[Latest]Income Tax Slab Rates FY 2020-21 For Govt. Employees

Income tax slab rates FY 2020-21

Income Tax Slab Rates FY 2020-21

Income Tax Slab Rates FY 2020-21We will discuss new in one tax slab rates FY 2020-21.There is a big disappointment for salaried employees in Budget 2020.About 100 deductions+exemptions have been abolished.

Let us have quick look at Budget 2020 changes :

  • 70 exemptions and deductions are no more.
  • Tax slab rates reduced.
  • You have the option to calculate your tax either according to FY 2019-20 or FY 2020-21 tax rates.
  • New budget will be applicable from 1st April 2020 to 31st March 2021.
  • Rebate of ₹ 12,500 under section 87A is applicable.

Who will benefit the most

The tax payers who have no deduction and exemptions in past and now,will get the most benefit.

In other words,senior citizens can get reduction in their taxes,if they do not have any saving.

Who will get the loss

All salaried employees will have to pay more tax,if they choose new tax regime.

So all in all,salaried class should choose calculate tax according to FY 2019-20 tax rates.

Income tax slab rates FY 2019-20

Govt. has reduced Tax slab rates,but on one fatal condition,that is,you can not claim any deduction and exemption out of 70 manor deductions and exemptions.

But you will have the option of choosing old tax regime (calculate tax according to FY 2019-20) or new tax regime (calculate tax according to FY 2020-21).

Also read : Latest Income Tax Calculator FY 2020-21 For Govt. Employees.

Example to calculate tax in FY 2020-21(according to new tax regime)

Suppose your gross income for FY 2020-21 is ₹ 750,000.

So there will be no standard deduction of ₹ 50,000.

Hence your taxable income remains at  ₹ 7,50,000.

So as per budget 2020 rules,there will be no saving applicable.So according to the new tax slab rates,we calculate the tax :

So ₹ 750,000 can be devided as new tax slab rates.

0-250,000 = Nil tax

250,001-5,00,000 = @5% of 250,000 =12,500.

5,00,001-750,000 =@10% of 250,000 = 25,000

Hence your total tax = 12,500+25,000 = 37,5000.

Health and education Cess of 4% of 37,500 =1500

Finally got tax liability becomes 37500+1500=₹ 39,000.

Note : Here you can get rebate u/s 87A if total income is 5 lakhs or less.

Example to calculate tax in FY 2020-21(according to old tax regime)

Suppose your gross income for FY 2020-21 is ₹ 750,000.

So there will be standard deduction of ₹ 50,000.

Hence your taxable income becomes   ₹ 7,00,000.

So if you choose old tax regime,all tax deductions and exemptions are applicable.

In this particular example,we take ₹ 150,000 tax saving u/s 80C.

So your taxable income becomes ₹ 7,00,000-150,000=5,50,000.

Here,since taxable income is more than 5 lakhs,hence there will be no tax rebate u/s 87A

So ₹ 550,000 can be divided as old tax slab rates.

0-250,000 = Nil tax

250,001-5,00,000 = @5% of 250,000 =12,500.

5,00,001-550,000 =@20% of 50,000 = 10,000

Hence your total tax = 12,500+10,000 = 22,500.

Health and education Cess of 4% of 22,500 =900

Finally got tax liability becomes 22,500+900=₹ 23,400.

Note : from the above comparison,it is clear that for govt employees point of view,there is a loss of ₹ 39,000-23,400 = ₹ 15,600.

New tax slab rates for Govt. Employees FY 2020-21

Tax slab ratesTax Rate
0-250,000Nil
250,001 to 5,00,0005%
5,00,001 to 750,00010%
750,001 to 10,00,00015%
10,00,001 to 12,50,00020%
12,50,001 to 15,00,00025%
Above 15,00,00030%

From the table it is clear that,under new tax regime,tax slab rates have been reduced.But on the condition of foregoing all deductions and exemptions.

Comparison of New Tax Ragime and Old tax regime

Taxable IncomeNew Tax RateOld Tax Rates
0-250,000NilNil
250,001-5,00,0005%5%
5,00,001-7,50,00010%20%
750,001-10,00,00015%20%
10,00,001-12,50,00020%30%
12,50,001-15,00,00025%30%
Above 30%30%30%

Note : If  New tax rates apply,no tax deduction and exemption is applicable.

Analysis

Budget 2020 has brought nothing for govt. So they are forced to follow old tax regime.But this is realy disappointing.Although, inflation rates have increased over the years,but such budget has proved meaningless for govt employees.they are deprived of their savings,that is not justified.

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

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