Comparison of New Income Tax Slabs with Old for FY 2020-21 for Individual earning Income between Rs. 5 Lakhs to 7.5 Lakhs

 

Individual earning Income between Rs. 5 Lakhs to 7.5 Lakhs

Income of Rs. 6 lakhs
	Old Regime (w/o Deductions)	Old Regime (with Deductions)	New Regime
Income	600,000.00	600,000.00	600,000.00
Deductions/Exemptions	-	100,000.00	-
Taxable Income	600,000.00	500,000.00	600,000.00
Tax	32,500.00	-	22,500.00
Cess @ 4%	1,300.00	-	900.00
Total Tax	33,800.00	-	23,400.00
Income of Rs. 7.5 lakhs
	Old Regime (w/o Deductions)	Old Regime (with Deductions)	New Regime
Income	750,000.00	750,000.00	750,000.00
Deductions/Exemptions	-	150,000.00	-
Taxable Income	750,000.00	600,000.00	750,000.00
Tax	62,500.00	32,500.00	37,500.00
Cess @ 4%	2,500.00	1,300.00	1,500.00
Total Tax	65,000.00	33,800.00	39,000.00

 

Ø  Income from 5-6 Lakhs, Investment of Rs. 1 lakh can help you to enter Tax free slab i.e. Up to Rs. 5 Lakhs.

Ø  Income Up to 7.5 Lakhs, Maximum saving due to Low Rate of Tax is Rs. 25,000/-, This can be saved with Investment/deduction of Rs. 1,25,000.00 only.

Ø  For Salaried Individuals, Reaching Rs. 1 – 1.25 Lakhs Deduction is not very difficult.

o   Rs. 50000 from Standard Deduction without any investment/proof and

o   Rs. 30000 – Rs. 40000 must be going to EPF (Compulsory) considering 12% of Basic and DA. OR

o   Those having Lower EPF must be having Higher HRA. Hence EPF and HRA deduction will be saving around Rs. 50000 – Rs. 70000.

o   Tuition Fees of Children’s is also unavoidable and must be around Rs. 35000 – Rs. 60000

Ø  Clearly For Salaried Individuals it is beneficial to opt Old Regime with Deductions and Exemptions

Ø  Salaried / Self Employed Individuals if already having regular prefixed investments / Insurance like LIC Policy, House Loans, then Old regime is better.

Ø  And for Self Employed Individuals who do not want to Invest in any of the saving Options available (being low ROI) may opt for New Regime without Deductions. Otherwise Old Regime is better.