All individuals, partnership firms, HUF, LLPs and corporates are liable to pay Income Tax in the country. According to the slab system, the tax is levied if the income of the individual exceeds the given threshold limit. Here is an explanation of the income tax slab for the year 2020-21.
What Is an Income Tax Slab?
The Income Tax slab helps to calculate the amount of tax individuals need to pay according to their age and income. The tax rates are directly proportional to the income of the individuals. This ensures fair tax system in the country. The income tax slabs tends to change during the budget every year. The income taxpayers are divided under three categories depending upon their age group.
- (Residents and non-residents) Individuals aged less than 60 years.
- (Residents) Individuals or senior citizens aged between 60 to 80 years of age
- (Residents) individuals or super senior citizens aged more than 80 years.
The Latest Income Tax slab for 2021- Who Can Choose?
The new tax regime is optional and individuals can choose the tax regime according to two options:
If they choose to pay taxes as per the old tax regime they would have to pay higher taxes but would also be liable to get tax rebates and exemptions as per their investments.
If individuals choose to pay with the new tax regime they will be liable to lower tax rates but will have to forgo permissible exemptions and rebates.
Here Is The New Income Tax Slab:
|Income Tax Slabs||New Income Tax Regime FY 2020-21|
|Less than Rs. 2.5 Lakhs||NIL|
|Rs. 2.5 Lakhs to Rs. 3 Lakhs||5% (tax rebate under section 87a is available)|
|Rs. 3 Lakhs to Rs. 5 Lakhs||5% (tax rebate under section 87a is available)|
|Rs. 5 Lakhs to Rs. 7.5 Lakhs||10%|
|Rs. 7.5 Lakhs to Rs. 10.00 Lakhs||15%|
|Rs. 10.00 Lakhs to Rs. 12.50 Lakhs||20%|
|Rs. 12.5 Lakhs to Rs. 15 Lakhs||25%|
|More than Rs. 15 Lakhs||30%|
The new income tax slab is the same for all age groups irrespective of whether senior citizens or super senor citizens. Whether individuals or HUF, the tax slabs and rates are the same and there are no additional benefits or rebates.
Any individuals or HUF whose income is below 5 lakhs is eligible for tax rebate under Section 87A. Under this section the tax liability of the individual will be nil.
The basic limit for exemption for NRIs is Rs. 2.5 lakhs.
There is an additional health and educational cess that will be charged to the tax liability in all the income groups.
The surcharge charges for different income group:
- Income above Rs. 50 Lakhs – 10% of Income tax
- Income above Rs. 1 crore – 15% of Income tax
- Income above Rs. 2 crore – 25% of Income tax
- Income above Rs. 5 crore- 37% of Income tax
Few Conditions for Opting the New Tax Regime:
There are 70 deductions & exemptions that the individual needs to undergo to opt New Tax Regime. Also there are a list of deductions that are allowed under the New Tax Regime. Exemptions such as Leave Travel Allowance, HRA, Conveyance Allowance are not allowed under New tax regime whereas Transport allowance for disabled, Conveyance Allowance for travelling to work are allowed under New Tax regime.