Old Regime
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
New Regime
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
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
Note :
1. Standard Deduction: Rs. 50,000
2. 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
1. Interest on Housing Loan : Threshold limit is Rs. 2,00,000
2. Savings in Section 80C : Threshold limit is Rs. 1,50,000
3. Savings in Section 80CCCD (2) - Employers contribution to NPS : Lesser of 10% of (Basic + DA) or Actual contribution
4. Savings in Section 80CCCD (1B) - Voluntary contribution to NPS : Threshold limit is Rs. 50,000
5. Other commonly used Chapter VI-A Deductions
1. 80TTA - Interest income on Savings Bank : Threshold limit is Rs. 10,000
2. 80G - Donations
3. 80U - Physical Disability : Limit of Rs. 75,000 for disability and 1,25,000 for severe disabililty
4. 80GG - Deduction for rent paid : In the absence of HRA only
5. 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
6. Surcharge is not considered
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Proceed
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.