Income Tax Slab 2020 to 2021

Income Tax Slab 2020 to 2021

Download digibank Now

An update on the newly-introduced Income Tax Slabs in Budget 2021

Key Takeaways

  • Tax implication in India is divided based on income ranges.
  • Based on your age, the tax rates will differ as well.
  • Taxpayers can choose the old or new regime when filing taxes.
  • You will not qualify for tax deductions if you select the new tax regime.
  • The old regime allows tax benefits under Sections 80C, 80TTA etc., HRA, and LTA.

Under the Income Tax Act of India, you must pay taxes based on your age, citizenship, and annual income. These ranges are termed Tax Slabs. The government frequently revises the Income Tax Slabs and announces any changes or modifications while presenting the Union Budget for the next financial year. This article highlights the 2020 to 2021 Income Tax Slabs introduced by the Finance Minister in Budget 2021.

Income Tax Slabs in Budget 2021

In Budget 2021, the FM introduced a new regime while keeping the old regime intact. Taxpayers may choose their preferred regime while filing their returns. The 2020 to 2021 Income Tax Slabs presented by the FM for the two tax regimes are as under:

Income Tax Slab

New Regime FY 2020-21

Old Regime FY 2019-20

Below INR 2,50,000

NIL

NIL

INR 2,50,001 – INR 5,00,000

5%

5%

INR 5,00,001 – INR 7,50,000

10%

20%

INR 7,50,001 – INR 10,00,000

15%

20%

INR 10,00,001 – INR 12,50,000

20%

30%

INR 12,50,001 – INR 15,00,000

25%

30%

Above INR 15,00,000

30%

30%

Download digibank Now

Income Tax Slab 2020 to 2021 for Sr. & Super Sr. Citizens

Senior and Super Senior Citizens must pay their taxes as per the old tax regime under the Income Tax Act, 1961.

Tax Regime for Individuals in the 60-80 years age range

Income Tax Slab

Old Regime FY 2019-20

Below INR 3,00,000

NIL

INR 3,00,001 – INR 5,00,000

5%

INR 5,00,001 – INR 10,00,000

20%

Above INR 10,00,000

30%

Tax Regime for Individuals above 80 years

Income Tax Slab

Old Regime FY 2019-20

Below INR 5,00,000

NIL

INR 5,00,001 – INR 10,00,000

20%

Above INR 10,00,000

30%

'

Income Tax Slab 2021 to 2022 – Example

Assume that you are a salaried individual with an annual income of INR 6,50,000. For up to INR 2,50,000, there will be no tax applicable. For INR 2,50,000 – INR 5,00,000, 5% tax will be applicable on the difference amount, i.e., INR 12,500

You will fall in the INR 5,00,000 – INR 7,50,000; therefore, the amount on which tax will be applicable is the difference between INR 6,00,000 and INR 5,00,000, i.e., INR 1,00,000. As per the Income Tax Slab 2020 to 2021, 10% tax would be applicable on INR 1 Lakh, i.e., INR 10,000. Therefore, your total tax payable would be INR 12,500 + INR 10,000, which equals INR 22,500. As per the old regime, your total payable would be INR 32,500.

Exemptions

Taxpayers who opt for the new tax regime no longer qualify for certain exemptions available under the old tax regime under the Income Tax Slab 2021. These include:

  • House Rent Allowance
  • Leave Travel Allowance
  • Deductions under section 80C, 80TTA, 80TTB, 80DDB and so on.
  • Deduction of INR 15,000 under clause 2a of Section 57 for family pension.
  • Standard deduction of INR 50,000

Conclusion

Income Tax payment is a major revenue source for the Government of India. However, to establish fairness amongst individual taxpayers, Income Tax Slab rates exist based on your income and age. You can choose to follow the old or new tax regimes based on your preference.

Download the digibank by DBS app to get started.

Download digibank Now

*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.

Thank you. Your feedback will help us serve you better.

Was this information useful?

Thank you for your feedback
Let us know how this article helped:
We're sorry to hear that.
How can we do better?
Enter only letters, numbers or @!$-(),.