The Finance Act, 2020 has made certain changes in the slab rates for individuals giving them option either to opt for the new tax regime or to continue with the old tax regime.
New Tax Regime*
Income Slab
Applicable Tax Rate
Upto ₹ 2,50,000
Nil
₹ 2,50,001 – ₹ 5,00,000
5%
₹ 5,00,001 – ₹ 7,50,000
10%
₹ 7,50,001 – ₹ 10,00,000
15%
₹ 10,00,001- ₹ 12,50,000
20%
₹ 12,50,001 – ₹ 15,00,000
25%
Above ₹ 15,00,000
30%
*Explanation
No Tax on the individual having income upto ₹ 2,50,000
5% Tax will applicable for the income more than ₹ 2,50,000 upto ₹ 5,00,000
10% Tax will applicable for the income more than ₹ 5,00,000 upto ₹ 7,50,000
15% Tax will applicable for the income more than ₹ 7,50,000 upto ₹ 10,00,000
20% Tax will applicable for the income more than ₹ 10,00,000 upto ₹ 12,50,000
25% Tax will applicable for the income more than ₹ 12,50,000 upto ₹ 15,00,000
30% Tax will applicable for the income more than ₹ 15,00,000
4% Health and Education cess will be applicable on the amount of tax so calculated.
Rebate of ₹12,500 under section 87A is available to the individuals having income upto ₹ 5,00,000.
The Individuals opting for the new tax regime will have to give up below mentioned exemptions and deductions;
Leave Travel Allowance (LTA)
Conveyance Allowance
Relocation Allowance
Children Education Allowance
Standard Deduction
Interest on housing loan
House Rent Allowance (HRA)
Daily employment expenses
Helper Allowance
Other Special allowance under section 10(14)
Professional Tax
Deduction under Chapter VI-A Except Section 80CCD (2) and 80JJA
Option to opt under the new tax regime can be exercised before filing the return of income for the AY 2021-22 (FY 2020-21)
Individuals having income from business if after opting into the new tax regime, switches to the old one, will not have the option to opt in the new tax regime again.
Old Tax Regime
For Individuals below 60 Years of age
Income Slab
Applicable Tax Rate
Upto ₹ 2,50,000
Nil
₹ 2,50,001 – ₹ 5,00,000
5%
₹ 5,00,001 – ₹ 10,00,000
20%
Above ₹ 10,00,000
30%
*Explanation
No Tax on the individual having income upto ₹ 2,50,000
5% Tax will applicable for the income more than ₹ 2,50,000 upto ₹ 5,00,000
20% Tax will applicable for the income more than ₹ 5,00,000 upto ₹ 10,00,000
30% Tax will applicable for the income more than ₹ 10,00,000
Rebate of ₹12,500 under section 87A is available to the individuals having income upto ₹ 5,00,000.
Tax deduction of Rs. 1.5 Lakhs can be availed under Section 80C and an amount of tax equal to ₹46,800 can be saved (Contact us to invest in the eligible investments)
4% Health and Education cess will be applicable on the amount of tax so calculated.
For Senior Citizens above 60 Years of age but below 80 Years*
Income Slab
Applicable Tax Rate
Upto ₹ 3,00,000
Nil
₹ 3,00,001 – ₹ 5,00,000
5%
₹ 5,00,001 – ₹ 10,00,000
20%
Above ₹ 10,00,000
30%
No Tax on the individual having income upto ₹ 3,00,000
5% Tax will applicable for the income more than ₹ 3,00,000 upto ₹ 5,00,000
20% Tax will applicable for the income more than ₹ 5,00,000 upto ₹ 10,00,000
30% Tax will applicable for the income more than ₹ 10,00,000
4% Health and Education cess will be applicable on the amount of tax so calculated.
For Super Senior Citizens above 80 Years of age
Income Slab
Applicable Tax Rate
Upto ₹ 5,00,000
Nil
₹ 5,00,001 – ₹ 10,00,000
20%
Above ₹ 10,00,000
30%
No Tax on the individual having income upto ₹ 5,00,000
20% Tax will applicable for the income more than ₹ 5,00,000 upto ₹ 10,00,000
30% Tax will applicable for the income more than ₹ 10,00,000
4% Health and Education cess will be applicable on the amount of tax so calculated.
The Finance Act, 2020 has left the surcharge untouched and hence it will continue to be levied in the new tax regime at the same rates as mentioned below
Income Slab
Surcharge on the amount of Tax
If net income exceeds Rs. 50 lakh but upto Rs. 1 Cr
