Since Budget 2020 was out with optional Alternative tax regime with lower slab rates. These lower rates were tuned with withdrawal of certain exemptions. To arrive at whether or not this is beneficial to the taxpayers, Let us understand scenario under both the regime.
The New Tax regime is optional and is available only to INDIVIDUAL & HINDU UNDIVIDED FAMILY. Individual may be salaried/retired person having salary income or self employed person having business income or any other person having any other income.
A taxpayer who wants to avail the benefit of new tax regime has to upload FORM 10-IE on or before the due date of filing the Return of Income.
For taxpayer who has income from business & Profession, once opted cannot withdraw from the scheme except cease to have such income. For others this option can be exercised every year.
|
INCOME |
OLD |
NEW |
|
Up to Rs. 2,50,000 |
Nil |
Nil |
|
From Rs. 2,50,001 – Rs. 5,00,000 |
5% |
5% |
|
From Rs. 5,00,001 – Rs. 7,50,000 |
20% |
10% |
|
From Rs. 7,50,001- Rs. 10,00,000 |
20% |
15% |
|
From Rs. 10,00,000- Rs. 12,50,000 |
30% |
20% |
|
From Rs. 12,50,000 – Rs. 15,00,000 |
30% |
25% |
|
Above 15,00,000/- |
30% |
30% |
COMPARISION OF EXEMPTION & DEDUCTION
|
PARTICULAR |
OLD |
NEW |
|
Basic Exemption Limit -Senior Citizen |
3,00,000/- |
2,50,000/- |
|
Basic Exemption Limit – Super Senior Citizen |
5,00,000/- |
2,50,000/- |
|
LTA, HRA, Special Economic zone Allowance, Entertainment allowance, Professional tax deduction |
Available |
Not Available |
|
Standard deduction |
50,000/- |
Nil |
|
Interest on housing Loan , Additional Depreciation |
Available |
Not Available |
|
Deduction u/s 80C to 80U (except 80CCD(2), 80JJA, 80LA(1A) ) |
Available |
Not Available |
|
Investment Allowance u/s 32AD, 33AB, 33ABA, 35CCC |
Available |
Not Available |
|
Capital Expenditure to Specified Business u/s 35AD |
Available |
Not Available |
|
Family Pension Standard deduction Sec 57(iia) |
Available |
Not Available |
|
Interest and Maturity Withdrawal from PPF u/s 10 (11) & Sukanya Samriddhi Account us 10(11A) |
Available |
Available |
|
Exemption u/s: 10(10) – Gratuity 10(10A) - Commutation of Pension 10(10AA) – Leave encashment 10(10B)- Retrenchment Compensation 10(10C)- Retirement compensation 10(10CC)- Non- monetary perquisites 10(10D)- Sum received under LIC 10(12A)/12B)- NPS 10(13) – Approved Superannuation fund 10(14) – (a) Conveyance Allowance/ Transport Allowance used for official purpose (b) Transport Allowance of Rs. 3200/- to specially abled person. |
Available |
Available |
|
Alternate Minimum Tax us 115JC |
Applicable |
Not Applicable |
|
Brought Forward losses adjustment |
Allowed |
Not Allowed |
On considering the above, taxpayer can arrive at whether to opt for Alternative tax regime or not.
