000
5,00,000
Income Tax:-
12,500
10,000
0
Less:- Rebate 87A (Maximum-12,500)
12,500
10,000
0
Tax Payable
Nil
Nil
Nil
Comment:-
  1. If tax payer having deduction u/s 80C then go to new Slab.
  2. Computation before opting new or old scheme only the taxpayer whose income less than 7,00,000-
  3. As per my point of view kindly compare the amount of tax till 7,00,000
  4. A taxpayer whose income more than 7 lakh, not need to compare, go new tax regime.
  5. If you want to compare than download the Excel utility and clear own goal.
  6. Old and New tax regime compare utility- download  
 
  1. Reduced tax rates and reduced compliances:
The new regime provides for concessional tax rates vis-à-vis tax rates in the existing or old regime. Further, as most of the exemptions and deductions are not available, the documentation required is lesser and the tax filing is easier.
  1. Investor may not prefer to lock-in funds in the prescribed instruments for the specified period:
Under the new regime, all taxpayers would be treated at par and benefit of deduction/allowances would not be a criteria for availing the tax exemption. This may be helpful for those categories of taxpayers who may not subscribe to the specified modes of investments, as most of the investments have a lock-in period, before which it cannot be withdrawn. They can invest in openended mutual funds/instruments/deposits, which provides them good returns as well as flexibility of withdrawal as well. For instance, certain eligible instruments have a longer lock-in period such as fixed deposits with banks and post offices have a lock-in period of five years, equity-linked savings schemes (ELSS) is for a period of three years, National Savings Certificates (NSC) for five years, etc.
 
  1. Increased liquidity in the hands of the taxpayer:
The reduced tax rate would provide more disposable income to the taxpayer, who could not invest in specified instruments due to certain financial or other personal reasons.
 
  1. Flexibility of customizing the investment choice:
The existing tax regime provides for deductions to the taxpayer, provided he makes investments in certain instruments and manner as prescribed in the Act. This restricts the investment choices for the taxpayer as he has to make the investments only in the instruments specified. However, the new regime provides taxpayer with a flexibility of customising their investment choices.
 
The cons of the new regime are:
Non-availability of certain specified deductions: The listed above

Share