Calculate & Compare Income Tax as Per Old and New Regime

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The budget 2020 saw the Finance Minister Mrs. Nirmala Sitraman announce a new tax regime with more tax slabs and lower tax rates. The finance minister gave taxpayers an option between the existing regime and the new one.

If you have any of the following doubts

1. Which Tax Regime is best for My Income?

2. Do I file my Tax Return in Financial Year 2020-21 with New Slab Rates or Old One?

3. Under Which Income Tax Scheme I end up paying more Income Tax?

4. How much is Income Tax difference if I pay as per new regime and old regime, considering all deductions and exemptions?

Here is the straight forward answer for your Queries. Enter Details and figure it out yourself – Which is the best option for me to pay lower Income Tax

Calculate & Compare Income Tax
*
Gross Total Income
Total Deductions
Total Income
Tax Slabs (Upto 60 Yrs)
0 - 2,50,000
2,50,001 - 5,00,000
5,00,001 - 10,00,000
Above 10,00,000
Rebate
Tax
Health & Edu. Cess
Total Tax Payable
Gross Total Income
Total Deductions
Total Income
Tax Slabs
0 - 2,50,000
2,50,001 - 5,00,000
5,00,001 - 7,50,000
7,50,001 - 10,00,000
10,00,001 - 12,50,000
12,50,001 - 15,00,000
Above 15,00,000
Rebate
Tax
Health & Edu. Cess
Total Tax Payable
    Note :
  • Standard Deduction: Rs. 50,000
  • Mediclaim Policy 80D
    Scenario Premium Amount Deduction

    Self, Family Parents
    Individual and parents below 60 years 25,000 25,000 50,000
    Individual and family below 60 years but parents above 60 years 25,000 50,000 75,000
    Both individual, family and parents above 60 years 50,000 50,000 100,000
  • Interest on Housing Loan : Threshold limit is Rs. 2,00,000
  • Savings in Section 80C : Threshold limit is Rs. 1,50,000
  • Savings in Section 80CCCD (2) - Employers contribution to NPS : Lesser of 10% of (Basic + DA) or Actual contribution
  • Savings in Section 80CCCD (1B) - Voluntary contribution to NPS : Threshold limit is Rs. 50,000
  • Other commonly used Chapter VI-A Deductions
    • 80TTA - Interest income on Savings Bank : Threshold limit is Rs. 10,000
    • 80G - Donations
    • 80U - Physical Disability : Limit of Rs. 75,000 for disability and 1,25,000 for severe disabililty
    • 80GG - Deduction for rent paid : In the absence of HRA only
    • 80EEA - Interest on housing loan sanctioned in FY 19-20 upon satisfaction of conditions : Interest above 2,00,000, further limit of Rs. 1,50,000
  • Surcharge is not considered

Let us first understand the Current Tax Regime

The tax rates are high, there are a lot of ways to reduce your tax liability through exemptions, deductions.

Over the years the government has given Indian taxpayers the options with 65 exemptions and deductions through which they can bring down their taxable income and reduce their tax liabilities.

While exemptions are part of your salary, like the House Rent Allowance (HRA) and Leave Travel Allowance (LTA), deductions allow you to lower your tax amount by investing, saving, or spending on specific items. The biggest section for deduction is Section 80C through which you can bring down your taxable income by Rs.1.5 lakh. Apart from this, there are many more sections that let you take tax deductions on things ranging from interest on your loans (home and education) to premiums you pay for health insurance.

The combination of exemptions and deductions can bring down your taxable income by lakhs. However, it is also important for you to find the best way to optimize the income by investing in different options to keep the taxable income to a minimum.

Entering new tax regime – More slabs, lower tax rate but no way to reduce taxes

The new tax regime is different from the existing regime in two aspects.

One, in the new regime, the tax slabs have increased with a maximum rate of 30% starting above the taxable income of 15 Lakhs. Two, all the exemptions and deductions that were being used by taxpayers in the existing regime won’t be available in the new regime except for deduction under section 80CCD (2) for NPS contributions.

Here is a comparison between the old and new tax slabs

Tax Slab

Old Tax Rates

New Tax Rates

0 – 2,50,000

0%

0%

2,50,000 – 5,00,000

5%

5%

5,00,000 – 7,50,000

20%

10%

7,50,000 – 10,00,000

20%

15%

10,00,000 – 12,50,000

30%

20%

12,50,000 – 15,00,000

30%

25%

15,00,000 & above

30%

30%

Here are a few things to be done for deciding the best way:

1. Calculate all the exemptions that you are availing: If you are living on rent, you would be claiming HRA which is the biggest salary exemption available. Apart from that, other tax-free components include Leave Travel Allowance, food allowance.

2. Find out the deductions that you claim: Two Major Deductions will be one from Interest on Housing or Education Loans and others will be under 80C. In addition, the deduction is also available under 80D for the Mediclaim policy and also Standard deduction of Rs. 50,000.

Here are few ways to opt for a scheme, though sometimes both the options give similar tax liabilities when calculated precisely.

Scenario 1: When none or few of the exemptions and deductions are claimed

In such a case, the New regime would be benefitted as in the old regime also no benefit of the deduction is claimed. HRA exemption and standard will play a major role in this scenario. Reduced Tax slabs can benefit in reducing tax liability.

Scenario 2: When all the exemptions and deductions are claimed

In such a case, the calculation to be done on a case to case basis for finding the beneficial scheme as given above.

Notes related to New Tax Regime

a) The tax calculated on the basis of such rates will be subject to health and education cess of 4%.

b) 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.

c) List of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.

· Leave Travel Allowance

· House Rent Allowance

· Conveyance

· Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)

· Daily expenses in the course of employment

· Relocation allowance

· Helper allowance

· Children education allowance

· Other special allowances [Section 10(14)]

· Standard deduction

· Professional tax

· Interest on housing loan (Section 24)

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 a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once.


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