Login LOGIN
Login

What is the income tax slab for FY 2020-21?

What is the income tax slab for FY 2020-21?

What is the income tax slab for FY 2020-21?
Share :

What is the income tax slab 2020-21?

When it comes to levying taxes, India may not be on the top of the list. That honor goes to many European countries such as Belgium, Germany, Hungary, Austria and Denmark where taxes can go up to 50% or more. However, India tops the chart when it comes to complexity in tax structure; and constant revisions in the tax system add to the confusion.

In Budget 2020, a new tax regime and revised income tax slabs were proposed for FY 2020-21. As you may be aware, income tax rates in India vary for non-senior citizens, senior citizens and super senior citizens. Hence, let’s look at the income tax slabs for FY 2020-21 applicable to these 3 age groups. We will also compare the tax rates and slabs under the old tax regime with the new one in the table below.

Latest Income Tax Slab FY 2020-21

For individuals below 60 years of age

OPTION 1 OPTION
Old Tax Regime New Tax Regime
Up to Rs. 2.5 lakh Nil Up to Rs. 2.5 lakh Nil
Rs. 2,50,001 – 5 lakh 5% Rs. 2,50,001 – 5 lakh 5%
Rs. 5,00,001 – 10 lakh 20% Rs. 5,00,001 – 7.5 lakh 10%
Rs. 7,50,001 – 10 lakh 15%
Above Rs. 10 lakh 30% Rs. 10,00,001- 12.5 lakh 20%
Rs. 12,50,001 – 15 lakh 25%
Above Rs. 15 lakh 30%

In both the old and latest income tax slab, income tax on annual income up to Rs. 5 lakh is effectively exempt from tax. The IT department provides a rebate of up to Rs. 12,500 on annual income up to Rs. 5 lakh, which is in fact 5% of 2,50,000 (Rs. 5,00,000 – 2,50,000). Health education cess of 4% and rates of surcharge are also the same.

Options to choose

From FY 2020-21, taxpayers can choose to either opt for lower tax rates as mentioned above by foregoing tax exemptions and deductions or stick with the old regime for availing these income tax deductions.

If you opt for the latest income tax slabs for 2020-21, you will have to relinquish at least 70 exemptions and deductions including those available under sections 80C, 80D, 80CCD(except section 80CCD(2) and more. Here is a brief list of exemptions that you will have to forego.

  • Life insurance investments
  • House rent allowance
  • Home loan interest paid
  • Education loan interest paid
  • Leave travel allowance (LTA)
  • House rent allowance (HRA)
  • Health insurance premium
  • Standard deduction on rent

Taxpayers have to choose the right tax regime based on their income structure, type and investments to derive maximum tax benefits. Based on their profile they should decide whether to opt for lower income tax rates or exemptions.

Latest Income Tax Slab FY 2020-21

For individuals above 60 years and below 80 years of age

Speak to an insurance specialist now!

Call BackCall Back Pay PremiumPay Premium