IT slab rates for FY 2020-21

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:

1.	Income Tax Slab rates for FY 2020-21 under New Tax Regime
2.	Income Tax Slab rates for FY 2020-21 under Old Tax Regime
3.	Income Tax Slab rates for FY 2020-21 for senior citizens
4.	Income Tax Slab rates for FY 2020-21 for very senior citizens
5.	How to calculate Income Tax for FY 2020-21?
6.	Income Tax Slab for partnership firms
7.	Income Tax Slab for Domestic Companies

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

0.00

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

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

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)
Surcharge( subject to Marginal Relief )	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)
Surcharge( subject to Marginal Relief )	12% (If taxable income > Rs. 12 Crore)
Health & Education Cess	4% of (Income Tax + Surcharge).