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India’s Minister of Finance and Corporate Affairs Smt. Nirmala Sitharaman, on 1, 2020 tabled the Union Budget for the FY 2020-21 in the Lok Sabha february. She announced an income that is new regime besides the current one, to present relief to specific taxpayers.

Nonetheless, this brand new regime is optional as well as the taxpayers can decide between your old additionally the brand brand brand brand new, basis their suitability. The regime that is new foregone particular deductions and exemptions. The income tax prices have now been paid off, but taxpayers will need to forego exemptions when selecting the tax regime that is new.

Why don’t we take a good look at the income tax rates of an individual whoever age is not as much as 60 years under both the regimes:

tax slabs income tax price (Old Regime) income tax rate ( brand New Regime)
as much as 2.5 lakhs Nil Nil
2.5-5 lakhs 5% 5%
5-7.5 lakhs 20% 10%
7.5-10 lakhs 20% 15%
10-12.5 lakhs 30% 20%
12.5-15 lakhs 30% 25%
Above 15 lakhs 30% 30%

From the above mentioned dining dining table, it’s obvious that the taxation prices are low in the brand new regime as compared to regime that is old. But, there was a summary of exemptions and deductions that includes become conceded by the taxpayers. This list includes it is not restricted towards the after:

i) Leave Travel Allowance (LTA)

iii) Home Lease Allowance (HRA)

iv) Uniform Allowance

v) Helper allowance

vi) expert income tax

vii) Standard deduction

viii) Other allowances that are special 10(14)]

ix) Interest on housing loan (part 24) on self occupied home

x) Chapter VI-A deduction (80C,80D, 80E and so forth) (Except part 80CCD(2) and 80JJA)

Savings calculation according to earnings

PARTICULARS Old Tax Regime(Rs.)
Gross Income 15,00,000
Less: Deductions-
U/S 80C (Investment in PPF) 1,50,000
U/S 80D (healthcare Insurance – Self, spouse, children) 25,000
U/S 80TTA (Interest earnings from checking account for a bank) 10,000
Taxable money 13,15,000
At normal price, from the earnings of Rs. 13,15,000:
Up to 2.5 lakhs Nil
2.5-5 lakhs @5% 12,500
5-7.5 lakhs @20per cent 50,000
7.5-10 lakhs @20% 50,000
10-12.5 lakhs @30% 75,000
12.5-13.15 lakhs @30% 19,500
complete 2,07,000
Add: Cess @4% on Rs. 2,07,000 8,280
Tax Liability 2,15,280