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

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In the Budget 2020 for Financial Year 2020-21 i.e Assessment Year, 2021-22 presented by FM Mrs Nirmala Sitaraman Many changes have bee...

Income Tax Slabs in Budget 2020 AY 2021-22 FY 2020-21 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Year, 2021-22 presented by FM Mrs Nirmala Sitaraman Many changes have been made tax slab, DDT many Exemption have been withdrawn but as of now, we discuss the impact of Tax slab changes on Taxpayer.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 in no changes in 87A Rebate i.e. If NTI as per old regime or GTI as per 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 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 New regime but it is optional for the taxpayer, it depends on the taxpayer who can opt 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 say Mr Ram having total income of Rs 650000 and have 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 say Mr Ram having Gross Total Income (GTI) 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 assessee has invested and fulfil full limit u/s 80C, 80D and having home loan interest amount Rs 200000/-

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

As you can see the Difference in Rs 39000/- Benefit to Taxpayer if he opts for old tax regime. As per New Tax Compliances 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.
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 query you can comment below.

Key to Budget Documents
Budget Highlights (Key Features)
Budget Speech
Budget at a Glance
Finance Bill

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