Income tax levied on Individual taxpayers on the basis of slab system. Slab system means different tax rates are prescribed for different range on incomes.
From the financial year (FY) 20-21, individual taxpayers can choose between two tax regimes- Old tax regimes and New tax regimes.
Old tax regimes allows the taxpayers to continue with existing tax exemptions such as Leave Travel Concession (LTA), House Rent Allowance (HRA), Conveyance Allowance, Professional Tax, Standard deduction, Interest on housing loan (Section 24) etc. and many other deductions also.
While for those who opting new tax regimes will have to forget most of the exemptions and deductions that are available under the old tax regime.
Here is a look at old income tax slab rates and new income tax slab rates applicable for FY 20-21 for resident individual, Non-resident individual (below 60 years) and HUF:
Income tax rates for resident Senior citizen (age above 60 years but below 80 years)
Income tax rates for resident Super senior citizen (age above 80 years)
Followings are applicable for all individual taxpayers:
Rebate of upto the amount of Rs.12,500 (maximum amount) is allowed under section 87A under both tax regimes. So, no income tax is payable where net taxable income of individual is upto Rs. 5,00,000 under both tax regimes.
Rebate is allowed only for resident individual not allowed for NRIs and HUF.
After rebate, Surcharge is also payable on tax, if total income before levy of Cess exceeds Rs. 50 lakhs at different rates.
Health & Education cess provided after surcharge @4% of tax liability.
If senior or super senior citizen opting for new tax regimes then limit of higher exemption of Rs. 3 lakh in case of senior citizen and Rs. 5 lakh in case of super senior citizen will not be available under new tax regime. Under new tax regime, basic exemption limit will remain Rs. 2.5 lakh for all taxpayers.
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