In Budget 2020 has introduced a new income tax slab and new tax rates for Individuals and a HUF. The new tax rate will apply with a condition that no exclusion and finding can be asserted. Be that as it may, the new tax regime for individuals and HUFs are discretionary.
New income tax rate and new income tax slab for AY 2021-22 under the new tax regime for individuals and HUF presented by the Union Budget 2020.
Concentrate of Finance Minister discourse during her spending introduction
“So as to give critical alleviation to the individual taxpayers and to improve the income-tax law, I propose to bring a new and streamlined personal income tax regime wherein income tax rates will be essentially decreased for the individual taxpayers who swear off specific reasoning’s and exceptions,” the FM said in her discourse.
With this, a new tax framework is introduced the Indian economy which denies any reasoning and exclusion.
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Financial plan 2020 has offered taxpayers the choice to pick between the current income tax regime and a new regime with cut income tax rates and new income tax slabs however with no tax finding and exceptions.
While introducing the Union Budget 2020, the Finance Minister Nirmala Sitharaman reported cuts in income tax rates. The rates are a piece of a new income tax the regime that Sitharaman said will bring down the income tax a salaried individual pays.
To offer impact to the new tax regime, a new section 115BAC is embedded in the Income Tax Act, 1961 with impact from the evaluation year 2021-22.
According to area 115BAC, an Individual or a HUF will figure his tax risk on the complete income according to the accompanying table-
|Sl. No.||Total income||Rate of tax|
|1.||Upto Rs 2,50,000||Nil|
|2.||From Rs 2,50,001 to Rs 5,00,000||5 percent|
|3.||From Rs 5,00,001 to Rs 7,50,000||10 percent|
|4.||From Rs 7,50,001 to Rs 10,00,000||15 percent|
|5.||From Rs 10,00,001 to Rs 12,50,000||20 percent|
|6.||From Rs 12,50,001 to Rs 15,00,000||25 percent|
|7.||Above Rs 15,00,000||30 percent|
Under the new tax regime, tax obligation of an Individual and a HUF will be figured dependent on the above table according to his income slab and rate of tax. The slab increments by Rs. 2.50 lakh.
Note: There is by all accounts a drafting lacuna in the income tax slab and tax rate table as referenced in section 115BAC. In spite of the fact that the expectation is to recommend slab based rate of tax however the table proposes it is a level rate based taxation. On the off chance that all out income is thought to be Rs. 6,00,000 it straight forward falls in sequential no. 3 of the above table and the relating rate of tax is 10 percent which processes the tax risk to Rs 60,000. In actuality, on the off chance that the tax is registered on the slab rate premise, at that point, income-tax on Rs 6 lakh will come to Rs, 22,500.
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Section 115BAC is discretionary. It implies a taxpayer could possibly tail it. On the off chance that a taxpayer doesn’t wish to follow the new disentangled tax regime, as it is called, he may decide to pay the income tax on all out income according to existing income tax rates which are given beneath
|Category of Taxpayer||Individual/HUF/AoP/BoI/AJP|
|Residential Status||Resident and Non-Resident|
|Age of the Taxpayer||Under 60 years of age|
|Total Income||Income-Tax Rate|
|Up to Rs. 2,50,000||Nil|
|Rs. 2,50,001 to Rs. 5,00,000||5%|
|Category of Taxpayer Individual (Senior Citizen) Residential Status Resident Age of the Taxpayer Above 60 years of age Total Income Income-Tax Rate Up to Rs. 3,00,000 Nil Rs. 3,00,001 to Rs. 5,00,000 5% Rs. 5,00,001 to Rs. 10,00,000 20% Above Rs. 10,00,000 30% Rs. 5,00,001 to Rs. 10,00,000||20%|
|Above Rs. 10,00,000||30%|
It would be ideal if you note that there is no adjustment in the income slab and income tax rate under the current or old regime contrasted with the first the appraisal year 2020-21.
Relevant Income Tax Slab Rates for AY 2021-22 for Individuals/HUF
|Category of Taxpayer||Individual (Super Senior Citizen)|
|Age of the Taxpayer||Above 80 years of age|
|Total Income||Income-Tax Rate|
|Up to Rs. 5,00,000||Nil|
|Rs. 5,00,001 to Rs. 10,00,000||20%|
|Above Rs. 10,00,000||30%|
Comments: A Non-Resident Senior Citizen or a Very Senior Citizen Individual isn’t qualified for extra alleviation on income-tax slab rates. Just a Resident Senior Citizen or a Very Senior Citizen Individual is qualified for extra help on income-tax slab rates.
Overcharge on Income Tax for AY 2021-22 for all the cases canvassed in Table 1 to Table 3 referenced previously
Exemption u/s 87A is permitted on the tax obligation to an inhabitant Individual if Total Income doesn’t surpass Rs. 5,00,000. The most extreme measure of refund is Rs. 12,500. This discount isn’t permitted to a non-occupant and persons other than Individual.
Fortunately this discount of Rs. 12,500 will be accessible under the new tax regime too. It was at that point accessible for the old tax regime.
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The viable tax rate for individuals with taxable income up to Rs 5 lakh would be nil under both the new and the current tax regime as these individuals would have the option to profit the tax-advantage of refund up to Rs 12,500 under Section 87A under both regimes.
In the wake of looking at the tax rate graph and the income tax slab under the old tax regime and the new tax regime, the time has come to break down whether the new tax regime is extremely gainful to an Individual.
Is New Income Tax Slab Rate for Individuals after Budget 2020 is Really Beneficial
Already, taxpayers paid 20% for incomes between Rs 5-10 lakh and 30% for incomes between Rs 10-15 lakh.
Income underneath Rs, 2.50 lakh will keep on staying absolved while income between Rs 2.50 to Rs. 5 lakh will keep on getting a discount.
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