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What are the Income Tax Slab rates for FY 2020-21?

Chandra Sekhar Reddy 
Updated on 30 June 2020

LinkedIn


Update:

Via Notification No. 35 dt. 24th June 2020, CBDT has extended the due date for Filing Income Tax Returns(ITR) for A.Y. 2021-22 upto 30th November 2020. ITR filing date for FY 2018-19 has been extended up to 31st July.

INCOME TAX CALCULATION UNDER OLD AND NEW TAX REGIMES

On 13th April 2020, the CBDT issued a circular to employers to obtain a declaration from their employees if they wish to opt for concessional slab rates for FY 2020-21 under the new Income Tax regime for the purpose of TDS deduction under section 192 under the new tax regime. For better understanding, to know the calculation of Income Tax under the Old and New tax regimes for FY 2020-21, and to take the decision whether we can select old tax structure or new tax structure, I am trying to write an article on this. This will be useful for salaried employees relating to India. This article covers the following:

IT slab rates for FY 2020-21

Income Tax slab rates for FY 2020-21 and AY 2020-21 under the New Tax Regime:

For all individuals:

    

Income Tax Slabs

Tax rate

Up to 2,50,000

NIL

2,50,001 to 5,00,000

5%

5,00,001 to 7,50,000

10%

7,50,001 to 10,00,000

15%

10,00,001 to 12,50,000

20%

12,50,001 to 15,00,000

25%

Above 15,00,000

30%

2. Health and Education cess @ 4% will be added to the “Tax payable amount after deduction of rebate u/s 87A".

3. Surcharge is levied on taxable income above Rs50,00,000

4. The individuals who are having taxable income of up to Rs5,00,000 will be eligible for tax rebate u/s 87A up to maximum of Rs12,500, and thereby no need to pay any tax either in old tax regime or new tax regime. (The detailed notes will be there below about sec 87A).

5. Under the new tax regime, the individuals are eligible for only one deduction u/s 80CCD(2) which allows deduction on the employer’s contribution to the National Pension Scheme (NPS) Account for maximum of 10% of the respective employee’s salary (Basic + DA).

6. Deductions and exemption disallowed in the new tax regime:

- Deduction u/s 80C, 80D, 80E, 80G, and 80U, etc. under chapter VI A
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA), etc. are not available in the new tax regime.
- The deductions and tax exempts under chapter VI A are mentioned below:

7. Eligibility to claim rebate u/s 87A :-

The following conditions should satisfy if we claim the benefit of rebate u/s 87A :-

(a) We should be a resident individual,
(b) Our total taxable income (after deductions, but before calculating Health and Education cess) does not exceed Rs12,500.

Then, we are not required to pay any income tax under the new tax regime:

    

Rebate u/s 87A under New tax regime :-

 

Total

Taxable income

Tax payable

Rebate available  u/s 87A

Tax payable before Health and Education cess calculated

 

260000

500

(2,50,001 to 2,60,000) x 5%

500

NIL

 
 

400000

7500

(2,50,001 to 4,00,000) x 5%

7,500

NIL

 
 

580000

28500

(2,50,000 to 5,00,000) x 5%

(5,00,001 to 5,80,000) x 15%

N/A

24500

(12,500 + 12,000)

 
 
 

Income Tax Slab rates for FY 2020-21 under the Old Tax Regime:

Income Tax Slab rates for individuals less than 60 years of age:

    

Tax Slab

Tax rate

Up to 2,50,000

NIL

2,50,001 to 5,00,000

5%

5,00,000 to 10,00,000

20%

Above 10,00,000

30%

Income Tax Slab rates for Senior Citizen (Aged 60 years or more but less than 80 years)

    

Tax Slab

Income Tax Rates

Upto Rs. 3,00,000

NIL

Rs. 3,00,000 - Rs. 5,00,000

5%

Rs. 5,00,000 - Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Surcharge( subject to Marginal Relief )

10% (If taxable income > Rs. 50 lacs)

15% (If taxable income > Rs. 1 Crore)

 

25% (If taxable income > Rs. 2 Crore)

 

37% (If taxable income > Rs. 5 Crore)

 

Health & Education Cess

4% of (Income Tax + Surcharge).

Income Tax Slab rates for Very Senior Citizen (Aged 80 years or more)

    

Income Tax Slab

Income Tax Rates

Upto Rs. 5,00,000

NIL

Rs. 5,00,000 - Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Surcharge( subject to Marginal Relief )

10% (If taxable income > Rs. 50 lacs)

15% (If taxable income > Rs. 1 Crore)

25% (If taxable income > Rs. 2 Crore)

37% (If taxable income > Rs. 5 Crore)

Health & Education Cess

4% of (Income Tax + Surcharge).

• Rebate under Section 87A Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs

    

Rebate u/s 87A under Old tax regime :-

 

Total  Taxable income

Tax payable

Rebate available  u/s 87A

Tax payable before  Health and  Education cess  calculated

 

260000

500

(2,50,001 to 2,60,000) x 5%

500

NIL

 
 

400000

7500

(2,50,001 to 4,00,000) x 5%

7,500

NIL

 
 

580000

28500

(2,50,000 to 5,00,000) x 5%

(5,00,001 to 5,80,000) x 20%

N/A

28500

(12,500 + 16,000)

 
 
 

How to calculate Income Tax under New Tax Regime and Old Tax Regime for FY 2020-21?

Example 1:

    

Particulars

Tax  Rate

Old Tax  Structure

New Tax  Structure

Total income or Gross Salary

 

480000

480000

Less : Standard deduction

 

50000

N/A

Income after standard deduction

 

430000

480000

Less : Deductions and Tax exemptions of Chapter VI A

 

80000

0

Taxable income

 

350000

480000

Calculation of Tax for Old tax structure:-

     

Up to 2,50,000

NIL

   

2,50,001 to 5,00,000

5%

7500

 

5,00,000 to 10,00,000

20%

   

Above 10,00,000

30%

   

Calculation of Tax for New Tax structure:-

     

Up to 2,50,000

NIL

   

2,50,001 to 5,00,000

5%

 

11500

5,00,001 to 7,50,000

10%

   

7,50,001 to 10,00,000

15%

   

10,00,001 to 12,50,000

20%

   

12,50,001 to 15,00,000

25%

   

Above 15,00,000

30%

   

Total Tax amount

 

7500

11500

Less : Tax rebate u/s 87 A

 

7500

11500

Total Taxable amount after rebate u/s 87 A

 

0

0

Add : Health and Education cess

4%

N/A

N/A

Total Tax Payable amount to Government

 

N/A

N/A

 
 

Note 1:

The income tax amount of Rs11,500 calculated as below :-

There is a taxable amount under New tax regime is Rs 4,80,000

    

On first 2,50,000

0%

0.00

From 2,50,001 to 4,80,000

(i.e. 2,30,000 x 5%)

5%

11500.00

   

11500.00

Note 2: Total Taxable amount after rebate u/s 87A is considered zero because both the old and New tax regimes are having the rebate u/s 87A is below Rs12,500 which is under eligible limit.

Example 2:

    

Particulars

Tax  Rate

Old Tax  Structure

New Tax  Structure

Total income or Gross Salary

 

860000

860000

Less : Standard deduction

 

50000

N/A

Income after standard deduction

 

810000

860000

Less : Deductions and Tax exemptions of Chapter VI A

 

235000

40000

Taxable income

 

575000

820000

Calculation of Tax for Old tax structure:-

     

Up to 2,50,000

NIL

0

 

2,50,001 to 5,00,000

5%

12500

 

5,00,000 to 10,00,000

20%

15000

 

Above 10,00,000

30%

   

Calculation of Tax for New Tax structure:-

     

Up to 2,50,000

NIL

 

0

2,50,001 to 5,00,000

5%

 

12500

5,00,001 to 7,50,000

10%

 

25000

7,50,001 to 10,00,000

15%

 

10500

10,00,001 to 12,50,000

20%

   

12,50,001 to 15,00,000

25%

   

Above 15,00,000

30%

   

Total Tax amount

 

27500

48000

Less : Tax rebate u/s 87 A

 

0

0

Total Taxable amount after rebate u/s 87 A

 

27500

48000

Add : Health and Education cess

4%

1100

1920

Total Tax Payable amount to Government

 

28600

49920

Benefit by choosing old tax regime is Rs.

21320

Note: The Health and Education cess @ 4% is calculated on “Total taxable amount after rebate u/s 87A".

Example 3:

    

Particulars

Tax  Rate

Old Tax  Structure

New Tax  Structure

Total income or Gross Salary

 

1700000

1700000

Less : Standard deduction

 

50000

N/A

Income after standard deduction

 

1650000

1700000

Less : Deductions and Tax exemptions of Chapter VI A

 

210000

10000

Taxable income

 

1440000

1690000

Calculation of Tax for Old tax structure:-

     

Up to 2,50,000

NIL

0

 

2,50,001 to 5,00,000

5%

12500

 

5,00,000 to 10,00,000

20%

100000

 

Above 10,00,000

30%

132000

 

Calculation of Tax for New Tax structure:-

     

Up to 2,50,000

NIL

 

0

2,50,001 to 5,00,000

5%

 

12500

5,00,001 to 7,50,000

10%

 

25000

7,50,001 to 10,00,000

15%

 

37500

10,00,001 to 12,50,000

20%

 

50000

12,50,001 to 15,00,000

25%

 

62500

Above 15,00,000

30%

 

57000

Total Tax amount

 

244500

244500

Less : Tax rebate u/s 87 A

 

0

0

Total Taxable amount after rebate u/s 87 A

 

244500

244500

Add : Health and Education cess

4%

9780

9780

Total Tax Payable amount to Government

 

254280

254280

Benefit either by choosing old or New tax regime is Rs.

0

Note:

We understand that the old tax regime is beneficial for us when the below conditions are fulfilled ;-

(a) Total taxable income is more than Rs15,00,000, and

(b) The total deductions and exemptions of the old tax regime are should be more than Rs2,50,000 (including standard deduction), comparing to the deductions under new tax regime which is applicable for only u/s80CCD(2).

If the total taxable income is below Rs15,00,000 then the above said deductions under old tax structure i.e. 2,50,000 gradually decrease, comparing to the deductions under new tax regime which is applicable for only u/s80CCD(2).

Income Tax Slab Rates for Partnership Firm for FY 2020-21

    

Particular

Income Tax

Income Tax

30%

Surcharge( subject to Marginal Relief )

12% (If taxable income > Rs. 1 Crore)

Health & Education Cess

4% of (Income Tax + Surcharge).

Income Tax Slab rates for Domestic Companies for FY 2020-21:

• Claiming Exemptions and
• Turnover in 2017-18 upto Rs. 400 crores

    

Particular

Income Tax

Income Tax

25%

Surcharge( subject to Marginal Relief )

7% (If taxable income > Rs. 1 Crore)

12% (If taxable income > Rs. 12 Crore)

Health & Education Cess

4% of (Income Tax + Surcharge).

• Domestic Company (2) -
• Claiming Exemptions and
• Turnover in 2017-18 exceeding Rs. 400 crores

    

Particular

Income Tax

Income Tax

30%

Surcharge( subject to Marginal Relief )

7% (If taxable income > Rs. 1 Crore)

12% (If taxable income > Rs. 12 Crore)

Health & Education Cess

4% of (Income Tax + Surcharge).

• Domestic Manufacturing Company (3) –
• NOT Claiming Exemptions
• U/s 155BAA

    

Particular

Income Tax

Income Tax

22%

Surcharge

10% (If taxable income > Rs. 1 Crore)

Health & Education Cess

4% of (Income Tax + Surcharge).

• Domestic Manufacturing Company (4) –
• NEW Company
• U/s 155BAB

    

Particular

Income Tax

Income Tax

15%

Surcharge

10% (If taxable income > Rs. 1 Crore)

Health & Education Cess

4% of (Income Tax + Surcharge).

Hope this article gives you basic information to opt the suitable tax structure to pay Income Tax.


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