Which Tax Regime to choose?
Calculate your Tax Liability and compare Old & New Tax Regime
Maharshi Shah
2021-01-27 16:48:36The Union Budget for the year 2020 was presented by the Finance Minister Nirmala Sitharaman on the 1st of February, 2020. The new income tax rate will be applicable from FY 2020-21 corresponding to Assessment Year 2021-22. The Union Budget will be presented on the 1st of February, 2021.
Furthermore, given the budget is just a couple of days away now, the expectations surrounding it are huge. Additionally, the FM has also launched the “Union Budget Mobile App” to access the budget documents by the Members of Parliament (MPs) and the general public.
| Income Range | Current Income Tax Rates | New Income Tax Rates |
| Up to INR 2,50,000 | NIL | NIL |
| INR 2,50,001 to INR 5,00,000 | 5% | 5% |
| INR 5,00,001 to INR 7,50,000 | 20% | 10% |
| INR 7,50,001 to INR 10,00,000 | 20% | 15% |
| INR 10,00,001 to INR 12,50,000 | 30% | 20% |
| INR 12,50,001 to INR 15,00,000 | 30% | 25% |
| Above INR 15,00,000 | 30% | 30% |
| Income Range | Current Income Tax Rates |
| Up to INR 3,00,000 | NIL |
| INR 3,00,001 to INR 5,00,000 | 5% |
| INR 5,00,001 to INR 10,00,000 | 20% |
| Above INR 10,00,000 | 30% |
| Income Range | New Income Tax Rates |
| Up to INR 2,50,000 | NIL |
| INR 2,50,001 to INR 5,00,000 | 5% |
| INR 5,00,001 to INR 7,50,000 | 10% |
| INR 7,50,001 to INR 10,00,000 | 15% |
| INR 10,00,001 to INR 12,50,000 | 20% |
| INR 12,50,001 to INR 15,00,000 | 25% |
| Above INR 15,00,000 | 30% |
| Income Range | Current Income Tax Rates |
| Up to INR 5,00,000 | NIL |
| INR 5,00,001 to INR 10,00,000 | 20% |
| Above INR 10,00,000 | 30% |
| Income Range | New Income Tax Rates |
| Up to INR 2,50,000 | NIL |
| INR 2,50,001 to INR 5,00,000 | 5% |
| INR 5,00,001 to INR 7,50,000 | 10% |
| INR 7,50,001 to INR 10,00,000 | 15% |
| INR 10,00,001 to INR 12,50,000 | 20% |
| INR 12,50,001 to INR 15,00,000 | 25% |
| Above INR 15,00,000 | 30% |
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated in the above 3 categories.
Surcharge: 10% of Income Tax when total income exceeds INR 50,00,000 and 15% of income tax when total income exceeds INR 1,00,00,000.
Rebate: An individual (resident) is entitled to rebate under section 87A if his total income does not exceed INR 5,00,000. The amount of rebate shall be 100% of income-tax or INR 12,500, whichever is less.
A partnership firm that includes LLP is taxable at 30%.
Surcharge: A surcharge of 12% is payable if total income exceeds INR 1 Cr.
Cess: An additional 4% surcharge will be taxable for Health and Education Cess.
| Particulars | Tax Rates |
| Existing Companies | 22% |
| Newly Incorporated Companies (Manufacturing) | 15% |
The tax rate for foreign companies is 40%.
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount.
Surcharge: A surcharge of 12% is payable if total income exceeds INR 1 Cr.
| Net Income Range | Income Tax Rates |
| Up to INR 2,50,000 | NIL |
| INR 2,50,000 to INR 5,00,000 | 5% |
| INR 5,00,000 to INR 10,00,000 | 20% |
| Above INR 10,00,000 | 30% |
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated above.
Surcharge: 10% of Income Tax when total income exceeds INR 50,00,000 and 15% of income tax when total income exceeds INR 1,00,00,000.
| Net Income Range | Income Tax Rate |
| Up to INR 10,000 | 10% |
| INR 10,000 to INR 20,000 | 20% |
| Above INR 20,000 | 30% |
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated above.
Surcharge: 12% of tax is applicable when total income exceeds INR 1 Cr.
The local authority is taxable at 30%.
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated above.
Surcharge: 12% of Income Tax when total income exceeds INR 1 Cr.
The given tax rate slabs are applicable to any individual, HUF or artificial judicial person.
| Nature of Income | Up to INR 50L | More than 50L and up to 1 Cr. | More than 1 Cr. and up to 2 Cr. | More than 2 Cr. and up to 5 Cr. | More than 5 Cr. and up to 5 Cr. | More than 5 Cr. and up to 10 Cr. | More than 10 Cr. |
| Short term capital gain covered under section 111A | NIL | 10% | 15% | 15% | 15% | 15% | 15% |
| Long term capital gain covered under section 112A | NIL | 10% | 15% | 15% | 15% | 15% | 15% |
| Any other Income | NIL | 10% | 15% | 25% | 15% | 37% | 37% |
It is the amount that is levied upon the tax payable and not on the income that is generated. In other words, it is a tax that is levied upon the general tax.
For example: if an individual has generated an income of INR 100 over which the tax payable is INR 30, then the surcharge would be 10% of INR 30.
1. Calculate your Gross Total Income (GTI)
2. Reduce the deductions under sections 80C to 80U
3. Calculate your Tax Payable as per Income Tax slabs
4. Deduct the amount of rebate allowed
The Financial Year is the year which begins on 1st April and ends on 31st March. It is the year in which income is earned by the taxpayer. The Assessment Year is a year immediately following the Financial Year. The taxpayer needs to file the Income Tax Return (ITR) not in the year in which he/she earns the income but after the end of that year i.e, in the assessment year.
