Income Tax Slabs 2021-22: New or old regime? Which tax slabs will give you more benefits | Details inside
New Delhi | Jagran Business Desk: Amid hopes to revive the coronavirus pandemic-hit Indian economy, Finance Minister Nirmala Sitharamand had announced the Union Budget 2021 on February 1. As predicted by several financial experts, the central government didn't change the income tax slabs for tax returns for the financial year 2021-22. However, Sitharaman provided a huge relief to senior citizens across the country as the central government said that people above the age of 75 dependent on pension and interest income have been exempted from filing tax returns. In the case of such senior citizens, banks will automatically deduct TDS. Let us know in detail about both these tax slabs.
Select a tax slab
In Budget 2020, the Finance Ministry gave two income tax options for the salaried class. These options are effective from FY 2020-21. With no change in the income tax slab in Budget 2021, these options will also be applicable in the new financial year. Taxpayers can choose either of these two options while filing their income tax return. One of these two options is the old/existing tax slabs and the other option is the new tax slab, which was introduced in the budget 2020.
New tax slabs eliminate many tax exemptions
Apart from the rates in the new tax slabs brought in the previous budget, the major difference is that it eliminated various exemptions, while the old/existing tax slabs are getting different tax rebates. Also, in all cases, 4 per cent health and education cess is charged with income tax liability.
New tax slab brought in Budget 2020
The rates in the tax slabs brought in the Union Budget 2020 are low, but in this tax slabs, the other tax exemptions received under section 80C have been abolished. There is no tax on income up to Rs 2.5 lakh in the new tax slab. Income from 2.5 lakh to 3 lakh rupees is taxed at the rate of 5 per cent.
Income from Rs 3 lakh to Rs 5 lakh is also taxed at the rate of 5 per cent and tax exemption of Rs 12,500 is given under U / S 87A. In this way, there will be no tax liability due to the tax exemption under 87A up to income up to Rs 5 lakh in this tax slab.
Further, income from Rs 5 to 7.5 lakh is taxed at a rate of 10 per cent. Income from 7.5 to 10 lakhs is taxed at a rate of 15 per cent. Income from 10 to 12.50 lakhs is taxed at a rate of 20 per cent. Income from 12.5 lakh to 15 lakh is taxed at the rate of 25 per cent. After this, there is tax at the rate of 30 per cent on income above Rs 15 lakh.
Income tax rates remain the same for all age groups in the new tax slab
The income tax rates in the tax slabs brought in the Budget 2020 are the same for people up to the age of 60 years, senior citizens from 60 years to 80 years of age and super senior citizens above the age of 80 years.
Income tax rates as per old/existing tax slabs (for the age group below 60 years)
No tax is payable on the income of Rs 2.5 lakh. Income from 2.5 lakh to 5 lakh is taxed at a rate of 5 per cent. Income from Rs 5 lakh to Rs 10 lakh is taxed at the rate of 20 per cent. Income above Rs 10 lakh is taxed at the rate of 30 per cent. Tax exemption is also available under 87A on the income of Rs 2.5 to 5 lakh in the tax slab of this age group.
Income tax rates as per old/existing tax slabs (for age group 60 to 80 years)
There is no tax payable on income up to 3 lakh. Income from Rs 3 to 5 lakh is taxed at the rate of 5 per cent. Income from Rs 5 to 10 lakh is taxed at the rate of 20 per cent. The income of more than one million (Rs 10 lakh) is taxed at a rate of 30 per cent. In this age group, income from 3 to 5 lakhs is also exempted from being taxed under 87A.
Income tax rates as per old/existing tax slabs (for the age group above 80 years)
There is no tax on income up to 5 lakh. There is a 20 per cent tax on income ranging from Rs 5 to 10 lakh. There is a 30 per cent tax on income above Rs 10 lakh.
No tax on income up to five lakhs
A tax rebate of up to a maximum of Rs 1.5 lakh can be availed by investing in instruments specified under section 80C in old/existing income tax slabs. In this way, there will be no tax liability on income up to Rs 5 lakh even in the old/existing income tax slabs.
Conditions on opting for new tax slab
The taxpayer opting for concessional rates in the new tax regime will have to waive some of the exemptions and deductions available in the existing/old tax system. There are 70 deductions and exemptions, which are not allowed in the new tax slab.
These general deductions and exemptions are not allowed in the new tax slab:
1. Leave Travel Allowance (LTA)
2. House Rent Allowance (HRA)
3. Conveyance allowance
4. Daily expenses during employment
5. Transfer Allowance
6. Helper allowance
7. Education allowance to children
8. Other Special Allowances [Section 10 (14)]
9. Standard Deduction on Salary
10. Professional Tax
11. Interest on housing loan (Section 24)
12. Deduction under Chapter VI-A (80C, 80D and 80E)
These deductions are allowed in the new tax slab:
1. Transport allowance for differently-abled people
2. Allowance for travelling expenses during work
3. Investment in notified pension scheme under section 80CCD (2)
4. Deduction for the employment of new employees under section 80JJAA
5. Any allowance for travel for employment or on transfer
Posted By: Talibuddin Khan