Income Tax Slabs: Tax Rates for the Financial year 2020-2021

Deepti Shikha

17 Feb, 2020

The Union Government in Budget 2020 has proposed a new tax regime by slashing Income Tax Rates. Some changes have been made in the income tax slabs to decrease the total tax payable by the individuals. The Budget 2020 has offered the taxpayers an option to choose between the existing Income Tax regime which allowed income tax exemptions and deductions and a new tax regime with new income tax slabs and slashed income tax rates but no tax exemptions and deductions. According to the Finance Minister, the new tax regime offers lower tax rates and new tax slabs. It concurrently removes tax exemptions which will result in lower tax outgo for the individual taxpayer.

What is Income Tax Slabs?

• In India, income tax is raised on individual taxpayers based on the slab system proposed by the Government. 
• Different tax rates are prescribed for various tax slabs, and such rates keep on increasing with the increase in income.

• Tax slabs are inclined to change during every budget.
• Further, if any Budget does not specify the change in the income tax slab, the tax rate will remain the same as that of the previous year.
•  The basic tax exemption limit for a taxpayer depends on their age and residential status.

 Individual taxpayers are specified in three categories according to their age:

1. Individuals below the age of 60 years which includes residents as well as non-residents.
2. Senior citizens (residents) who are above 60 years of age but below 80 years must be residents.
3. Super senior citizens who are above the age of 80 years and must be residents.

New Tax Slab Rates 2020- for the individuals opting for the new income tax regime

The cess and surcharge on income tax payable in the new personal tax regime remain the same as in the existing tax regime.

These rates will apply to individual taxpayers who will give up all the exemptions and deductions prevailing under the income tax laws.

Income tax slabs and Income Tax rates for individuals below 60 years of age-Old Regime

Income tax slabs and Income Tax rates for super senior citizens (Age 80 years and above)-Old Regime

Certain contributions to be taxed as perquisite

Contributions exceeding an amount of Rs. 7, 50,000 made by an employer to an employee’s account in a recognized provident fund, National Pension Scheme and superannuation fund will be taxed perquisite in the hands of the employees. The annual increase to such contributions exceeding Rs. 7,50,000 will also be a taxed perquisite.

Income tax calendar for the year 2020

In below are mentioned the major tax-related dates in all the months of 2020.

Conclusion

Which tax regime old or new will be beneficial that will result in a lower tax rate for each individual is likely to depend on his or her income, composition and investments are done. Each individual taxpayer has to do his income calculations to figure out which tax regime will be more beneficial for them. So it is wise of you to consult an expert for guidance. Contact our experts in Enterslice to help you in Filing Income Tax and make it clear as to which regime will be best for you. 

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