Income Tax Slab: You Will Now Pay Rs 1.95 Lakh In Tax On Rs 15 Lakh Income In This Case

Income Tax Slab: According to Budget 2020 proposals, annual gross income of Rs 15 lakh will lead to a tax liability of Rs 1.95 lakh, but there's a catch: the assessee has to give up a range of income tax exemptions and deductions (including Section 80C). First things first, the new income tax slabs proposed in Budget 2020 are optional, subject to certain conditions. Finance Minister Nirmala Sitharaman used the example given above to explain the difference in tax liability for a person not claiming any exemptions. "A person earning Rs 15 lakh in a year and not availing any deductions etc will pay only Rs 1,95,000 as compared to Rs 2,73,000 in the old regime," she said during her Budget speech. (Also read: 5 New Income Tax Slabs With Lower Rates).The Finance Minister said that that for such a person, the tax burden will be reduced by Rs 78,000 in the new tax regime. .The person "would still be the gainer in the new regime even if he was taking deduction of Rs 1.5 lakh under various sections of Chapter- VI-A of the Income Tax Act under the old regime", the Finance Minister explained. The Budget proposes to remove around 70 out of more than 100 exemptions and deductions available today with an aim to simplify the Income Tax Act, Ms Sitharaman said. .But what all was taken into account in this example? Here's how it works:.For someone who didn't claim any exemption whatsoever - and this includes deductions in taxable income available under Section 80C of the Income Tax Act and even Standard Deduction - the tax liability in Assessment Year 2020-21 will be as follows:. table.itax_tab { border-top: solid 1px #ccc; border-left: solid 1px #ccc; border-right: solid 1px #ccc; } table.itax_tab th { background-color: #f5f5f5; padding: 5px 10px; border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; text-align: center; } table.itax_tab td { border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; padding: 5px 10px; text-align: center; } table.itax_tab th:last-child, table.itax_tab td:last-child { border-right: 0; } @media only screen and (max-device-width: 480px) and (min-device-width: 320px) { table.itax_tab { display: table; min-width: 280px; max-width: 100%; font-size: 14px; } table.itax_tab th, table.itax_tab td, table.itax_tab th:nth-child(n+1), table.itax_tab td:nth-child(n+1) { display: table-cell; line-height: normal; } } . S No. Income Tax Slab Tax 1 5% 12500 2 20% 100000 3 30% 150000 4 Total (1 + 2 + 3) 262500 5 Cess @ 4% 10500 6 Total Income Tax Payable (4 + 5) 273000 .The Finance Bill 2020 (Budget 2020-21) proposes the following optional tax rates, promising "significant relief to taxpayers and more so to those in the middle class":.table.compare_tab { border-top: solid 1px #ccc; border-left: solid 1px #ccc; border-right: solid 1px #ccc; } table.compare_tab th { background-color: #f5f5f5; padding: 5px 10px; border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; text-align: center; } table.compare_tab td { border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; padding: 5px 10px; text-align: center; } table.compare_tab th:last-child, table.compare_tab td:last-child { border-right: 0; } @media only screen and (max-device-width: 480px) and (min-device-width: 320px) { table.compare_tab { display: table; min-width: 280px; max-width: 100%; font-size: 14px; } table.compare_tab th, table.compare_tab td, table.compare_tab th:nth-child(n+1), table.compare_tab td:nth-child(n+1) { display: table-cell; line-height: normal; } } . Taxable Income Slab (In Rupees) Existing Tax Rates New Tax Rates 0-2.5 lakh Exempt Exempt 2.5-5 lakh 5% 5% 5-7.5 lakh 20% 10% 7.5-10 lakh 20% 15% 10-12.5 lakh 30% 20% 12.5-15 lakh 30% 25% Above 15 lakh 30% 30% (Source: Finance Bill 2020) .Now, for the same person, the tax liability in Assessment Year 2021-22 will be as follows:.table.newtax_tab { border-top: solid 1px #ccc; border-left: solid 1px #ccc; border-right: solid 1px #ccc; } table.newtax_tab th { background-color: #f5f5f5; padding: 5px 10px; border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; text-align: center; } table.newtax_tab td { border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; padding: 5px 10px; text-align: center; } table.newtax_tab th:last-child, table.newtax_tab td:last-child { border-right: 0; } @media only screen and (max-device-width: 480px) and (min-device-width: 320px) { table.newtax_tab { display: table; min-width: 280px; max-width: 100%; font-size: 14px; } table.newtax_tab th, table.newtax_tab td, table.newtax_tab th:nth-child(n+1), table.newtax_tab td:nth-child(n+1) { display: table-cell; line-height: normal; } } . S No. Income Tax Slab Tax 1 5% 12500 2 10% 25000 3 15% 37500 4 20% 50000 5 25% 62500 6 30% 0 7 Total (1 + 2 + 3 + 4 + 5 + 6) 187500 8 Cess @ 4% 7500 9 Total Income Tax Payable (4 + 5) 195000 .Let's take a look at few examples to understand in which cases the optional tax rates will benefit the user, and by how much (all figures in rupees):.table.newtax_tab { border-top: solid 1px #ccc; border-left: solid 1px #ccc; border-right: solid 1px #ccc; } table.newtax_tab th { background-color: #f5f5f5; padding: 5px 10px; border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; text-align: center; font-size:16px; } table.newtax_tab td { border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; padding: 5px 3px; text-align: center; font-size:15px; word-wrap: break-word; } .newtax_tab_head { border-bottom: solid 1px #ccc; border-right: solid 1px #ccc; padding: 5px; text-align: center; font-size:13px !important; word-wrap: break-word !important; font-weight:bold; line-height:16px; } table.newtax_tab th:last-child, table.newtax_tab td:last-child { border-right: 0; } @media only screen and (max-device-width: 480px) and (min-device-width: 320px) { table.newtax_tab { display: table; min-width: 280px; max-width: 100%; font-size: 14px; } table.newtax_tab th, table.newtax_tab td, table.newtax_tab th:nth-child(n+1), table.newtax_tab td:nth-child(n+1) { display: table-cell; line-height: normal; } .scroll { overflow: auto; } } . Old Regime New Regime Gross Income (In Lakh) Deduction Under 80C Taxable Income Income Tax Taxable Income Income Tax Saving (New Vs Old Regime) More Beneficial Regime 3.5 lakh 1.5 lakh 2 lakh 0 3.5 lakh 0 0 No change 4 lakh 1.5 lakh 2.5 lakh 0 4 lakh 0 0 No change 4.5 lakh 1.5 lakh 3 lakh 0 4.5 lakh 0 0 No change 5 lakh 1.5 lakh 3.5 lakh 0 5 lakh 0 0 No change 5.5 lakh 1.5 lakh 4 lakh 0 5.5 lakh 18,200 -18,200 Old 6 lakh 1.5 lakh 4.5 lakh 0 6 lakh 23,400 -23,400 Old 6.5 lakh 1.5 lakh 5 lakh 0 6.5 lakh 28,600 -28,600 Old 7 lakh 1.5 lakh 5.5 lakh 23,400 7 lakh 33,800 -10,400 Old 7.5 lakh 1.5 lakh 6 lakh 33,800 7.5 lakh 39,000 -5,200 Old 8 lakh 1.5 lakh 6.5 lakh 44,200 8 lakh 46,800 -2,600 Old 8.5 lakh 1.5 lakh 7 lakh 54,600 8.5 lakh 54,600 0 No change 9 lakh 1.5 lakh 7.5 lakh 65,000 9 lakh 62,400 2,600 New 9.5 lakh 1.5 lakh 8 lakh 75,400 9.5 lakh 70,200 5,200 New 10 lakh 1.5 lakh 8.5 lakh 85,800 10 lakh 78,000 7,800 New 10.5 lakh 1.5 lakh 9 lakh 96,200 10.5 lakh 88,400 7,800 New 11 lakh 1.5 lakh 9.5 lakh 1,06,600 11 lakh 98,800 7,800 New 11.5 lakh 1.5 lakh 10 lakh 1,17,000 11.5 lakh 1,09,200 7,800 New 12 lakh 1.5 lakh 10.5 lakh 1,32,600 12 lakh 1,19,600 13,000 New 12.5 lakh 1.5 lakh 11 lakh 1,48,200 12.5 lakh 1,30,000 18,200 New 13 lakh 1.5 lakh 11.5 lakh 1,63,800 13 lakh 1,43,000 20,800 New 13.5 lakh 1.5 lakh 12 lakh 1,79,400 13.5 lakh 1,56,000 23,400 New 14 lakh 1.5 lakh 12.5 lakh 1,95,000 14 lakh 1,69,000 26,000 New 14.5 lakh 1.5 lakh 13 lakh 2,10,600 14.5 lakh 1,82,000 28,600 New 15 lakh 1.5 lakh 13.5 lakh 2,26,200 15 lakh 1,95,000 31,200 New 15.5 lakh 1.5 lakh 14 lakh 2,41,800 15.5 lakh 2,10,600 31,200 New 16 lakh 1.5 lakh 14.5 lakh 2,57,400 16 lakh 2,26,200 31,200 New 16.5 lakh 1.5 lakh 15 lakh 2,73,000 16.5 lakh 2,41,800 31,200 New 17 lakh 1.5 lakh 15.5 lakh 2,88,600 17 lakh 2,57,400 31,200.00 New 17.5 lakh 1.5 lakh 16 lakh 3,04,200 17.5 lakh 2,73,000 31,200 New 18 lakh 1.5 lakh 16.5 lakh 3,19,800 18 lakh 2,88,600 31,200 New 18.5 lakh 1.5 lakh 17 lakh 3,35,400 18.5 lakh 3,04,200 31,200 New 19 lakh 1.5 lakh 17.5 lakh 3,51,000 19 lakh 3,19,800 31,200 New 19.5 lakh 1.5 lakh 18 lakh 3,66,600 19.5 lakh 3,35,400 31,200 New 20 lakh 1.5 lakh 18.5 lakh 3,82,200 20 lakh 3,51,000 31,200 New 20.5 lakh 1.5 lakh 19 lakh 3,97,800 20.5 lakh 3,66,600 31,200 New .(The examples given above are based on the assumption that the assessee fully utilises the exemptions available under Section 80C in the old structure and gives them up in the new structure.)

Income Tax Slab: You Will Now Pay Rs 1.95 Lakh In Tax On Rs 15 Lakh Income In This Case

Assessee has to give up exemptions to take benefit of optional new rates Those making Rs 15 lakh/year, not claiming exemptions will pay less tax For such persons, tax outgo to be reduced by Rs 78,000: Finance Minister

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