Income Tax Slabs in Budget 2020 AY 2021-22 and its impact

Income Tax Slabs in Budget 2020 AY 2021-22 and its impact In the Budget 2020 for Financial Year 2020-21 i.e Assessment Year, 2021-22 presented by FM M

Income Tax Slabs in Budget 2020 AY 2021-22 and its impact

In the Budget 2020 for Financial Year 2020-21 i.e Assessment Year, 2021-22 presented by FM Mrs Nirmala Sitaraman Many changes have been made tax slab, DDT many Exemption have been withdrawn but as of now, we discuss the impact of the Tax slab changes on Taxpayer.
FM introduces a new optional income tax slab for FY 2020-2021.

Budget Files download Links are given at the end of the article.

Income Tax Slab for HUFs & Individuals (below 60 years – for both Men & Women)

Taxable Income Slab	Existing Tax Rates under the Old Regime	New Tax Rates in the New Regime
0-2.5 Lakh	Exempt	Exempt
2.5-5 Lakh	5%	5%
5-7.5 Lakh	20%	10%
7.5-10 Lakh	20%	15%
10-12.5 Lakh	30%	20%
12.5-15 Lakh	30%	25%
Above 15 Lakh	30%	30%

Surcharge:

1. 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
2. 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
3. 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
4. 37% surcharge on income tax if the total income exceeds Rs 5 crore
5. Health and Education Cess: 4% cess on income tax including surcharge

In the Tax rates, there are no changes in 87A Rebate i.e. If NTI as per the old regime or GTI as per the new regime is below 5 Lakhs then there will be no tax liability as Rs 12,500/- rebate will be deducted from tax liability so if Gross Total Income under the new regime or Net Total Income under old regime is more then 5 Lakhs then as per tax slab only income up to Rs 2.5 lakhs will be exempted.

No Deduction under Chapter Vi is allowed in the New regime but it is optional for the taxpayer, it depends on the taxpayer who can opt for either of the options.

Income tax slab for senior citizens (60 years to less than 80 years old) For both men & women

Income Slab	Existing Rates under the Old Regime	New Tax Rates under the New Regime
0 to 3 Lakh	0%	0%
3 - 5 Lakh	5%	5%
5 - 7.5 Lakh	20%	10%
7.5 -10 Lakh	20%	15%
10 - 12.50 Lakh	30%	20%
12.50 -15 Lakh	30%	25%
Above 15 Lakh	30%	30%

Surcharge:

1. 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
2. 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
3. 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
4. 37% surcharge on income tax if the total income exceeds Rs 5 crore
5. Health and Education Cess: 4% cess on income tax including surcharge

Income tax slab for Very senior citizens (80 years or more) (both men & women)

Income Slab	Tax Rates under the Old Regime	Tax Rates under the New Regime
0 - 5 Lakh	0%	0%
5 - 7.5 Lakh	20%	10%
7.5 - 10 Lakh	20%	15%
10 - 12.5 Lakh	30%	20%
12.5 - 15 Lakh	30%	25%
Above 15 Lakh	30%	30%

Surcharge:

1. 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
2. 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
3. 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
4. 37% surcharge on income tax if the total income exceeds Rs 5 crore

if you are claiming the deductions other than chapter vi then you should stick to old regime otherwise if you are claiming only under chapter VI then shift to New Regime will benefit you.

We can understand the implications via the below example
1. Let's say Mr Ram has a total income of Rs 650000 and has invested in 80C so under the old regime so up to rs 6.5 lakhs we have no tax liability but under the new regime, we have to pay tax.

2. Let's say Mr Ram has a Gross Total Income (GTI) of Rs 16,00,000/- (16 Lakhs) then the calculations will be as follows:

Details	Under the old Regime	Under the new regime
Total Income	1600000	1600000
Gross Income	1600000	1600000
Deductions*
Deduction u/s 80C	-150000	0
Deduction u/s 80D	-25000	0
Housing Loan u/s 24	-200000	0
Income Taxable	1225000	1600000
Tax	180000	217500
Education Cess @4%	7200	8700
Total Tax	187200	226200
Income at disposal after invest	1037800	1198800
Income at disposal no invest	1212800	1373800

In the Above Calculation, we have assumed that the assessee has invested and fulfilled full limit u/s 80C, 80D and has a home loan interest amount of Rs 200000/-

Also Read: Full list of Exemption not allowed in the new tax regime 

As you can see the difference of Rs 39000/- Benefits the Taxpayer if he opts for the old tax regime. As per New Tax Compliances if you are claiming deductions other than chapter vi then you should stick to the old regime otherwise if you are claiming only under chapter VI then shifting to New Regime will benefit you.
You can see the Gross Income Bifurcation slab-wise calculations below :

slab	old Income breakup	new Income breakup	tax under the old regime	tax under the new regime
NTI	1225000	1600000	-	-
0-2.5 Lakh	250000	250000	0	0
2.5-5 Lakh	250000	250000	12500	12500
5-7.5 Lakh	250000	250000	50000	25000
7.5-10 Lakh	250000	250000	50000	37500
10-12.5 Lakh	225000	250000	67500	50000
12.5-15 Lakh	0	250000	0	62500
Above 15 Lakh	0	100000	0	30000
	1225000	1600000	180000	217500

If the assessee does not have a home loan then conditions are different, tax calculation can be seen below:

Details	Under the old Regime	Under the new regime
Total Income	1600000	1600000
Gross Income	1600000	1600000
Deductions
Deduction u/s 80C	-150000	0
Deduction u/s 80D	-25000	0
Housing Loan u/s 24	0	0
Income Taxable	1425000	1600000
Tax	240000	217500
Education Cess @4%	9600	8700
Total Tax	249600	226200
Income at disposal after invest	1175400	1198800
Income at disposal no invest	1350400	1373800

Net Benefit of Tax Rs 23400/-
If you have any queries you can comment below.