INCOME TAX SLAB FOR THE YEAR 2020-21 (the assessment year 2021-22) FOR AN INDIVIDUAL

  • An Individual in India pays income tax according to a slab scheme. Specific tax rates are recommended for different levels of Income in a slab scheme. It means that when a taxpayer’s income rises, his or her tax rate increases as well. This method of taxation allows the nation to have progressive and equitable tax structures.

Each budget, specific income tax slabs are likely to adjust. Different types of taxpayers have different slab rates. Individual taxpayers are divided into three groups by the IRS:

  • Individuals (under the age of 60), both local and outsiders.
  • Local Senior Individuals age 60 to 80 years
  • Local Super Senior Individuals age above 80 years.

This financial year, we have two choices either to opt for Old Tax Regime or New Tax Regime.

OLD TAX REGIME

1) Age is Below 60 years: Individuals, HUFs under 60 years of age, and NRIs are eligible for an income tax exemption of up to Rs.2, 50,000 in FY 2018-19. On top of that, a 4% health and education cess will be applied to the tax number.

 

Total Income of a taxpayer Rate of tax
UpTo 2.5 Lakhs 0%
2.5 Lakhs to 5 Lakhs 5%
5 Lakhs to 10 Lakhs 20%
Above 10 Lakhs 30%

2) Age is Below 60 years: Individuals, HUFs under 60 years of age, and NRIs are eligible for an income tax exemption of up to Rs.2,50,000 in FY 2018-19. On top of that, a 4% health and education cess will be applied to the tax number.

Total Income of a taxpayer Rate of tax
UpTo 3 Lakhs 0%
3 Lakhs to 5 Lakhs 5%
5 Lakhs to 10 Lakhs 20%
Above 10 Lakhs 30%

3) Age is 80 years or more: Taxpayers above 80 years of age are aged Senior Individuals Under the Income Tax Act,1961. They must pay the taxes per the income tax slab FY 2020-21 and AY 2021-22.

Total Income of a taxpayer Rate of tax
UpTo 5 Lakhs 0%
5 Lakhs to 10 Lakhs 20%
Above 10 Lakhs 30%

NEW TAX REGIME

The Finance minister of government-initiated new taxation authorities for individual and HUF taxpayers under Section 115BAC of the Income Tax Act,1961.

Any individual is allowed to opt for the concessional tax rates, but he cannot avail of 70 deductions in the new tax regime of India.

FOR ALL AGES:-

Total Income of a taxpayer Rate of tax
UpTo 2.5 Lakhs 0%
2.5 Lakhs to 5 Lakhs 5%
5 Lakhs to 7.5 Lakhs 10%
7.5 Lakhs to 10 Lakhs 15%
10 Lakhs to 12.5 lakhs 20%
12.5 Lakhs to 15 Lakhs 25%
Above 15 Lakhs 30%

Relaxation and withdrawal that are not allowed under the new tax rate regime are mentioned below:

  • HRA (House Rent Allowance)
  • LTA (Leave Travel Allowance)
  • Transfer Allowance
  • Helper Allowance
  • Transportation Allowance
  • Daily charge’s in the course of employment
  • Children’s study Allowance
  • Other additional allowances[Section 10(14)]
  • Standard removal on Income
  • Professional Tax
  • Interest on house loan as per Section 24
  • Withdrawals under Chapter VI-A withdrawals (80C,80D,80E and so on) [Except section 80CCD(2)]

List of “allowed” withdrawals under the new tax rate regime:

  • Allowance for transportation for an individual with unique requirements.
  • Conveyance allowance is compensation for expenses experienced while travelling to and from work.
  • An individual can invest in a Notified Pension Scheme (2), Under section 80CCD.
  • Section 80JJAA allows for a withdrawal for the hiring of new workers.
  • Except for additional depreciation, depreciation is allowed under section 32 of the Income Tax Act.
  • Any reimbursement for travel related to your job or a move.

After reading this informational blog, if you still have any confusion or query feel free to ask us on 9825373707 or mail at info@djshahca.com or officeidk@gmail.com. We at Dinesh J. Shah & Associates would glad to solve your doubt.