Income Tax Slab 2020 & Tax Rates in India for FY 2020-21 – Budget 2020 Revised IT Slabs (AY 2021-22)

Income Tax Slabs : In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab.

Existing tax regime:

There are three categories of individual taxpayers:

• Individuals (below the age of 60 years), which includes residents as well as non-residents
• Resident senior citizens (60 years and above but below the age of 80 years)
• Resident super senior citizens (above 80 years of age)

There are different slabs for each category of taxpayers. The latest income tax slab for AY 2019-20, AY 2020-21 and AY 2021-22 are discussed in this article. Such tax slabs tend to undergo a change during every budget.

New tax regime:

Budget 2020 has announced a new tax regime giving taxpayers an option to pay taxes as per the new tax slabs from FY 2020-21 onwards.

Income tax slabs under the new tax regime for all individuals for FY 2020-21 (AY 2021-22)

Income Tax Slab	Tax Rate
Up to Rs 2.5 lakh	NIL
Rs 2.5 lakh to Rs 5 lakh	5% (Tax rebate of Rs 12,500 available under section 87A)
Rs 5 lakh to Rs 7.5 lakh	10%
Rs 7.5 lakh to Rs 10 lakh	15%
Rs 10 lakh to Rs 12.5 lakh	20%
Rs 12.5 lakh to Rs 15 lakh	25%
Rs 15 lakh and above	30%

• The tax calculated on the basis of such rates will be subject to health and education cess of 4%.
• Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will have to give up certain exemptions and deductions.
• Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
  1. Leave Travel Allowance 
  2. House Rent Allowance 
  3. Conveyance
  4. Daily expenses in the course of employment
  5. Relocation allowance
  6. Helper allowance
  7. Children education allowance
  8. Other special allowances [Section 10(14)]
  9. Standard deduction
  10. Professional tax
  11. Interest on housing loan (Section 24)
  12. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
• Points to remember while opting for the new tax regime:
  1. Option to be exercised on or before the due date of filing return of income for AY 2021-22
  2. In case a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once. A business taxpayer withdrawing from the optional tax regime has to follow the regular income tax slabs.