IncomeTax for FY2020-21 - Individuals and HUF (Hindu Undivided Family)

The Finance Minister introduced new tax regime in Union Budget for FY2020-21 for individuals and HUF (Hindu Undivided Family). The salary employees to be utilise new tax regime or old existing tax regime.

Let's see which tax regime is better for you tax on salary as under:

1. New tax slab regime FY2020-21

Income Tax Slab	Tax Rates As Per New Regime
₹0 - ₹2,50,000	Nil
₹2,50,001 - ₹ 5,00,000	5%
₹5,00,001 - ₹ 7,50,000	₹12500 + 10% of total income exceeding ₹5,00,000
₹7,50,001 - ₹ 10,00,000	₹37500 + 15% of total income exceeding ₹7,50,000
₹10,00,001 - ₹12,50,000	₹75000 + 20% of total income exceeding ₹10,00,000
₹12,50,001 - ₹15,00,000	₹125000 + 25% of total income exceeding ₹12,50,000
Above ₹ 15,00,000	₹187500 + 30% of total income exceeding ₹15,00,000

1. Old existing tax slab regime FY2020-21

Income Tax Slab	Tax Rates As Per Old Regime
₹0 - ₹2,50,000	Nil
₹2,50,001 - ₹ 5,00,000	5%
₹5,00,001 - ₹ 7,50,000	₹12500 + 20% of total income exceeding ₹5,00,000
₹7,50,001 - ₹ 10,00,000	₹62500 + 20% of total income exceeding ₹7,50,000
₹10,00,001 - ₹12,50,000	₹112500 + 30% of total income exceeding ₹10,00,000
₹12,50,001 - ₹15,00,000	₹187500 + 30% of total income exceeding ₹12,50,000
Above ₹ 15,00,000	₹262500 + 30% of total income exceeding ₹15,00,000

If we have adopt the new tax regime, we have claim the two following deductions only.

• Section 80CCD(2)- Employer's contribution to NPS Section 
• 80TTA- Deduction on savings bank interest up to Rs 10,000

If we have adopt the old tax regime, we shall claim the all tax deductions benefits as under:

• Standard deduction of Rs 50,000 
• Deductions towards meal coupons 
• Section 80C- contributions towards EPF, NPS, life insurance premiums, ELSS, PPF, 
• Section 80CCD- NPS contribution upto Rs 50,000 
• Section 80D- contributions towards medical insurance premium 
• Section 80DD- medical expenses of specially-abled dependents 
• Section 80DDB- medical expenditure on certain specified illnesses 
• Section 10- house rent allowance, travel allowance 
• Section 24- interest paid on home loan Section 
• 16- entertainment allowance, professional tax 
• Section 80E-interest paid on education loan Section 80G-donations
• 80TTA- Deduction on savings bank interest up to Rs 10,000

Let we have see the Old vs New Tax Regime with example for your understanding.

If you are confused as to which tax regime you better opt for the financial year 2020-21. As my examples in below that could help you make the decision of tax saving for your salary. 

It has been assumed that the individual take into consideration for calculation is less than 60 years old.

Particulars	New Regime	Old Regime
Gross total income	₹ 11,00,000	₹ 11,00,000
Less: Deductions under 80C	₹ 0	₹ 1,50,000
Less: Standard Deduction (Medical & Travel Allowance)	₹ 0	₹ 50,000
Less: Deductions under 80CCD	₹ 0	₹ 50,000
Less : HRA deduction as per section 10(13A)	₹ 0	₹ 1,50,000
Taxable Income	₹ 11,00,000	₹ 7,00,000
Taxes payable as per slab rates
₹0 - ₹2,50,000	₹ 0	₹ 0
₹2,50,001 - ₹ 5,00,000	₹ 12,500	₹ 12,500
₹5,00,001 - ₹ 7,50,000	₹ 25,000	₹ 40,000
₹7,50,001 - ₹ 10,00,000	₹ 37,500	₹ 0
₹10,00,001 - ₹12,50,000	₹ 20,000	₹ 0
Total taxes	₹ 95,000	₹ 52,500

Note : Above rates does not include Surcharge and Cess.

• 10% surcharge is applicable on income tax if income exceeds  50 lacs but upto  1 crore
• 15% surcharge is applicable on income tax if income exceeds  1 crore
• 4% Health & Education Cess is applicable on the income tax and applicable surcharge.
• Tax rates and slabs are same for Male and Female as per above table
• Individuals having total income below  5 lakhs, are eligible for full tax rebate under section 87A