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Under New Tax Regime

Comparative analysis on budget 2020 for Salaried Individual

Case I - Salaried individual those who are not claiming any exemptions or deductions

Amount (Rs.)

       

Gross salary

750,000

1,000,000

1,250,000

1,500,000

2,000,000

       

Tax

       

Rs.2,50,001-5,00,000 5%

12,500

12,500

12,500

12,500

12,500

Rs.5,00,001-7,50,000 10%

25,000

25,000

25,000

25,000

25,000

Rs.7,50,001-10,00,000 15%

 

37,500

37,500

37,500

37,500

Rs.10,00,001-12,50,0000 20%

   

50,000

50,000

50,000

Rs.12,50,001-15,00,000 25%

     

62,500

62,500

Rs.15,00,001-20,00,000 30%

       

150,000

Tax Payable

37,500

75,000

125,000

187,500

337,500

Health Education Cess 4%

1,500

3,000

5,000

7,500

13,500

Total Tax Payable

39,000

78,000

130,000

195,000

337,500

Existing Tax Regime

Case I - Salaried individual those who are not claiming any exemptions or deductions

Amount (Rs.)

Gross salary

750,000

1,000,000

1,250,000

1,500,000

2,000,000

       

Tax

       

Rs 2,50,001-5,00,000 5 %

12,500

12,500

12,500

12,500

12,500

Rs.5,00,001-10,00,000 20%

50,000

100,000

100,000

100,000

100,000

Rs.10,00,001-and above 30%

   

75,000

150,000

300,000

Tax Payable

62,500

112,500

187,500

262,500

412,500

Health Education Cess 4%

2,500

4,500

7,500

10,500

16,500

Total Tax Payable

65,000

117,000

195,000

273,000

412,500

Excess Tax in new Regime

(26,000)

(39,000)

(65,000)

(78,000)

(75,000)

Case II -  Salaried individual claiming only deductions or exemptions. under sections 80C, 80D and standard deduction

Amount (Rs.)

Gross salary

750,000

1,000,000

1,250,000

1,500,000

2,000,000

Less: Standard Deduction

50,000

50,000

50,000

50,000

50,000

Total Income

700,000

950,000

1,200,000

1,450,000

1,950,000

Less: 80C

150,000

150,000

150,000

150,000

150,000

80D

25,000

25,000

25,000

25,000

25,000

Net Total Income

525,000

775,000

1,025,000

1,275,000

1,775,000

Tax on Total Income

17,500

67,500

120,000

195,000

345,000

Health Education Cess 4%

700

2,700

4,800

7,800

13,800

Total Tax Payable

18,200

70,200

124,800

202,800

358,800

Excess Tax in new Regime

20,800

7,800

5,200

(7,800)

(21,300)

Case III- Salaried individual claiming more exemptions/deduction, i.e. under sections 80C, 80D, standard deduction and HRA exemption

Amount (Rs.)

       

Gross salary

750,000

1,000,000

1,250,000

1,500,000

2,000,000

Less: HRA

150,000

200,000

250,000

300,000

350,000

Less: Standard Deduction

50,000

50,000

50,000

50,000

50,000

Total Income

550,000

750,000

950,000

1,150,000

1,600,000

Less: 80C

150,000

150,000

150,000

150,000

150,000

80D

25,000

25,000

25,000

25,000

25,000

Net Total Income

375,000

575,000

775,000

975,000

1,425,000

Tax on Total Income

6,250

27,500

67,500

107,500

240,000

Rebate U/S 87A

(For income upto Rs 5 lakhs Tax Rebate upto Rs 12,500)

6,250

     

Health Education Cess 4%

-

1,100

2,700

4,300

9,600

Total Tax Payable

-

28,600

70,200

111,800

249,600

Excess Tax in new Regime

39,000

49,400

59,800

83,200

87,900

                       

Note:

 

1. If the salaried employee is claiming deductions under section 80C, 80D (medical premium), HRA exemption, LTA exemption and deduction of interest paid on housing loan taken for self occupied property up to permissible limits, he is likely to be better off in the existing personal tax regime. A high earner claiming only these deductions is likely to save tax under the new regime but lower income earners up to gross salary of Rs 12.5 lakh will end up paying more tax. To see if the new regime is beneficial, each individual will have to make their own comparative calculations. It will depend on the level of deductions and exemptions you are claiming at the moment.

 

2. This new tax regime is the option to those people who are unable to avail exemptions or deductions. Those who are new in job,one who has not yet planned to buy a house, he might be putting little money in PF (provident fund) and insurance. He may find that, depending on his income, this new scheme is better.

3. A person can freely opt in scheme and opt out of the scheme. The tax Rates will be applicable as per the Option exercised at the time of filing of Return every year. Income Tax Return has to be filed by Due Date. If ITR is late, then Tax payable at Normal rate.

The author is a member of the CPA Institute, Australia and member of Institute of Chartered Accountants of India and can also be reached at casusmitadutta@gmail.com.

Disclaimer: The facts and opinions written in this column are those of the author and have been prepared on the basis of relevant provisions and information available at the time of preparation. The article does not constitute any professional advice or a formal recommendation. The author has undertaken the utmost care to disseminate true and correct views and does not accept liability of any errors or omissions.


 

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