Compare Old tax regime with new tax regime

In Finance Bill, 2020 a new section 115BAC has been inserted to provide concessional slab rate of tax for individuals and HUFs. Further, this section is optional and option has to be exercised on or before the due date of filing return. However, to avail the benefit of concessional rate, following conditions needs to be satisfied.

Following exemptions and deductions will not be available:

1. Leave Travel Concession (Section 10(5))

2. House Rent Allowance (Section 10(13A))

3. Allowances mentioned in Section 10(14)

4. Flat deduction of Rs 50,000/- which available to salaried employees

5. Deduction of entertainment allowance

6. Deduction of professional tax

7. Deduction of interest on housing loans in case of self-occupied properties. (Section 24(b))

8. Exemption of Rs 1,500/- in respect of clubbing of minor child’s income (Section 10(32))

9. Exemption in respect of SEZ units (Section 10AA)

10. Additional depreciation of 20% of Actual Cost of New plant and machinery (Section 32(1)(iia))

11. Additional depreciation of 15% in respect of investment made in notified backward areas (Section 32AD)

12. Rebate in respect of amount deposited in Tea/Coffee/Rubber development A/c or Site Restoration Fund (Section 33AB and 33ABA)

13. Deduction in respect of amount paid for the purpose of scientific research as mentioned in section 35(ii), 35(iia) and section 35(iii)

15. Deduction in respect of any specified business as mentioned in section 35AD

16. Deduction in respect of Agriculture Extension Activities (Section 35CCC)

17. Deduction in respect of family pension (Section 57(iia))

18. Deduction under section 80C to 80U. However, deduction in respect of employer contribution to employees u/s. 80CCD (2) and deduction in respect of new employees 80JJAA can be availed.

Set-off of any carried forward loss and unabsorbed depreciation is not available if such loss or unabsorbed depreciation is attributable to any of the item mentioned above.

If after exercising the option, any of the condition is violated then benefit of this section is not available for that year and any of the subsequent years and income will be taxed as per existing slab rate.

Concessional slab rates are as under:-

S. No.	Total Income	Rate of Tax
1.	Up to Rs 2,50,000/-	Nil
2.	From Rs 2,50,001/- to Rs 5,00,000/-	5%
3.	From Rs 5,00,001/- to Rs 7,50,000/-	10%
4.	From Rs 7,50,001/- to Rs 10,00,000/-	15%
5.	From Rs 10,00,001/- to Rs 12,50,000/-	20%
6.	From Rs 12,50,001/- to Rs 15,00,000/-	25%
7.	Above Rs 15,00,000/-	30%

However, it is noteworthy that this option once exercised, it cannot be withdrawn subsequently in any of the following year in case where the Individual or the HUF has business Income.

The said amendment will be applicable from AY 2021-22 relevant to Financial Year 2020-21.

EXAMPLE OF TAX LIABILITY IN OLD TAX REGIME AND IN NEW TAX REGIME –

CASE A – 

Particulars	Old Tax Regime	New Tax Regime
Salary Income	10,00,000/-	10,00,000/-
Less – Standard Deduction	50,000/-	–
Less – Profession Tax	2,500/-	–
Taxable Salary Income	9,47,500/-	10,00,000/-
Less – Interest On Housing Loan (24(b))	2,00,000/-	–
Interest On Saving Account	13,000/-	13,000/-
Interest On Fixed Deposits	20,000/-	20,000/-
Gross Total Income	7,80,500/-	10,33,000/-
Deduction under Chapter VIA
80C	1,50,000/-	–
80CCD(1B) (New Pension Schme)	50,000/-	–
80D (For Self & Spouse Mediclaim)	25,000/-	–
80D (For Senior Citizen Parents Mediclaim or Expenditure incurred for their health)	50,000/-	–
80TTA	10,000/-	–
Total Income	4,95,500/-	10,33,000/-
Tax Payable	–	81,600/-
Education Cees	–	3,264/-
Total Tax Liability	NIL	84,864/-

CASE B –

Particulars	Old Tax Regime	New Tax Regime
Salary Income	15,00,000/-	15,00,000/-
Less – Standard Deduction	50,000/-	–
Less – Profession Tax	2,500/-	–
Taxable Salary Income	14,47,500/-	15,00,000/-
Less – Interest On Housing Loan (24(b))	2,00,000/-	–
Interest On Saving Account	13,000/-	13,000/-
Interest On Fixed Deposits	20,000/-	20,000/-
Gross Total Income	12,80,500/-	15,33,000/-
Deduction under Chapter VIA
80C	1,50,000/-	–
80CCD(1B) (New Pension Schme)	50,000/-	–
80D (For Self & Spouse Mediclaim)	25,000/-	–
80D (For Senior Citizen Parents Mediclaim or Expenditure incurred for their health)	50,000/-	–
80TTA	10,000/-	–
Total Income	9,95,500/-	15,33,000/-
Tax Payable	1,11,600/-	1,97,400/-
Education Cees	4,464/-	7,896/-
Total Tax Liability	1,16,064/-	2,05,296/-

CASE C –

Particulars	Old Tax Regime	New Tax Regime
Salary Income	25,00,000/-	25,00,000/-
Less – Standard Deduction	50,000/-	–
Less – Profession Tax	2,500/-	–
Taxable Salary Income	24,47,500/-	25,00,000/-
Less – Interest On Housing Loan (24(b))	2,00,000/-	–
Interest On Saving Account	13,000/-	13,000/-
Interest On Fixed Deposits	20,000/-	20,000/-
Gross Total Income	22,80,500/-	25,33,000/-
Less – Deduction under Chapter VIA
80C	1,50,000/-	–
80CCD(1B) (New Pension Schme)	50,000/-	–
80D (For Self & Spouse Mediclaim)	25,000/-	–
80D (For Senior Citizen Parents Mediclaim or Expenditure incurred for their health)	50,000/-	–
80TTA	10,000/-	–
Total Income	19,95,500/-	25,33,000/-
Tax Payable	4,11,150/-	4,97,400/-
Education Cees	16,446/-	19,896/-
Total Tax Liability	4,27,596/-	5,17,296/-

CASE D –

Particulars	Old Tax Regime	New Tax Regime
Salary Income	70,00,000/-	70,00,000/-
Less – Standard Deduction	50,000/-	–
Less – Profession Tax	2,500/-	–
Taxable Salary Income	69,47,500/-	70,00,000/-
Less – Interest On Housing Loan (24(b))	2,00,000/-	–
Interest On Saving Account	13,000/-	13,000/-
Interest On Fixed Deposits	20,000/-	20,000/-
Gross Total Income	67,80,500/-	70,33,000/-
Less – Deduction under Chapter VIA
80C	1,50,000/-	–
80CCD(1B) (New Pension Schme)	50,000/-	–
80D (For Self & Spouse Mediclaim)	25,000/-	–
80D (For Senior Citizen Parents Mediclaim or Expenditure incurred for their health)	50,000/-	–
80TTA	10,000/-	–
Total Income	64,95,500/-	70,33,000/-
Tax Payable	17,61,150/-	18,47,400/-
Surcharge as Total Income Exceeds Rs 50,00,000/-	1,76,115/-	1,84,740/-
Education Cees	77,491/-	81,286/-
Total Tax Liability	20,14,756/-	21,13,426/-