Let’s understand this proposed scheme in detail-, As per Budget 2020 the individual and HUF taxpayers including, Are allowed to make a choice of income tax slab on the basis of which they will like to pay taxes from FY 2020-21. new one or old one? The Union Budget 2020 introduced a new income tax regime with reduced tax rates for those willing to forego 70 tax-exemptions and deductions under it. 70 exemptions were dropped from the Income Tax exemption list.

However, deduction under section 80CCD(2) (employer contribution on account of the employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed. This new tax system has been made optional and continues to co-exist with the old one that comprises of three tax rates and various tax exemptions and deductions available to a taxpayer. Which is partially true. The option shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other applicable provisions of the Act. Some of the common exemptions especially the ones under Sec 80C that will not be allowed if you opt for the new tax regime are, The Finance Act 2020 has allowed some deductions as below to be admissible as earlier. This option can be taken by the individual or the HUF who has no business income. The person opting for the new scheme under section 115BAC shall not be entitled to the following exemptions/ deductions: Only following under section 10(14) are allowed to the Individual or HUF : For the FY 2020-21 (AY 2021-22) the taxpayer can choose amongst the old and new tax regime.The new optional tax regime has reduced income tax rate but without benefit of deductions and allowances and the existing tax slabs can be used with the benefits of deductions and exemptions. Income Tax is the tax that is levied by the Government of India on the income earned by individuals and other entities like a Hindu Undivided Family or a Company. It will be applicable from the FY 2020-21(AY 2021-22). Should you say goodbye ELSS mutual funds, welcome new income tax slabs? Before getting to know the income tax rates for particular slabs for the ongoing financial year, let us know the individual categories of taxpayers.

For reprint rights: How to know which income tax slab you fall in? But, if the income of such taxpayer does not exceed Rs 5 lakhs then no tax would be payable after availing the benefit of rebate u/s 87A. Budget 2020 has proposed to introduce new income tax slabs sans 70 deductions and tax exemptions. Remember, while salaried employees have the option to pick the tax regime most suitable to them every financial year, those with salaried and business income should make their decision carefully. The basic exemption limit for an individual depends on his/her age as well as his/her residential status. However, individuals having net taxable income up to Rs 5 lakh will be eligible for rebate up to Rs 12, 500 under both the tax regimes. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. House rent allowance (HRA): Varying amounts depending upon the salary structure and rent paid, Housing loan interest allowed under Section 24 of up to Rs 3.5 lakh for those claiming under affordable housing, Rs 2 lakh for others, Leave travel allowance: Tax-free if claimed once in a block of two years, Medical insurance premium: Rs 25,000 (Rs 50,000 for parents and senior citizens), Children Education Allowance: Rs 2250 per child/ Rs 6750 for hostel subsidy ICICI Prudential Bluechip Fund Direct-Growth, Here are the latest income tax slabs and rates.

Rs 3,00,000 for senior citizens The new income tax slabs and rates have come into effect from April 1, 2020 for FY 2020-21. The new income tax slabs and rates have come … Rs 5,00,000 for super senior citizens, Under the new tax regime there is only one exemption limit of Rs 2,50,000 which is applicable for both individuals and HUF, Budget 2020 : New Income Tax Slab Rate for Individuals u/s 115BAC. Form 16 Meaning, Format & How to Upload, Complete Guide on Rent Slips/Receipts and Claim HRA Tax, Notice u/s 143-(1) Intimation from Income Tax Department. Here’s the answer, Senior citizens of advanced age , say above 75,suffering from critical illness like cancer should be exempted from tax and filing of return as they depend on others for survival through painful treatments.The government will do well to extend this help in the twilight of their lives. (b) Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office; (c) Any Allowance granted to meet the cost of travel on tour or on transfer; (d) Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. In case of assessee ceases to have business income, option can be exercised again. Option once exercised can be withdrawn only once. Notice for Defective Return u/s 139(9): How to Respond? They are. Individuals (below the age of 60 years), consisting of residents and non-residents Indians (NRIs), Resident senior citizens - in the age group of 60 years to 80 years, Resident super senior citizens -aged 80 and above, Health and Education Cess of 4% is charged on all Income Tax slabs on the total amount of Income Tax+surcharge payable. The incentive of lower tax has been provided by the insertion of a new section 115BAC in the Income Tax Act. The option once exercised for a previous year shall be valid for that previous year and all subsequent years. This scheme provides an option to the tax-payers to pay tax at reduced rates subject to fulfillment of certain conditions. However, to compensate for this, the tax rate has also been reduced. With the new tax regime, the options for tax saving with the help of deductions have been reduced. Normally more suitable for New employees, low tax bracket earners or senior citizens willing to have greater liquidity in hand at the old age.

He is the co-founder & CEO of Tax2Win.in. This is based on various slabs as decided by the GOI.

Let us understand this with the help of an example. (i) Leave travel concession u/s section 10(5); (ii) House rent allowance u/s section 10(13A); (iii) Some of the allowance as contained in section 10(14); (iv) Allowances to MPs/MLAs as contained in section 10(17); (v) Allowance for the income of minor as contained in section 10(32); (vi) Exemption for SEZ unit contained in section 10AA; (vii) The standard deduction, a deduction for entertainment allowance and employment/professional tax as contained in section 16; (viii) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. Here are the latest Income Tax Slab Rates FY 2020-21 (Assessment Year 2021-22): Income Zero to Rs 2.5 lakh = No tax Let's reshape it today, Hunt for the brightest engineers in India, Choose your reason below and click on the Report button. Income Tax Slab & Tax Rates for FY 2020-21(AY 2021-22) & FY 2019-20 (AY 2020-21), Section 234F: Penalty for Late Filing of Income Tax Return, Deductions under Chapter VI A of Income Tax Act for FY 2019-20(AY 2020-21), Income Tax Return (ITR) Filing 2019: How to File ITR Online India, Form 16: What is Form 16? Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. New Optional income tax regime for Individuals and HUF has been proposed in the budget 2020. (Loss under the head income from house property for the rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law); (ix) Additional depreciation under section 32(1)(iia); (x) Deductions under section 32AD, 33AB, 33ABA; (xi) Various deduction for donation for or expenditure on scientific research contained in section 35(2AA) or 35(1)(ii) or (iia) or (iii); (xii) Deduction under section 35AD or section 35CCC; (xiii) Deduction from family pension under section 57(iia); (xiv) Any deduction under chapter VIA (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). To know more about the existing tax slab and the new optional tax slabs introduced under section 115BAC let read further, After the Budget 2020 people are getting confused that there will be no tax on an income upto Rs.5 lakh. Knowing your income tax slabs is very important so that you are able to carry out an efficient tax planning exercise well in time. Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. Income tax slabs 2020-21: Here are the new tax rates Under the new tax rates, there will be 10% tax levied for incomes between 5-7.5 lakh per annum, 15% for 7.5-10 lakh per annum bracket, 20% for 10-12.5 lakh per annum, 25% tax for income between 12.5 … In case of Business income, the option once exercised for a previous year shall by default be valid for that financial year and all subsequent years as well. This section allows deduction on the employer's contribution to the NPS account for a maximum of 10% of the employee's salary (salary here means basic plus dearness allowance). Income tax slabs as per Union Budget 2020 Pixabay The government has introduced new 'optional' tax slabs for individual taxpayers. There are many calculators available online to see which tax regime works best for your income level. For those individuals earning an income above Rs 50 lakh, a surcharge at the rate mentioned below is applicable. *The above calculations are excluding cess. The Union Budget 2020 introduced a new income tax regime with reduced tax rates for those willing to forego 70 tax-exemptions and deductions under it. Tax Exemptions Dropped under the New Tax Regime Announcement of slabs, tax rates for various slabs, and the exemptions allowed happening during the presentation of the Annual Budget.

(xv) It is also proposed to amend rule 3 of the Rules subsequently, so as to remove an exemption in respect of free food and beverage through vouchers provided to the employee, being the person exercising option under the proposed section, by the employer. As soon as your taxable income crosses the threshold of Rs 5lakhs the benefit u/s 87A will not be available and tax would be payable at 5% for the income above Rs 2.5 lakhs but upto Rs 5lakhs. New Income tax slab rates for FY 2020-21 (AY 2021-22) The tax calculated on the basis of such rates will be subject to health and education cess of 4%. Health and Education Cess of 4% is charged on all Income Tax slabs on the total amount of Income Tax+surcharge payable A tax rebate of Rs 12500 under Sec 87A of Income Tax Act is available for individuals (only resident Individuals) whose taxable income is up to Rs 5 lakh even in the new tax regime. A tax rebate of Rs 12500 under Sec 87A of Income Tax Act is available for individuals(only resident Individuals) whose taxable income is up to Rs 5 lakh even in the new tax regime. Union Budget 2020 has proposed a new tax structure by slashing income tax rates and rejigging the income tax slabs to reduce total tax liability by individuals.