The latest news on Income Tax Slabs for the Financial year 2020-2021

income tax slabs

The budget 2020 has given taxpayers the choice to settle on between the present tax regime (which allows availing existing tax exemptions and deductions) and a replacement tax regime with lower tax rates and new tax slabs but no tax exemptions and deductions. The new tax system offers new tax slabs with lower tax rates and simultaneously removes tax exemptions/deductions and can lead to lower tax outgo for taxpayers.

The Income-tax rates applicable underneath the Financial year 2020-2021 would be:

S.No Slab Rate Tax Rate
1 Up to INR 2,50,000 Nil
2 INR 2,50,001 to INR 5,00,000 5%
3 INR 5,00,001 to INR 7,50,000 10%
4 INR 7,50,001 to INR 10,00,000 15%
5 INR 10,00,001 to INR 12,50,000 20%
6 INR 12,50,001 to INR 15,00,000 25%
7 Above 15,00,000 30%

According to the income tax rates for the FY (2020- 2021) people earning salaries upto Rs. 5,00,000 don’t have to pay any tax. If a person’s taxable income is Rs. 5,00,000 then they will be able to avail  tax rebate of Rs. 12,500 under section 87A.The tax rebate is allowed for both the FY (2019 – 2020) & (2020 – 2021). And the tax rate has not changed for the people earning salaries above Rs. 15,00,000

 List of exemptions and deductions that a taxpayer will have to give up while choosing the income tax slabs for the FY(2020-2021)

  • Leave Travel Allowance as per clause (5) of section 10
  • House Rent Allowance as per clause (13A) of section 10
  • Relocation Allowance
  • Helper Allowance
  • Children Education allowance
  • Standard deduction of Rs. 50,000 under section 16
  • Employment/Professional Tax deduction as per section 16
  • Interest on Housing loan(section 24)
  • Daily expense in the course of employment
  • Other special allowances [section10(14)]

People opting the tax rate for the FY (2020 2021) can’t claim for deductions under many sections such as 80C ( for maximum of Rs 1.5 lakh by investing in specified instruments),  80D (for medical insurance paid, house rent allowance, leave travel allowance etc.), 80CCD, 80CCC, 80DDB, 80E, 80EEA, 80EE, 80G, 80GGA, 80GG, 80GGC, 80IA, 80-IAC, 80-IAB, 80-IBA, 80-IB, etc

Income Tax slabs for FY (2019 – 2020) &  FY (2020 – 2021)

A salaried individual  have the option to choose between the income tax slab rate for FY (2019- 2020)  & FY (2020- 2021) based on the benefits in terms of tax savings

Income tax slabs and rates for people below 60 years aged

Option 1

Option 2
FY(2019 – 2020)

FY(2020-2021)

Up to Rs. 2,50,000

Nil

Up to Rs. 2,50,000 Nil

Rs 2,50,001 to Rs 5,00,000

5%

Rs 2,50,001 to Rs 5,00,000

5% 

Rs 5,00,001 to Rs 10,00,000

20%

Rs 5,00,001 to Rs 7,50,000

10%

Rs 7,50,001 to Rs 10,00,000

15%

Above Rs. 10,00,000

30%

Rs 10,00,001 to Rs 12,50,000

20%

Rs 12,50,001 to Rs 15,00,000

25%

Above 15,00,000

30%

Income tax slabs and rates for citizens between 60-80 years 

Option 1

Option 2

FY(2019 – 2020)

FY(2020 – 2021)

Upto Rs. 3,00,000

Nil

Upto Rs. 2,50,000

Nil

Rs. 3,00,001 to Rs. 5,00,000 

5%

Rs. 2,50,001 to Rs. 5,00,000 

5%

Rs. 5,00,001 to Rs. 10,00,000

20%

Rs. 5,00,001 to Rs. 7,50,000

10%

Rs. 7,50,001 to Rs. 10,00,000

15%

Above 10,00,001

30%

Rs. 10,0001 to Rs. 12,50,000

20%

Rs. 12,50,001 to Rs. 15,00,000

25%

Above 15,00,000

30%

Income tax slabs and rates for super senior citizens (Age 80 years and above) 

Option 1

Option 2

FY(2019 – 2020)

FY(2020 – 2021)

Up to Rs 5,00,000

Nil

Up to Rs 2,50,000

Nil

Rs 2,50,001 to Rs 5,00,000

5%

Rs 5,00,001 to Rs 10,00,000

20%

Rs 5,00,001 to Rs 7,50,000

10%

Rs 7,50,001 to Rs 10,00,000

15%

Above Rs 10,00,001 

30%

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 : An additional 4% Health & education cess and surcharge rates remain the same

Both the tax rates exist. An individual should be aware of exemptions & deductions and evaluate which tax rate is better for them. If individuals don’t have many exemptions then opt for the new FY (2020- 2021) tax rate which is more beneficial in terms of tax saving

Click here to calculate tax by using income tax slab for the FY (2019 -2020) OR  FY (2020 – 2021)  

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