Under union budget 2020, The Finance Minister introduced the “New Income Tax Slab” which is also called the “New Tax Regime”. As per the new tax regime, there is an option for individuals and HUF to pay tax at lower rates without claiming deductions under various sections.
The New Income Tax Slab (New Tax Regime) was introduced vide section 115BAC, which is applicable to individual and HUF assessee only and allows them to pay tax at lower rates. Under the New Tax Regime, the taxpayer has an option to choose either of the following:
1) To pay tax at lower rates as per the New Income Tax Slab (New regime) on the condition that they forego certain permissible exemptions and deductions available under Income Tax.
2) To continue to pay taxes under the existing tax rates. The assessee can avail of rebates and exemption by staying in the Old regime and paying tax at the existing higher rate.
New Income Tax Slab
In India, tax laws divide taxpayers into different groups as per their taxable income and levy income tax at different rates. These groups are called Income Tax Slabs. This type of taxation enables progressive and fair tax systems in the country. Such Income Tax Slabs tend to undergo a change during every budget. These slab rates are different for different categories of taxpayers.
New Income Tax Slab For AY 2021-22 and AY 2022-23- It is to be noted that as per budget 2021, there is no change in the Income Tax Slab applicability (Old as well as new) and the same Income Tax Slab will be applicable for 2022 (AY 2022-23). Accordingly, here in this post, the given tax slab will be applicable for the assessment year 2021-22 and assessment year 2022-23.
Also Read- AY 2020-21: Income Tax Slab For Individual, HUF, Partnership Firm, Local Authority, Co-operative Society and companies
Income Tax Slabs For AY 2021-22 and AY 2022-23
Here are the Income Tax Slabs for AY 2021-22 and AY 2022-23 for all categories of the Income Tax assessee.
Individual and HUF Assessee
New Income Tax Slab For Individual and HUF (New Regime)
| New Income Tax Slab | Income Tax Rates for All individuals and HUF- New Scheme |
|---|---|
| upto Rs. 2,50,000 | NIL- No Tax |
| Rs. 2,50,001 to Rs. 5,00,000 | 5 % (Tax Rebate u/s 87a is available) |
| Rs. 5,00,001 to Rs. 7,50,000 | 10% |
| Rs. 7,50,001 to Rs. 10,00,000 | 15% |
| Rs. 10,00,001 to Rs. 12,50,000 | 20% |
| Rs. 12,50,001 to Rs. 15,00,000 | 25% |
| Above Rs. 15,00,000 | 30% |
Note 1- The taxpayer opting for concessional rates in the New Tax Regime will have to forgo certain exemptions and deductions available in the existing old tax regime.
Note 2:- A tax rebate under section 87A is allowed to individual taxpayers for a maximum amount of Rs. 12,500 if the total income is up to Rs. 5,00,000 for AY 2021-22. The amount of rebate shall be 100% of the Income Tax or Rs. 12,500 whichever is less. (New Regime)
Old Income Tax Slab For Individual and HUF (Old Regime)
| Income Tax Slab | Income Tax Rates for individual (Age below 60 years) & HUF |
|---|---|
| upto Rs. 2,50,000 | NIL- No Tax |
| Rs. 2,50,000 to Rs. 5,00,000 | 5 % of total income exceeding Rs. 2,50,000 |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs. 12,500 + 20% of total income exceeding Rs. 5,00,000 |
| Above Rs. 10,00,000 | Rs. 1,12,500 + 30% of total income exceeding Rs. 10,00,000 |
Income Tax rates for Senior Citizen (Age 60 years to 80 years)
| Income Tax Slab | Rates |
|---|---|
| upto Rs. 3,00,000 | NIL- No Tax |
| Rs. 3,00,000 to Rs. 5,00,000 | 5 % of total income exceeding Rs. 3,00,000 |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs. 10,000 + 20% of total income exceeding Rs. 5,00,000 |
| Above Rs. 10,00,000 | Rs. 1,10,000 + 30% of total income exceeding Rs. 10,00,000 |
Income Tax rates for Super Senior Citizen (Age above 80 years of age)
| Income Tax Slab | Rates |
|---|---|
| upto Rs. 5,00,000 | NIL- No Tax |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% of total income exceeding Rs. 5,00,000 |
| Above Rs. 10,00,000 | Rs. 1,00,000 + 30% of total income exceeding Rs. 10,00,000 |
The following points are also applicable-
Note 1:- An additional 4% health & education cess will be applicable to the tax amount calculates as above. (Both Regime)
Note 2:- A tax rebate under section 87A is allowed to individual taxpayers (Age below 60 years) for a maximum amount of Rs. 12,500 if the total income is up to Rs. 5,00,000 for AY 2021-22. The amount of rebate shall be 100% of the Income Tax or Rs. 12,500 whichever is less. (Old Regime)
Note 3:- A tax rebate under section 87A is allowed to individual taxpayers (Age 60 or 60 + but below 80 years) for a maximum amount of Rs. 10,000 if the total income is up to Rs. 5,00,000 for AY 2021-22. The amount of rebate shall be 100% of the Income Tax or Rs. 10,000 whichever is less. (Old Regime)
Note 4:- The surcharge over the tax calculated will be charged (subject to marginal relief) as per the below table- (Both Regime)
| Income Limit | Surcharge rate on amount of Income Tax |
|---|---|
| Net income exceed Rs. 50 Lakhs but does not exceed Rs. 1 Crore | 10% |
| Net Income exceed Rs. 1 Crore but does not exceed Rs. 2 Crore | 15% |
| Net Income exceed Rs. 2 Crore but does not exceed Rs. 5 Crore | 25% |
| Net Income exceed Rs. 5 Crore | 37% |
How to choose between the new tax regime and the old tax regime
Salaried Person- For this purpose, a salaried person is free to opt-in or opt-out every year. He is only required to intimate his employer about his choice and the employer has to deduct TDS according to the employee choice.
Non-Salaried Person- A non-salaried person, has to make his choice at the time of filing his return. They are not required to intimate anyone during the year. However, a non-salaried taxpayer has no option to change his choice every year. It means once a non-salaried person opt-out of the new tax regime, they can not opt-in again for the new tax regime in the future.
***For tax planning purposes, a taxpayer needs to make a comparison between old and new tax regimes according to his estimated income of that financial year. Once the taxpayer chooses the right tax regime, the investment TDS or advance tax payable calculations are made accordingly.
Partnership Firm
Tax rate:- For Partnership firms (Including LLP) Income tax rate is flat 30%
Surcharge:- It will be 12% of tax if net income exceeds Rs. 1 crore. (Surcharge will be subject to marginal relief)
Health and Education cess:- It will be 4% of Income Tax + Surcharge
Local Authority
For the Local Authority, Income tax rate is flat 30%
Health and Education cess:- It will be 4% of Income Tax + Surcharge
Surcharge:- It will be 12% of the tax if net income exceeds Rs. 1 crore. (Surcharge will be subject to marginal relief)
Co-operative society
From AY 2021-22 Income of the Cooperative society is taxable as per the choice of the Old regime or a new regime of tax. Under the new regime, the rate of tax is flat 22% provides its forgoes specified deduction and exemption under the Act.
New Tax Rate- for co-operative society Income tax rate is flat 22%
Health and Education Cess:- It will be 4% of Income Tax + Surcharge
Surcharge:- It will be levied at a flat rate of 10% of the tax, irrespective of the Income of such society.
Under the old tax regime, the Income Tax Slab will be as follow-
| Taxable Income | Tax Rate |
|---|---|
| Up to Rs. 10,000 | 10% |
| Rs. 10,000 to Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
Health and Education cess:- It will be 4 % of Income Tax + Surcharge
Surcharge:- It will be 12 % of tax if net income exceeds Rs. 1 crore. (Surcharge will be subject to marginal relief)
Domestic Companies
| Particulars | Tax Rates |
|---|---|
| where companies’ total turnover or gross receipts during the previous year 2018-19 does not exceed Rs. 400 crore | 25% |
| Where company opt for section 115BA | 25% |
| Where company opt for section 115BAA | 22% |
| Where company opt for section 115BAB | 15% |
| All other domestic company | 30% |
Health and Education cess:- It will be 4% of Income Tax + Surcharge
Surcharge:- It will be 7% of the tax if net income exceeds Rs. 1 crore but below Rs. 10 crores and if income exceeds Rs. 10 crores, a surcharge will be 12%. (Surcharge will be subject to marginal relief)
Foreign Company
| Particulars | Tax Rates |
|---|---|
| Royalty received from the government or an Indian concern or fees for rendering technical services where such agreement has, in either case, been approved by the central government | 50% |
| Any other income | 40% |
Health and Education cess:- It will be 4% of Income Tax + Surcharge
Surcharge:- It will be 2% of the tax if net income exceeds Rs. 1 crore but below Rs. 10 crores and if income exceeds Rs. 10 crores, a surcharge will be 5%. (Surcharge will be subject to marginal relief)
Frequently Asked Questions- FAQs
-
What is the Income Tax Slab For 2020-21?
As per the new tax regime for FY 2020-21 following new income tax slab is applicable for all individuals and HUF assessees-
🎯 up to Rs. 2,50,000 NIL ▶️ No Tax
🎯 Rs. 2,50,001 to Rs. 5,00,000 ▶️ 5 % (Tax Rebate u/s 87a is available)
🎯 Rs. 5,00,001 to Rs. 7,50,000 ▶️ 10%
🎯 Rs. 7,50,001 to Rs. 10,00,000 ▶️ 15%
🎯 Rs. 10,00,001 to Rs. 12,50,000 ▶️ 20%
🎯 Rs. 12,50,001 to Rs. 15,00,000 ▶️ 25%
🎯 Above Rs. 15,00,000 ▶️ 30%
Note- The taxpayer opting for concessional rates in the New Tax Regime will have to forgo certain exemptions and deductions available in the existing old tax regime.
Note 2:- A tax rebate under section 87A is allowed to individual taxpayers for a maximum amount of Rs. 12,500 if the total income is up to Rs. 5,00,000 for FY 2020-21. The amount of rebate shall be 100% of the Income Tax or Rs. 12,500 whichever is less. (New Regime)
-
What is the Income Tax Slabs For FY 2019 20?
Income Tax Slab For FY 2019-20 in case of Individual (Age below 60 years) and HUF
🎯 upto Rs. 2,50,000 ▶️ NIL (No Tax)
🎯 Rs. 2,50,000 to Rs. 5,00,000 ▶️ 5 % of total income exceeding Rs. 2,50,000
🎯 Rs. 5,00,001 to Rs. 10,00,000 ▶️ Rs. 12,500 + 20% of total income exceeding Rs. 5,00,000
🎯 Above Rs. 10,00,000 ▶️ Rs. 1,12,500 + 30% of total income exceeding Rs. 10,00,000
-
What are the new tax changes for 2020?
The New Income Tax Slab was introduced vide section 115BAC, which is applicable to individual and HUF assessee only and allows them to pay tax at lower rates. Under the New Tax Regime, the taxpayer has an option to choose either of the following:
1) To pay tax at lower rates as per the new regime on the condition that they forego certain permissible exemptions and deductions available under Income Tax.
2) To continue to pay taxes under the existing tax rates. The assessee can avail of rebates and exemption by staying in the old regime and paying tax at the existing higher rate.
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Disclaimer: The information contained in the above article are solely for informational purpose after exercising due care. However, it does not constitute professional advice or a formal recommendation. The author does not own any responsibility for any loss or damage caused to any person, directly or indirectly, for any action taken on the basis of the above article.
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