We are in a new financial year and it is time for tax planning for year 2020-2021. However, unlike
previous years, there is a new dimension to the tax calculation.
This year government has introduced a new tax structure while also retaining the old tax structure.
The option is with the tax payers to decide which tax structure they wish to use and pay taxes. Below
are details of the new tax structure.
New tax structure :
Upto 2.5 Lakhs -no tax
2.5 – 5. 0 Lakhs – 5% of amount exceeding 2.5 Lakhs
5.0- 7.50 Lakhs -10 % of amount exceeding 5 lakhs +Rs 12,500
7.50-10.0 Lakhs- 15% of amount exceeding 7.5 Lakhs +Rs 37,500
10.0-12.50 Lakhs- 20% of amount exceeding 10 Lakhs + Rs 75,000
12.50-15 Lakhs-25% of the amount exceeding 12.5 Lakhs +Rs 1,25,000
15.0 Lakhs and more – 30% of the amount exceeding 15 Lakhs +1,87,500
* Surcharge and Cess additional.
If Total income is less than 5 Lakhs, then there is Rebate under 87A applicable and hence no tax
To avail the new tax slab, the tax payer will have to forego the benefits of all exemptions ( listed
- Exemptions under section 10 allowances such as HRA, LTA, Children Education, Uniform,Research/ Professional /Books etc
- Investment under section Chapter VI-A Section 80C, 80CCC, 80CCD such as PF, PPF, LIC,Mutual Find, NPS, FD of more than 5 years, ULIP, Home loan Principal etc
- Other deductions under chapter VI such as 80D (Mediclaim), 80 E (Repayment of Education loan), 80U (Self Disability), 80 DD (Medical expense on specified disease of dependent), 80G (Donation), 80TTA (interest on savings account)
- Interest on home loan (section 24)
- Standard Deduction
- Professional Tax
Old tax structure:
Up to 2.50 Lakhs – no tax
2.5- 5.0 Lakhs- 5% of amount exceeding 2.5 Lakhs. If Taxable income is less than 5 Lakhs, then no tax.
5.0- 10.0 Lakhs -20 % of amount exceeding 5 lakhs +Rs 12,500
10.0 Lakhs and more – 30% of the amount exceeding 10 Lakhs +1,12,500
* Surcharge and Cess additional
For more details follow attachment