Income Tax Slabs 2021 & Tax Rates for FY 2020-21

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  •  Budget 2021 update :It has been proposed to exempt the senior citizens from filing income tax returns if pension income and interest income are their only annual income source. Section 194P has been newly inserted to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.

 

  • Budget 2021 Live Update will be announced on 1st February 2021 addressed by FM Nirmala Sitharaman

 

Income tax is levied on the income earned by all the individuals, HUF, partnership firms , LLPs and Corporates as per the Income tax Act of India. In the case of individuals, tax is levied as per the slab system if their income is above the minimum threshold limit (known as basic exemption limit ). 


Income Tax Slab Rates for F.Y 2020-21 (A.Y 2021-22)

    a. Income tax slab rate for new tax regime F.Y 2020-21 - Why it is optional? 

     In this new tax regime, tax payers has an OPTION to choose either:

            1.To pay income tax at lower rates as per New tax regime on the condition that they forgo certain permissible exemptions and deductions available under income tax, Or

            2. To continue to pay taxes under the existing tax rates. The assessee can avail rebates and exemptions by staying in the old regime and paying tax at the existing higher rate. 

      Income tax slab rate applicable for new tax regime (F.Y 2020-21)


 Note:

  • Please note that the tax rates in the New tax regime is the same for all categories of Individuals, i.e Individuals & HUF upto 60 years of age, Senior citizens above 60 years upto 80 years , and Super senior citizens above 80 years. Hence no increased basic exemption limit benefit will be available to senior and super senior citizens in the New Tax regime.
  • Individuals with Net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A i.e tax liability will be nil of such individual in both – New and old/existing tax regimes.
  • Basic exemption limit for NRIs is of Rs 2.5 Lakh irrespective of age.
  • Additional Health and Education cess at the rate of 4 % will be added to the income tax liability in all cases. (increased from 3% since FY 18-19)
    • Surcharge applicable as per tax rates below in all categories mentioned above:
      1. 10% of Income tax if total income > Rs.50 lakh
      2. 15% of Income tax if total income > Rs.1 crore
      3. 25% of Income tax if total income > Rs.2 crore
      4. 37% of Income tax if total income > Rs.5 crore
     
    b. Income tax slab rate for old tax regime F.Y 2020-21






 

Note:

1. Income tax exemption limit is up to Rs.5,00,000 for super senior citizen aged above 80 years for FY  2020-21.

2. An additional 4% Health and education cess will be applicable on the tax amount calculated as above.

  • Surcharge applicability:

    1. 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore.

    2. 15% of income tax, where the total income exceeds Rs.1 crore

       

 Invest now and save up to Rs.46,800 on taxes.


   c. Conditions for opting New Tax Regime

 The tax payer opting for concessional rates in the new tax regime will have to forgo certain exemtions and deductions available in the existing old regime. In all there are 70 deductions & exemptions that are not allowed, out of which the most commonly used are listed below:

 

List of common exemptions and deductions "NOT ALLOWED" under new tax regime

  1. Leave Travel allowance (LTA)
  2. House Rent allowance (HRA)
  3. Conveyance allowance
  4. Daily Expenses in the course of Employment
  5. Relocation allowance
  6. Helper allowance
  7. Children education allowance
  8. Other special allowance [Section 10 (14)]
  9. Standard deduction on salary
  10. Professional Tax
  11. Interest on housing loan (section 24)
  12. Deduction under chapter VI-A (80C, 80D, 80E and so on) Except section 80CCD(2) 


List of deductions "ALLOWED" under new tax rate regime

  1. Transport allowance to specially abled people
  2. Conveyance allowance for expenditure incurred for traveling to work 
  3. Investment in notified pension scheme under section 80CCD(2)
  4. Deductions for employment of new employees under section 80JJA
  5. Depreciation u/s 32 of the income tax act except additional depreciation
  6. Any allowance for traveling for employment or on transfer

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