Income Tax New Slab 2020

Table of Contents

What is income tax

An income tax is a imposed on individual s or entities (taxpayers) that various with respective income  or profits (taxable income) taxation rates may very by type or characteristics of the taxpayers. The tax rate may increase as taxable income increase (referred to as graduated or progressive rates).

income tax

Income Tax Slabs 2020 & Tax Rates in India for FY 2020-21 – Budget 2020 Revised IT Slabs (AY 2021-22)

In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab.

Such tax slabs tend to undergo a change during every budget.

Further, Budget 2020 has announced a new income tax regime following which individuals will have the option to pay taxes as per new tax slabs from FY 2020-21 onwards.

There are three categories of individual taxpayers:

  • Individuals (below the age of 60 years) which includes residents as well as non-residents
  • Resident Senior citizens (60 years and above but below 80 years of age)
  • Resident Super senior citizens (above 80 years of age)

Income Tax Slabs for individuals below 60 years of age under new tax regime – Applicable to FY 2020-21

Income Tax Slab             Tax Rate

Up to Rs 2.5 lakh                            NIL

Rs 2.5 lakh to Rs 5 lakh                             5% (Tax rebate of Rs 12,500 available under                                                                                           section 87A)

Rs 5 lakh to Rs 7.5 lakh                             10%

Rs 7.5 lakh to Rs 10 lakh                          15%

Rs 10 lakh to Rs 12.5 lakh                                    20%

Rs 12.5 lakh to Rs 15 lakh                                    25%

Rs 15 lakh and above                                30%

  • The tax calculated on the basis of such rates will be subject to health and education cess of 4%.
  • Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will have to give up certain exemptions and deductions.
  • Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
  1. Leave Travel Allowance (LTA)
  2. House Rent Allowance (HRA)
  3. Conveyance
  4. Daily expenses in the course of employment
  5. Relocation allowance
  6. Helper allowance
  7. Children education allowance
  8. Other special allowances [Section 10(14)]
  9. Standard deduction
  10. Professional tax
  11. Interest on housing loan (Section 24)
  12. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)

Points to remember while opting for the new tax regime:

  • Option to be exercised on or before the due date of filing return of income for AY 2021-22
  • In case of a taxpayer having business income, the option once exercised can be withdrawn only once. Further, if the taxpayer withdraws the option, he will never be able to opt-in the option again.

According to the current income tax laws in India, the income tax rate on resident individuals varies based on their age. There are different tax slabs applicable to the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual, aged below 60 years, with an income less than Rs 2.5 lacs is exempt from paying income tax.

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This Post Has 9 Comments

  1. Bhanupriya

    👍

  2. Varsha kumawat

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  3. Shraddha

    Good

    1. Yukta

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  7. Nimesh luhar

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  8. Tanzila Qureshi

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