Key Updates:
- Significant Relief for Individual Taxpayers
- New Income Tax Regimes for 2020 are: 10%, 15%, 20%,25% and 30% respectively
- Individuals are Now Taxed At:
- Up to 5 lakh Annual Income-Zero/No Tax
- Rs.5 lakh-7.5 lakh Annual Income: 10% Income Tax
- Rs.7.5 lakh-10 lakh Annual Income: 15% Income Tax
- Rs.10-12.5 lakh Annual Income: 20%Income Tax
- Rs.12.5-15 lakh Annual Income: 25% Income Tax
- Above Rs.15 lakh Annual Income: 30% Income Tax
- Simplified New Tax Return System in India will be Effective from 1st April,2020
The Finance Minister, Nirmala Sitharaman has finally opened her bag and presented the Union Budget 2020-21 in the Lok Sabha today. She proposed a new simplified individual tax regime for those who forego deductions and exemptions. As per the announcement, the new income tax slabs are: 0%, 10%, 15%, 20%, 25% and 30%. This new tax regime will cover the annual income bracket of: Up to 5 lakh, 5-7.5 lakh, 7.5-10 lakh, 10-12.5 lakh,12.5-15 lakh and above 15 lakh respectively. However,
this was the second budget presented by her under Modi’s government, leaving a common man happy by reducing his tax burden. Yes, a reduction in the current tax slabs will lead to savings, hence a big relief to individual taxpayers.
New Income Tax Regime
| Annual Income (in Rs.) | New Tax Slab |
| Up to 5 lakh | Nil |
| 5-7.5 lakh | 10% |
| 7.5-10 lakh | 15% |
| 10-12.5 lakh | 20% |
| 12.5-15 lakh | 25% |
| Above 15 lakh | 30% |
Let’s understand the income tax calculation below.
Income Tax Calculation for Different Slabs
Scenario 1: For Annual Income up to Rs.5 lakh
Annual Income-Rs.5 Lakh
Up to Rs.2.5 lakh-NIL
From Rs.2.5-5 lakh @0% = Rs.0 (0% of Rs.2.5 lakh)
So, the total tax liability comes out to be=Rs.0
Scenario 2: For Annual Income Rs.5-7.5 lakh
Annual Income: Rs.7 Lakh(assumed)
Up to Rs.5 lakh-NIL
From Rs.5-7 lakh @ 10%=Rs.20,000(10% of Rs.2 lakh)
So, the total tax liability comes out to be=Rs.20,000
Scenario 3: For Annual Income Rs.7.5-10 lakh
Annual Income:Rs.8 lakh(assumed)
Up to Rs.5 lakh-NIL
From Rs.5-7.5 lakh @ 10%=Rs.25,000(10% of Rs.2.5 lakh)
From Rs.7.5-8 lakh@15%=Rs.7,500(15% of Rs.50,000)
So, the total tax liability comes out to be=Rs.32,500
Scenario 4: For Annual Income Rs.10 lakh-12.5 lakh
Annual Income:Rs.12 lakh(assumed)
Up to Rs.5 lakh-NIL
From Rs.5-7.5 lakh @ 10%=Rs.25,000(10% of Rs.2.5 lakh)
From Rs.7.5-10 lakh@15%=Rs 37,500(15% of Rs.2.5 lakh)
From Rs.10-12 lakh@ 20%=Rs.40,000(20% of Rs.2 lakh)
So, the total tax liability comes out to be=Rs.1,02,000
Scenario 4: For Annual Income Rs.12.5 lakh-15 lakh
Annual Income:Rs.14 lakh(assumed)
Up to Rs.5 lakh-NIL
From Rs.5-7.5 lakh @ 10%=Rs.25,000(10% of Rs.2.5 lakh)
From Rs.7.5-10 lakh@15%=Rs 37,500(15% of Rs.2.5 lakh)
From Rs.10-12.5 lakh@ 20%=Rs.50,000(20% of Rs.2.5 lakh)
From Rs.12.5-14@25%=Rs.37,500(25% of Rs1.5 lakh)
So, the total tax liability comes out to be=Rs.1,49,500
Scenario 5: For Annual Income Above Rs.15 lakh
Annual Income:Rs.16 lakh(assumed)
Up to Rs.5 lakh-NIL
From Rs.5-7.5 lakh @ 10%=Rs.25,000(10% of Rs.2.5 lakh)
From Rs.7.5-10 lakh@15%=Rs.37,500(15% of Rs.2.5 lakh)
From Rs.10-12.5 lakh@ 20%=Rs.50,000(20% of Rs.2.5 lakh)
From Rs.12.5-15@25%=Rs.37,500(25% of Rs.1.5 lakh)
From Rs.15-16@30%=Rs.30,000(30% of Rs.1 lakh)
So, the total tax liability comes out to be=Rs.1,79,500
Note: The above tax calculations are assumed without standard deduction(for salaried). Further clarity on the same is yet to come.
Thus, the above scenarios would give a rough idea of individual income tax calculations. However, the figures are assumed here, thus the actual calculation may vary as per your current income.
