Income Tax Slabs & Rates
The Finance Minister introduced a new tax regime in Union Budget, 2020 wherein there is an option for individuals and HUF (Hindu Undivided Family) to pay taxes at lower rates without claiming deductions under various sections. The following Income Tax slab rates are notified in the new tax regime vs the old tax regime:
| Income Tax Slab | Tax rates as per new regime | Tax rates as per old regime |
|---|---|---|
| ₹0 - ₹ 2,50,000 | Nil | Nil |
| ₹ 2,50,001 - ₹ 5,00,000 | 5% | 5% |
| ₹ 5,00,001 - ₹ 7,50,000 | ₹ 12500 + 10% of the total income exceeding ₹ 5,00,000 | ₹ 12500 + 20% of the total income exceeding ₹ 5,00,000 |
| ₹ 7,50,001 - ₹ 10,00,000 | ₹ 37500 + 15% of the total income exceeding ₹ 7,50,000 | ₹ 62500 + 20% of the total income exceeding ₹ 7,50,000 |
| ₹ 10,00,001 - ₹ 12,50,000 | ₹ 75000 + 20% of the total income exceeding ₹ 10,00,000 | ₹ 112500 + 30% of the total income exceeding ₹ 10,00,000 |
| ₹ 12,50,001 - ₹ 15,00,000 | ₹ 125000 + 25% of the total income exceeding ₹ 12,50,000 | ₹ 187500 + 30% of the total income exceeding ₹ 12,50,000 |
| Above ₹ 15,00,000 | ₹ 187500 + 30% of the total income exceeding ₹ 15,00,000 | ₹ 262500 + 30% of the total income exceeding ₹ 15,00,000 |
New tax regime slab rates are not differentiated based on age group. However, under the old tax regime, the basic income threshold exempt from tax for senior citizens (aged 60 to 80 years) and super senior citizens (aged above 80 years) is ₹ 3 lakh and ₹ 5 lakh respectively.
However, under the new tax regime, a person up to the age of 70 cannot claim income tax deductions while calculating taxes. Hence, every person has to make his/her own calculation as per the old and new tax regimes and calculate which one is beneficial based on the type of investments made and returns earned on those investments.
Consider an example, a person aged 35 years has a total income of ₹ 11, 00,000/- and invested under Section 80C of ₹ 1, 50,000/- and under Section 80CCD of ₹ 50,000/-. He has claimed income tax deduction with medical and leave travel allowance of ₹ 50000/- and HRA of ₹ 1,50,000/-. The tax payable under new and old tax regimes are as follows:
| Particulars | New regime | Old regime |
|---|---|---|
| Gross total income | ₹ 11,00,000 | ₹ 11,00,000 |
| Less: Deductions under Section 80C | ₹ 0 | ₹ 1,50,000 |
| Less: Standard Deduction (Medical & Travel Allowance) | ₹ 0 | ₹ 50,000 |
| Less: Deductions under Section 80CCD | ₹ 0 | ₹ 50,000 |
| Less: HRA deduction as per Section 10(13A) | ₹ 0 | ₹ 1,50,000 |
| Taxable Income | ₹ 11,00,000 | ₹ 7,00,000 |
| Taxes payable as per slab rates | ||
| ₹ 0 - ₹ 2,50,000 | ₹ 0 | ₹ 0 |
| ₹ 2,50,001 - ₹ 5,00,000 | ₹ 12,500 | ₹ 12,500 |
| ₹ 5,00,001 - ₹ 7,50,000 | ₹ 25,000 | ₹ 40,000 |
| ₹ 7,50,001 - ₹ 10,00,000 | ₹ 37,500 | ₹ 0 |
| ₹ 10,00,001 - ₹ 12,50,000 | ₹ 20,000 | ₹ 0 |
| Total taxes | ₹ 95,000 | ₹ 52,500 |
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