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Analysis of Tax Slabs changes for Individuals and HUF

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Analysis of Tax Slabs changes for Individuals and HUF

For AY 2021-22 the Assessee has two options to compute the tax liable on income earned, whichever is beneficial for him/her:

 

 

Total Income (Rs.)

Rates Under  (Old Regime)

Rates Under(New Regime)

Up to 2,50,000

Nil

Nil

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

5%

5%

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

10 %

20%

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

15 %

20%

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

20 %

30%

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

25 %

30%

Above 15,00,000

30%

30%


 

Notes:

 

  1. Individuals having no business income can switch from one option to another on a year-to-year basis (i.e. Old regime or new regime) without any restriction.
  1. For individuals having business income, once the assessee selects the New Regime than he cannot go back to Old regime in future.

 

However, New Regime does not allow an Assesse to take various exemptions and deductions; some of them are as follows :-( List –A)

 

  1. HRA (Section 10)
  2. LTC (Section 10)
  3. Interest on Housing Loan (section 24b)
  4. All Chapter VI-A deductions (except 80CCD(2) &80JJAA) like:-
    • 80C (Investment in LIC, PPF etc.)
    • 80CCD(1B) (NPS)
    • 80D (Medical insurance premium)
    • 80DDB (Specified diseases)
    • 80E (Interest paid on Loan taken for Higher Education)
    • 80G(Donations to Charitable Institutions)
    • 80TTA/80TTB(Bank Interest)
    • 80U (Disabled Individuals)
  1. Standard Deduction of Rs. 50,000 (Applicable for Salary / Pension Only)

Mainly the below mentioned exemptions and deductions still permitted in new regime:-

 

(List –B)

 

  1. 80CCD(2)
  2. 80JJAA
  3. 87A rebate of 12,500( Applicable, If the Total Income is Upto 500000/-)
  4. Standard deduction on rent (Section 24a)
  5. Agricultural income
  6. Income from life insurance
  7. Retrenchment compensation
  8. VRS proceeds
  9. Gratuity received
  10. Interest on GPF and PPF
  11. Leave encashment on retirement

Receipts from new pension scheme (NPS) on its withdrawal or closure.

 

Our Analysis, as to which Regime one should choose in filing his / her return for FY 2020-21:

 

Income

Deductions under List -A

Option

More than equal to₹15,00,000

           No deduction

New Regime is better

More than equal to₹15,00,000

more than 2,50,000

Old Regime is better

Upto ₹12,50,000

more than 2,08,335

Old Regime is better

Upto ₹10,00,000

more than 1,87,500

Old Regime is better

Upto ₹7,50,000

more than 1,25,000

Old Regime is better

Upto ₹5,00,000

                 –

No tax in both regimes

 

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