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 Slabs | Old Regime | New Regime | Surcharge Rate |
₹0 - ₹2.5 lakh | Exempted | Exempted | 0 |
₹2.5 lakh - ₹5 lakh | 5% | 5% | 0 |
₹5 lakh - ₹7.5 lakh | 20% | 10% | 0 |
₹7.5 lakh - ₹10 lakh | 20% | 15% | 0 |
₹10 lakh to ₹12.5 lakh | 30% | 20% | 0 |
₹12.5 lakh - ₹15 lakh | 30% | 25% | 0 |
₹15 lakh - ₹50 lakh | 30% | 30% | 0 |
₹50 lakh - ₹1 crore | 30% | 30% | 10 |
₹1 crore - ₹2 crore | 30% | 30% | 15 |
₹2 crore - ₹5 crore | 30% | 30% | 25 |
₹5 crores and Above | 30% | 30% | 37 |
Particulars | Old Regime Calculation | New Regime Calculation |
Gross Income | 850000 | 850000 |
Tax on Employment: Sec 16(iii)
|
2400 | 0 |
Standard Deduction: Sec 16(ia) |
50000 | 0 |
House Rent Allowance: Section 10(13A) |
100000 | 0 |
Leave Travel Assistance: Sec. 10(5) |
60000 | 0 |
80C exemption |
150000 | 0 |
80D exemption |
25000 | 0 |
Taxable Income |
462600 | 850000 |
Calculated tax |
10630 | 52500 |
Rebate u/s 87A |
10630 | 0 |
Net tax + Cess |
0 | 54600 |
Particulars | Old Regime Calculation | New Regime Calculation |
Gross Income | 850000 | 850000 |
Tax on Employment: Sec 16(iii) | 2400 | 0 |
Standard Deduction: Sec 16(ia) | 50000 | 0 |
Taxable Income | 797600 | 850000 |
Calculated tax | 59520 | 52500 |
Rebate u/s 87A | 0 | 0 |
Net tax + Cess | 61901 | 54600 |
Additional Changes in Budget FY 2020-21:
Others Changes introduced in Budget 2020-2021:
- 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.
- 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.
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Related Links:
❓FAQs :
- To read more about Budget changes for FY 2023-24, click here.
- To read more about Budget changes for FY 2020-21, click here.
?Documentation :
- To learn more about the Tax Slabs of budget changes, click here.
- To learn more about the recent Budget changes for FY 2023-24, click here.
▶Video :
- To watch a video on Budget changes for FY 2023-24, click here.
- To watch a video on Budget changes for FY 2020-21, click here.
?Product Update- To read about the product update, click here.
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