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    Categories: Income Tax

Income Tax Slab Comparison Chart F.Y.2020-21: Old Tax Regime v/s New Tax Regime

It was certain on the part of government to bring some relief measures for taxpayers to curb the effect of economic slowdown which almost back lifted every sector of the economy. It was on expectations of the taxpayers and recommendations of the Finance Ministry that led the changes confirmed through the Finance Bill, 2020 where taxpayers were offered for an optional theme for taxation for FY 2020-21.

The optional taxation theme was proposed with assured exemption and reduction of tax outgo with some new tax slabs and exemptions for prescribed thresholds. The condition in addition was placed for the taxpayers to forgo some available deductions and exemptions as availed by them in the old regime. The short lived joy lifted when the Finance Minister Smt. Nirmala Sitharaman cleared that more than 70 exemptions and deductions shall be taken away if the new regime is opted.

So, the decision rests with people to choose the regime from which they’ll be benefitted the most!

Here , we have compared and concluded how your tax liability changes when you opt to prefer new tax regime over the old regime.

Case I – When income is up to 5 lakhs

Net income range Salary Business Salary Business
OLD NEW
Income 500000.00 500000.00 500000.00 500000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 75000.00 125000.00 500000.00 500000.00
Gross tax liability (refer note below) 0.00 0.00 12500.00 12500.00
*less-rebate (tax liability or 12500 whichever is less) 0.00 0.00 12500.00 12500.00
Net tax liability 0.00 0.00 0.00 0.00

Rebate is only available if taxable income is upto Rs 5 lakhs

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 0.00 0.00 2.5 to 5 @ 5% 12500.00 12500.00
Total 0.00 0.00 12500.00 12500.00

Case II – When income is up to 7.5 lakhs

Net income range Salary Business Salary Business
OLD NEW
750000.00 750000.00 750000.00 750000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 325000.00 375000.00 750000.00 750000.00
Gross tax liability (refer note below) 3750.00 6250.00 37500.00 37500.00
*Less-rebate (tax liability or 12500 whichever is less) 3750.00 6250.00 0.00 0.00
Net tax liability 0.00 0.00 37500.00 37500.00
Add: Ed. cess @ 4% 0.00 0.00 1500.00 1500.00
0.00 0.00 39000.00 39000.00

Rebate is only be available, if taxable income is upto Rs 5 lakh

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 3750.00 6250.00 2.5 to 5 @ 5% 12500.00 12500.00
5 to 10 @ 20% 5 to 7.5 @ 10% 25000.00 25000.00
Total 3750.00 6250.00 37500.00 37500.00

Case III – When income is up to 10 lakhs

Net income range Salary business Salary business
OLD NEW
1000000.00 1000000.00 1000000.00 1000000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 575000.00 625000.00 1000000.00 1000000.00
Gross tax liability (refer note below) 27500.00 37500.00 75000.00 75000.00
*Less-rebate (tax liability or 12500 whichever is less) 0.00 0.00 0.00 0.00
Net tax liability 27500.00 37500.00 75000.00 75000.00
Add: Ed. cess @ 4% 1100.00 1500.00 3000.00 3000.00
28600.00 39000.00 78000.00 78000.00

Rebate is only be available, if taxable income is upto 5 lakh

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 12500.00 12500.00 2.5 to 5 @ 5% 12500.00 12500.00
5 to 10 @ 20% 15000.00 25000.00 5 to 7.5 @ 10% 25000.00 25000.00
7.5 to 10 @ 15% 37500.00 37500.00
Total 27500.00 37500.00 75000.00 75000.00

Case IV – When income is up to 12.5 lakhs

Net income range Salary Business Salary Business
OLD NEW
1250000.00 1250000.00 1250000.00 1250000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 825000.00 875000.00 1250000.00 1250000.00
Gross tax liability (refer note below) 77500.00 87500.00 125000.00 125000.00
*Less-rebate (tax liability or 12500 whichever is less) 0.00 0.00 0.00 0.00
Net tax liability 77500.00 87500.00 125000.00 125000.00
Add: Ed. cess @ 4% 3100.00 3500.00 5000.00 5000.00
80600.00 91000.00 130000.00 130000.00

Rebate is only be available, if taxable income is uptoRs 5 lakh

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 12500.00 12500.00 2.5 to 5 @ 5% 12500.00 12500.00
5 to 10 @ 20% 65000.00 75000.00 5 to 7.5 @ 10% 25000.00 25000.00
Above 10 @ 30% 7.5 to 10 @ 15% 37500.00 37500.00
10 to 12.5 @ 20% 50000.00 50000.00
Total 77500.00 87500.00 125000.00 125000.00

Case V – When income is up to 15 lakhs

Net income range Salary business Salary business
OLD NEW
1500000.00 1500000.00 1500000.00 1500000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 1075000.00 1125000.00 1500000.00 1500000.00
Gross tax liability (refer note below) 135000.00 150000.00 187500.00 187500.00
*Less-rebate (tax liability or 12500 whichever is less) 0.00 0.00 0.00 0.00
Net tax liability 135000.00 150000.00 187500.00 187500.00
Add: Ed. cess @ 4% 5400.00 6000.00 7500.00 7500.00
140400.00 156000.00 195000.00 195000.00

Rebate is only be available , if taxable income is uptoRs 5 lakh

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 12500.00 12500.00 2.5 to 5 @ 5% 12500.00 12500.00
5 to 10 @ 20% 100000.00 100000.00 5 to 7.5 @ 10% 25000.00 25000.00
Above 10 @ 30% 22500.00 37500.00 7.5 to 10 @ 15% 37500.00 37500.00
10 to 12.5 @ 20% 50000.00 50000.00
12.5 to 15 @ 25% 62500.00 62500.00
Total 135000.00 150000.00 187500.00 187500.00

Case VI – When income is up to 17.5 lakhs

Net income range Salary Business Salary Business
OLD                     NEW
1750000.00 1750000.00 1750000.00 1750000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 1325000.00 1375000.00 1750000.00 1750000.00
Gross tax liability (refer note below) 210000.00 225000.00 262500.00 262500.00
*Less-rebate (tax liability or 12500 whichever is less) 0.00 0.00 0.00 0.00
Net tax liability 210000.00 225000.00 262500.00 262500.00
Add: Ed. cess @ 4% 8400.00 9000.00 10500.00 10500.00
218400.00 234000.00 273000.00 273000.00

Rebate is only be available , if taxable income is uptoRs 5 lakh

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 12500.00 12500.00 2.5 to 5 @ 5% 12500.00 12500.00
5 to 10 @ 20% 100000.00 100000.00 5 to 7.5 @ 10% 25000.00 25000.00
Above 10 @ 30% 97500.00 112500.00 7.5 to 10 @ 15% 37500.00 37500.00
10 to 12.5 @ 20% 50000.00 50000.00
12.5 to 15 @ 25% 62500.00 62500.00
Above 15 @ 30% 75000.00 75000.00
Total 210000.00 225000.00 262500.00 262500.00

Case VII – When income is up to 20 lakhs

Net income range Salary Business Salary Business
OLD NEW
2000000.00 2000000.00 2000000.00 2000000.00
Deductions/exemptions:-
Standard deduction 50000.00 NA NA NA
Interest of housing loan u/s 24 200000.00 200000.00 NA NA
Deductions under chapter vi a:-
80C 150000.00 150000.00 NA NA
80D 25000.00 25000.00 NA NA
Taxable income 1575000.00 1625000.00 2000000.00 2000000.00
Gross tax liability (refer note below) 285000.00 300000.00 337500.00 337500.00
*Less-rebate (tax liability or 12500 whichever is less) 0.00 0.00 0.00 0.00
Net tax liability 285000.00 300000.00 337500.00 337500.00
Add: Ed. cess @ 4% 11400.00 12000.00 13500.00 13500.00
296400.00 312000.00 351000.00 351000.00

Rebate is only be available , if taxable income is uptoRs 5 lakh

Slab rate OLD Slab rate NEW
Salary Business Salary Business
Upto 2.5 0.00 0.00 Upto 2.5 0.00 0.00
2.5 to 5 @ 5% 12500.00 12500.00 2.5 to 5 @ 5% 12500.00 12500.00
5 to 10 @ 20% 100000.00 100000.00 5 to 7.5 @ 10% 25000.00 25000.00
Above 10 @ 30% 172500.00 187500.00 7.5 to 10 @ 15% 37500.00 37500.00
10 to 12.5 @ 20% 50000.00 50000.00
12.5 to 15 @ 25% 62500.00 62500.00
Above 15 @ 30% 150000.00 150000.00
Total 285000.00 300000.00 337500.00 337500.00

Why Consultants at TaxReturnWala.com suggest use of Old regime over the New Optional Tax regime?

We being a team of leading tax practitioners and corporate consultants have viewed for the benefits and hitches of both tax regimes.  In conclusion to above figures and holding an objective to maximum tax savings of our clients, we would rather suggest use of the old tax regime where the possibility of tax saving is much wider with the available deductions and exemptions.

Besides, The New Tax Regime has proposed lower income-tax rates, for income segments up to Rs 15 lakh. But you need to remember that the proposed lower tax rates will be applicable only if you are willing to give up exemptions and deductions available under various provisions of the Income-tax Act, 1961. So just in case you have not made any investments for which you can claim exemptions or you are not having exempted investments equivalent to the maximum provided as benefit then you need to get a customized calculation made under both scenarios and then decide.

This means that when you choose the New Tax Regime, you will have to forgo some exemptions [such as Leave Travel Allowance (LTA), House Rent Allowance (HRA), etc] and deductions available under chapter VI A of the Act that grant deductions under Section 80 [such as 80C, 80CCC, 80CCD, 80D, 80DD, 80E, 80EE, 80G, 80GG, 80GGA, 80GGC, etc].So we would suggest to keep this things to be in mind while opting the regime.

Also, the above verdict on use of any particular tax regime out of both might differ in terms of different income sources, investments made and multiple other factors.

If not satisfied by above comparison, get a quick tax analysis done from our professionals and maximize your tax savings.
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