Budget Changes for FY 2020-21

Created by Raghul David, Modified on Mon, 30 Jun at 6:35 PM by Product Content Team

The Union Finance Minister has presented the budget for FY 2020-21. A new regime is introduced in the budget FY 2020-21. These changes will have an impact on the Income Tax calculations w.e.f April 2020.

Based on the new budget, taxpayers (employees) can now select between the old regime and the new regime to calculate Income Tax. The old regime has older tax rates and exemption components as in the previous financial year. The new regime will have lower tax rates and a few numbers of exemptions.

The tax slab rates as per the Old and New regimes are as follows: 

 

Income Tax SlabsOld RegimeNew RegimeSurcharge Rate
₹0 - ₹2.5 lakh ExemptedExempted0
₹2.5 lakh - ₹5 lakh5%5%0
₹5 lakh - ₹7.5 lakh20%10% 0
₹7.5 lakh - ₹10 lakh20%15%0
₹10 lakh to ₹12.5 lakh30%20%0
₹12.5 lakh - ₹15 lakh30%25%0
₹15 lakh - ₹50 lakh30%30%0
₹50 lakh - ₹1 crore30%30%10
₹1 crore - ₹2 crore30%30%15
₹2 crore - ₹5 crore30%30%25
₹5 crores and Above30%30%37
Scenario 1: Assume that the taxpayer has invested in 80C, and 80D and has HRA. Tax under both regimes will be calculated as follows:
 
ParticularsOld Regime CalculationNew Regime Calculation
Gross Income850000850000

Tax on Employment: Sec 16(iii)

 

24000

Standard Deduction: Sec 16(ia)

500000

House Rent Allowance: Section 10(13A)

1000000

Leave Travel Assistance: Sec. 10(5)

600000

80C exemption

1500000

80D exemption

250000

Taxable Income

462600850000

Calculated tax

1063052500

Rebate u/s 87A

106300

Net tax + Cess

054600
Scenario 2: Assume that the taxpayer has not done any investments. Tax under both regimes will be calculated as follows:
ParticularsOld Regime CalculationNew Regime Calculation
Gross Income850000850000
Tax on Employment: Sec 16(iii)24000
Standard Deduction: Sec 16(ia)500000
Taxable Income797600850000
Calculated tax5952052500
Rebate u/s 87A00
Net tax + Cess6190154600
 

Additional Changes in Budget FY 2020-21:

Others Changes introduced in Budget 2020-2021:

  1. Section 80EEA extended: Loan date is extended from 31st March 2020 to 31st March 2021. An individual can claim additional interest of Rs.1.5 Lac (over and above the existing Rs. 2 Lac), if the individual has taken a loan between 1st April 2019 and 31st March 2021.
  2. If the Employer’s contribution towards PF, NPS, or any recognized superannuation exceeds INR 7,50,000 per annum, the excess amount would be treated as perquisite and will become taxable.

To know more, click here to find a copy of the finance bill.


Looking for More Support?

Find answers and insights across our resources. Refer to our detailed Knowledge Base for in-depth articles, explore our practical video guides, and stay informed with our latest product updates.


Want to explore more features on greytHR? Talk to Us! 

 

 

 

Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select at least one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article