Income Tax Rule

FY-19-20/ AY 20-21

Tax Rates

1.1. In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

Old Tax Scheme

# Net Income Range Rate of Income-tax
1 Up to Rs. 2,50,000 0%
2 Rs. 2,50,000 to Rs. 5,00,000 5%
3 Rs. 5,00,000 to Rs. 10,00,000 20%
4 Above Rs. 10,00,000 30%

New Tax Scheme

# Net Income Range Rate of Income-tax
1 Up to Rs. 2,50,000 0%
2 Rs. 2,50,000 to Rs. 5,00,000 5%
3 Rs. 5,00,000 to Rs. 7,50,000 10%
4 Rs. 7,50,000- Rs. 10,00,000 15%
5 Rs. 10,00,000- Rs. 12,50,000 20%
6 Rs. 12,50,000- Rs. 15,00,000 25%
7 Above Rs. 15,00,000 30%%

Senior Citizen

# First Last Handle
1 Up to Rs. 3,00,000 0 %
2 Rs. 3,00,000 to Rs. 5,00,000 5 %
3 Rs. 5,00,000 to Rs. 10,00,000 20%
4 Above Rs. 10,00,000 30%

Super Senior Citizen

Who is 80 years or more at any time during the previous year

# Net Income Range Rate of Income-tax
1 Up to Rs. 5,00,000 0 %
2 Rs. 5,00,000 to Rs. 10,00,000 20 %
3 Above Rs. 10,00,000 30%

HRA Calculation

# Rent Amount Exempted Amount
1 Actual Rent Paid Otto
2 HRA Recieved Thornton
3 Actual Rent Paid- 10% of Basic the Bird

Surcharge Calculation Assessment Year 2021-22

In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

Income Range

# Net Taxable Income Slab Surchare Rate
1 Rs. 50 Lakhs to Rs. 1 Cr. 10%
2 Rs. 1 Crore to Rs. 2 Crores 15%
3 Rs. 2 Crores to Rs. 5 Crores 25%
4 Rs. 5 crores to Rs. 10 Crores 37%

b. Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.

Note: A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 12,500, whichever is less.

TAX Rates for AY 20-21

There are multiple tax saving instruments where you can invest such as PPF, ELSS etc. When you invest in these, the amount invested is used to reduce taxable income upto Rs 1.5 lakh under Section 80C. Let us see some of these tax saving avenues :-

Public Provident Fund (PPF) - PPF is a very popular tax saving avenue among salaried employees.PPF offers tax free earnings on maturity and guaranteed returns as set by the government every year. Minimum investment can be started from as low as Rs 500 per year. There is complete security of the invested capital. Facilities to make partial withdrawal and loans, tenure extension and easy account opening from banks or post offices can be availed.However, a drawback of PPF is that you cannot raise your investment as your income goes up. A maximum of Rs 1.5 lakhs can be invested in PPF. One cannot close his or her account prematurely , which results in lower flexibility as compared to SIP or FD where you can close it whenever you want.

Employee Provident Fund (EPF)- An employee’s contribution to the EPF account also earns a tax break under Section 80C of upto Rs 1.5 lakh. This amounts to 12% of salary that is deducted by an employer and deposited in the EPF or other recognised provident fund. The interest rate on the EPF for FY 2017-18 was 8.55%.

Tax Saving Fixed Deposits- Tax saving Fixed deposits are like regular fixed deposits, but come with a lock in period of 5 years and tax break under Section 80C on investments upto Rs 1.5 lakh.Different banks offer different interest on the tax saving FDs which range from 7-9%. The returns are guaranteed and the FDs offer 100% capital protection. But upon maturity the interest is added to the investor’s taxable income.

National Saving Certificate (NSC)- NSCs are eligible for tax breaks for the financial year in which they are purchased. Investments of upto 1.5 Lakh can be made to save taxes under Section 80C.NSCs can be bought from designated post offices and come with a lock-in period of 5 years. The interest is compounded annually but is taxable. The current interest rate for FY 2018-19 is 7.6%.

Equity Linked Saving Scheme (ELSS)strong> - Equity linked saving scheme (ELSS) is one of the smartest investment instrument to maximise your tax saving efforts. ELSS involves investment of majority of your deposit in equity related products. ELSS funds are managed by professional fund managers who are experts in predicting market trends and make sure your money is invested in the right way. Investments in ELSS can be done via SIPs. In case there is remaining balance in 80C to claim, a lump sum ELSS investment can be done as well. The lock-in period in case of ELSS is 3 years which is the lowest as compared to traditional tax saving options like PPF, NSC, bank fixed deposits etc. ELSS returns are usually in the range of 12-15%. Let’s use our calculator to see the returns.If you invest Rs 5,000 for 10 years at expected annual returns of 14% in equity mutual funds, you can see the following projected SIP return over the next 30 years

[As amended by Finance Act, 2020]

Tax Rates

Section 80 C Deductions

# Saving Instruments under 80C Rebate Amount
1 Investment in PPF Rs. 150,000
2 Employees PF contribution 5%
3 Life Insurance Premium payment 10%
4 Rs. 7,50,000- Rs. 10,00,000 15%
5 Rs. 10,00,000- Rs. 12,50,000 20%
6 NSC 25%
7 Principal Repayment of home loan 30%%
8 Children’s Tuition Fee 30%%
9 Sukanya Samriddhi Account 30%%

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