Any individual looking to move to the new tax regime should bear in mind that he/she will have to give up the tax exemptions that were available under the old regime. Those who do not have tax-saving investments / exemptions and are not willing to make the same anytime sooner. Health and Education Cess of 4% is charged on all Income Tax slabs on the total amount of Income Tax+surcharge payable A tax rebate of Rs 12500 under Sec 87A of Income Tax Act is available for individuals (only resident Individuals) whose taxable income is up to Rs 5 lakh even in the new tax regime. Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. Budget 2020 has proposed to introduce new income tax slabs sans 70 deductions and tax exemptions. Tax Exemptions Dropped under the New Tax Regime With the new tax regime, the options for tax saving with the help of deductions have been reduced. Let us understand this with the help of an example. Knowing your income tax slabs is very important so that you are able to carry out an efficient tax planning exercise well in time. New Optional Income Tax Rates, Exemptions & Deductions Availability analysis, New Optional income tax regime for Individuals and HUF has been proposed in the budget 2020. new one or old one? Rs 3,00,000 for senior citizens As soon as your taxable income crosses the threshold of Rs 5lakhs the benefit u/s 87A will not be available and tax would be payable at 5% for the income above Rs 2.5 lakhs but upto Rs 5lakhs. Option once exercised can be withdrawn only once. Some of the common exemptions especially the ones under Sec 80C that will not be allowed if you opt for the new tax regime are, The Finance Act 2020 has allowed some deductions as below to be admissible as earlier. ICICI Prudential Bluechip Fund Direct-Growth, Here are the latest income tax slabs and rates. Transport Allowance granted to a divyang (disabled) employee to meet the expenditure for the purpose of commuting between place of residence and place of duty, Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office, Any Allowance granted to meet the cost of travel on tour or on transfer. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. (b) Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office; (c) Any Allowance granted to meet the cost of travel on tour or on transfer; (d) Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. This scheme provides an option to the tax-payers to pay tax at reduced rates subject to fulfillment of certain conditions.

He is the co-founder & CEO of Tax2Win.in. 70 exemptions were dropped from the Income Tax exemption list. To claim benefit of proposed tax rates, option is exercised, on or before the due date of return of income u/s 139(1). After moving to the new regime, they will be able to make the choice to move to the old regime only once in their lifetime. In case of assessee ceases to have business income, option can be exercised again. The option shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other applicable provisions of the Act. The only deduction that is still available under the Section 80C benefits is the benefit under Sec 80CCD (2). Will proposed new income tax slabs rates benefit senior citizens? However, individuals having net taxable income up to Rs 5 lakh will be eligible for rebate up to Rs 12, 500 under both the tax regimes. Notice for Defective Return u/s 139(9): How to Respond? Which income tax regime to adopt? Instead of five different tax … Here’s the answer, Senior citizens of advanced age , say above 75,suffering from critical illness like cancer should be exempted from tax and filing of return as they depend on others for survival through painful treatments.The government will do well to extend this help in the twilight of their lives. Your Reason has been Reported to the admin. But, if the income of such taxpayer does not exceed Rs 5 lakhs then no tax would be payable after availing the benefit of rebate u/s 87A. The basic exemption limit for an individual depends on his/her age as well as his/her residential status. House rent allowance (HRA): Varying amounts depending upon the salary structure and rent paid, Housing loan interest allowed under Section 24 of up to Rs 3.5 lakh for those claiming under affordable housing, Rs 2 lakh for others, Leave travel allowance: Tax-free if claimed once in a block of two years, Medical insurance premium: Rs 25,000 (Rs 50,000 for parents and senior citizens), Children Education Allowance: Rs 2250 per child/ Rs 6750 for hostel subsidy The basic exemption limit has still been kept unchanged i.e. Union Budget 2020 has proposed a new tax structure by slashing income tax rates and rejigging the income tax slabs to reduce total tax liability by individuals. It will be applicable from the FY 2020-21(AY 2021-22). In case of Business income, the option once exercised for a previous year shall by default be valid for that financial year and all subsequent years as well. Normally more suitable for New employees, low tax bracket earners or senior citizens willing to have greater liquidity in hand at the old age. Luckily the surcharge rates remain the same even in the new tax regime. This new tax system has been made optional and continues to co-exist with the old one that comprises of three tax rates and various tax exemptions and deductions available to a taxpayer. New Optional income tax regime for Individuals and HUF has been proposed in the budget 2020.

Before getting to know the income tax rates for particular slabs for the ongoing financial year, let us know the individual categories of taxpayers. Income tax slabs as per Union Budget 2020 Pixabay The government has introduced new 'optional' tax slabs for individual taxpayers. This will alert our moderators to take action. The tax rates for this group are slightly different under the old regime. (Loss under the head income from house property for the rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law); (ix) Additional depreciation under section 32(1)(iia); (x) Deductions under section 32AD, 33AB, 33ABA; (xi) Various deduction for donation for or expenditure on scientific research contained in section 35(2AA) or 35(1)(ii) or (iia) or (iii); (xii) Deduction under section 35AD or section 35CCC; (xiii) Deduction from family pension under section 57(iia); (xiv) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). This is based on various slabs as decided by the GOI. Let’s get a comparative study of the pros and cons of both tax slabs available to the taxpayer, Your tax outflow will be effected in a below-depicted manner under the new tax structure. To know more about the existing tax slab and the new optional tax slabs introduced under section 115BAC let read further, After the Budget 2020 people are getting confused that there will be no tax on an income upto Rs.5 lakh. Option is also available for persons having the business income subject to certain conditions. Let’s understand this proposed scheme in detail-, As per Budget 2020 the individual and HUF taxpayers including, Are allowed to make a choice of income tax slab on the basis of which they will like to pay taxes from FY 2020-21. Income tax slabs 2020-21: Here are the new tax rates Under the new tax rates, there will be 10% tax levied for incomes between 5-7.5 lakh per annum, 15% for 7.5-10 lakh per annum bracket, 20% for 10-12.5 lakh per annum, 25% tax for income between 12.5 … Individuals in the age group of 60-80 are categorized as Senior Citizens. Form 16 Meaning, Format & How to Upload, Complete Guide on Rent Slips/Receipts and Claim HRA Tax, Notice u/s 143-(1) Intimation from Income Tax Department. (a) Transport Allowance granted to a divyang employee to meet the expenditure for the purpose of commuting between place of residence and place of duty. Very good useful information for salarised and other tax assessors, Inciting hatred against a certain community, Has working from home increased your tax liability? Rs 5,00,000 for super senior citizens, Under the new tax regime there is only one exemption limit of Rs 2,50,000 which is applicable for both individuals and HUF, Budget 2020 : New Income Tax Slab Rate for Individuals u/s 115BAC. Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty. For those individuals earning an income above Rs 50 lakh, a surcharge at the rate mentioned below is applicable. there will be no tax upto Rs 2.5lakhs for an individual/HUF. It will be applicable from the FY 2020-21(AY 2021-22). Should you say goodbye ELSS mutual funds, welcome new income tax slabs? The individuals aged 80 and above are categorized as Super Senior Citizens and any income of up to Rs 5 lakh is exempt from tax.

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