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Income Tax Slab for FY 2019-20 to FY 2020-21

All individuals, HUF, firms and corporations need to pay a tax that is levied on the income that they earn. For citizens, there is a set system for the payment of income tax. These sets of tax rates are called slabs. The budget that is announced yearly, may bring new updates in the taxation system, tax slabs, and also the forms. As a taxpayer, it is your responsibility that you not only note down the amendments made in the tax regime but also understand and follow them. Though in most cases, the filing details are unchanged, you need to know about the changes that are made.

Income Tax Slab:

As explained above, as per the India Tax system, an individual pays taxes on the basis of the slab that he falls in. When the income of an individual increases, his tax liabilities increase as well. The taxpayer is divided into 3 categories:

  1. Individuals who are less than 60 years of age, includes residents as well as non-residents
  2. Resident Senior citizens, people who are in the age group of 60-80 years
  3. Resident Super Senior Citizens, people who are over the age of 80 years

Income Tax Slab 2020-21:

On February 1, 2020, the Finance Minister of India, Mrs. Nirmala Sitharaman presented the Union Budget. A new income tax slab was introduced, wherein senior citizens, citizens, and HUF could opt for lower tax rates. Take a look at Old as well as the New Income Tax Slab

Income Range

Old Tax Regime New Tax Regime
Till INR 2.5 lakhs Nil

Nil

From 2.5 lakhs – 5 lakhs

5% 5%
From INR. 5 lakhs – 7.5 lakhs 20%

10%

From INR. 7.5 lakhs – INR 10 lakhs

20% 15%
From INR. 10 lakhs – INR 12.5 lakhs 30%

20%

From INR. 12.5 lakhs – INR 15 lakhs

30% 25%
Income over INR 15 lakhs 30%

30%

A unique thing about the new tax regime is that you, as a taxpayer, have the choice to either follow the new tax regime or the old. You have the option to choose any one of the following:

  1. Under the new tax regime, you can pay a lower income tax if you forgo the permissible exemptions and deductions
  2. If you wish to keep following the old tax regime, you can avail of the rebates and exemptions, however, you would have to pay your taxes at a higher rate.

 

Income Tax Slab Rates for FY 2019-20 AY 2020 21 – for the Individuals under 60 years of age HUF and NRIs

Income Tax Slab

Rates for the Individuals under 60 years of age
Till INR 2.5 lakhs

Nil

From INR 2.5 lakhs – INR 5 lakhs

5%
From INR 5 lakhs – INR 10 lakhs

20%

Over INR 10 lakhs

30%

 

Income Tax Slab Rates for FY 2019-20 AY 2020 21 – for the age group 60 – 80 years

Income Tax Slab

Rates for the Individuals for the age group 60 – 80 years
Till INR 3 lakhs

Nil

From INR 3 lakhs – INR 5 lakhs

5%
From INR 5 lakhs – INR 10 lakhs

20%

Over INR 10 lakhs

30%

 

Income Tax Slab Rates for FY 2019-20 AY 2020 21 – for the individuals over the age of 80 years

Income Tax Slab

Rates for the Individuals for the age group 60 – 80 years
Till INR 5 lakhs

Nil

From INR 5 lakhs – INR 10 lakhs

20%
Over INR 10 lakhs

30%

 

Who can opt for the New Tax Regime?

If you are an individual who wants to avail of the concessions in the new tax regime, you would have to relinquish some of the exemptions that were available in the old tax regime. Given below is a list of the most common deductions that are NOT permitted as per the new tax regime:

  1. House Rent Allowance
  2. Leave Travel Allowance
  3. Relocation Allowance
  4. Professional Tax
  5. Conveyance Allowance

The following deductions ARE allowed as per the new tax regime:

  1. Transport Allowance for differently-abled individuals
  2. Conveyance allowance for expenses due to work-related travel
  3. The investment made in Notified Pension Scheme (under Section 80CCD2)

Differences between the Old Tax Regime and the New Tax Regime:

To put it simply, it can be said that the old tax regime would be a more suitable alternative for the high-earners, the individuals who earn over INR 15 lakhs a year. The new tax regime on the other hand would be more beneficial for the taxpayers who have an annual income of up to INR 15 lakhs.

Let us see this example. Mohit Sharma is a software professional. His annual income is INR 10 lakhs. He has made some investments that help him get some tax benefits under Section 80C. His investments add up to INR 1,70,000 under home loan premium, PF, LIC, and ELSS. Mohit also has a health insurance plan of INR 28,000. His home loan interest in the Financial Year 2020-2021 is INR 75,000.

Now, as we read earlier, only if Mohit opts for the old tax regime, would he be able to claim the deduction. If in case he opts for the new tax regime, claiming them will not be possible. Here is what his tax outflow would look like:

Details

Old Tax Regime (In INR) New Tax Regime (In INR)
Gross Income 10,00,000

10,00,000

Deductions

Under Section 80C 1,50,000

Under Section 80D

25,000
Under Section 24(b) 75,000

Taxable Income

7,50,000 10,00,000
Tax Slab (Old)

Up to 2.5 lakhs

From INR 2.5 lakhs – INR 5 lakhs at 5% 12,500

From INR 5 lakhs – INR 10 lakhs at 20%

50,000
Over INR 10 lakhs at 30%

Tax Slab (New)

Till INR 2.5 lakhs

From 2.5 lakhs – 5 lakhs at 5%

12,500
From INR 5 lakhs – 7.5 lakhs at 10%

25,000

From INR 7.5 lakhs – INR 10 lakhs at 15%

37,500
From INR 10 lakhs – INR 12.5 lakhs at 20%

From INR 12.5 lakhs – INR 15 lakhs at 25%

Income over INR 15 lakhs at 30%

Income tax

62,500 75,000
Cess at 4% (No change) 2,500

3,000

Total Tax

65,000

78,000

You pay an income tax on your annual income, as per the tax slab that you fall in.

 

Which tax slab you should choose?

If you save a large part of your income through deductions, then you should stick with the old tax regime. However, if you want a larger portion of the money as your disposable income and do not have many standard deductions or tax saving income, then you can opt for the new tax regime. The best way to choose is to use both the calculators with all deductions and then choose whichever gives you a better overall tax deduction.

As discussed above, you can see which tax slab would help you save on taxes and make a choice accordingly.

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