The new income tax
discipline came into effect on April 1, 2020. It gives an individual the option
to continue with existing tax duties (with tax rebates and exemptions) or to
opt for the 70 new tax rebates and tax exemptions. For the convenience of salaried
persons who have no business income, they have to choose between the existing
and new tax system every financial year.
On the other hand,
those who have business income should carefully evaluate whether they want to
continue the existing tax discipline or choose the new one. This is because
once they choose the new tax system, they can return to the existing tax system
once in a lifetime.
Below is the income tax slab that applies to the new tax system for individuals:
The figure for tax slab for
A.Y.2021-22
Under the new tax,
a person is only eligible for a waiver under section 80CCD (2). This section
allows the employer's contribution to the NPS account to be deducted for a
maximum of 10 per cent of the employee's salary (here the salary means basic
additional value-added allowance).
Other Exemptionsavailable exemptions such as Section 80C, 80D, etc., and tax exemptions such as
HRA, LTA, etc. are not available in the new tax structure.
This can be
explained by an example of the income tax liability that you have under the new
tax. Suppose your total income in the financial year 2000-2011 is 1 lakh
rupees. In addition, your employer has contributed Rs.60,000 to your NPS
account during the year, which is eligible for exemption under Section 80CCD
(2). Therefore, your net taxable income will be Rs. 15,40,000 (Rs. 16 lakh
minus Rs. 60,000).
In the new tax the system, the income tax liability will be calculated at Rs 15.40 lakh. There
will be no tax on the first two and a half lakh rupees from the above mentioned
15.40 lakh rupees. Now the income that still has to be taxed will be Rs 12.90
lakh (15.40 lakh minus Rs 2.5 lakh).
From the next Rs
2.99 lakh mentioned in the second phase of the table above, the next 2.5 lakh rupees (2.5 Lakh rupees under the exemption certificate)
will be taxed at five per cent. The tax amount here will be Rs 12,500.
The applicable
income for tax will be Rs. 10,40,000. The next two and a half lakh rupees (.5.5
lakh minus five lakh rupees) will be levied on the ten per cent tax as
mentioned in the 3rd clause. The amount of tax comes out to Rs 25,000.
Adding tax
liability from points 1, 2 and 3, at the moment, the total tax liability comes
to Rs 37,500 (0 12,500 25,000).
At the moment, the
tax that is still taxable is Rs 7,90,000. From the 4th point, two and a half
lakh rupees (minus one lakh rupees Rs. 5 lakh) will be 15 per cent and the tax
liability will be 3,500 rupees.
After the fifth point, the amount of taxable income is Rs 5,40,000. From the fifth point, the
next two and a half lakh rupees (12.5 lakh minus 10 lakh rupees) will be taxedat 20 per cent. The duty liability comes out as Rs 50,000.
The remaining
amount of tax income is Rs. 2,90,000. As mentioned in the point clause, Rs 2.5
lakh (minus Rs 12.5 lakh) will be taxed at 25 per cent. The tax liability will
be Rs 62,500
Only Rs 40,000 is
left which is still taxed. As mentioned in the table above, from point M it will
be taxed at 30 per cent. Tax liability will be Rs 12,000
The new tax comes out as a total tax liability of Rs 1,99,500 (0 12,500 25,000 37,500 50,000
62,500 12,000). Health and education will be added at a rate of 4 per cent.
The amount of cess is Rs 7,980.
Thus, the total tax liability under the new tax system
will be Rs 2,07,480.
Now you need to
compare it with the tax liability under your existing tax. The calculation of income tax under the existing tax duty works in the same way. First, you must
deduct all tax deductions and deductions that you are entitled to from your
total income, and then calculate your tax liability on net taxable income.
Click here to read more about it.
Another way to
compare the new and existing tax systems is to have the same tax liability in
both tax systems so as to examine how many exemptions and/or tax exemptions are
required.
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50 employees Form 16 Part A&B for the F.Y.2020-21]
Feature of this Excel Utility:-
1) This Utility can prepare
at a time 50 Employees Form 16 Part A&B as per new Rules of Income Tax U/s115BAC which introduced in the Budget 2020 ( New & Old Tax Regime)
2) This Excel Utility can
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4)
This Excel Utility can
use Govt and Private Concerned
5)
All the Updated Income
Tax Amended Section have in this Utility as per Budget 2020
