New Income Tax Regime Comes Into Force For FY 2020-21(AY 2021-22)

As per Financial Budget 2020, From 1st April 2020 There is New Income Tax Regime comes into force for FY 2020-21.

• New Income Tax Regime : Advantages and Disadvantages

  • New Income Tax Structure is applicable to Person who is not having Income from Business and Profession. However its optional on the hand of Tax Payer.
  • New Tax Scheme tax rates are lower subject to avoiding Tax Deduction and Tax Exemption.
  • New Tax Regime Rates are as:
    • Income Upto Rs. 2,50,000 : Tax Rate is Nil
    • Income From Rs. 2,50,001 to Rs. 5,00,000 : Tax Rate is 5%
    • Income From Rs. 5,00,001 to Rs. 7,50,000 : Tax Rate is 10%
    • Income From Rs. 7,50,001 to Rs. 10,00,000 : Tax Rate is 15%
    • Income From Rs. 10,00,001 to Rs. 12,50,000 : Tax Rate is 20%
    • Income From Rs. 12,50,001 to Rs. 15,00,000 : Tax Rate is 25%
    • Income Above Rs. 15,00,000 : Tax Rate is 30%
  • Tax Payer can choose between New Tax Scheme with lower tax rates without Deduction and Exemptions or Old Tax Regime with deduction and exemptions.
  • Following Deductions and Exemptions will not allow to tax payer if they choose New Income Tax Regime:
    • Standard Deduction (Rs. 50,000) from Salary and profession tax will not allow in new regime
    • House Rent Allowance (HRA) will not allow in new regime
    • Housing Loan Interest (Rs. 2,00,000-Maximum) will not allow in new regime
    • Leave Travel Allowance (LTA) will not allow in new regime
    • Deduction Under Chapter VIA of The Income Tax Act, 1961 will not allow under New Tax Regime :
      • Section 80C Deductions : Life Insurance Premium, Tax Saving Mutual Fund, Housing Loan repayment etc
      • Sec 80CCC : Pension Premium
      • Section 80D: Health Insurance Policy premium
      • Section 80TTA: Saving Bank Interest Deduction
      • All Chapter VIA Deductions.
  • Thus, New Tax Structure is much complicated compare to old Income Tax Structure.

Click For Calculate your Tax as per New Income Tax Regime and Choose Best Regime which Saves Tax.