Dear,
From the current FY 2020-2021, an individual/ HUF having income other than “ Income from Business and profession” may opt for taxation of income as per new tax regime, wherein, the assessee needs to forego certain benefits of exemptions and deductions while computing the total Income:-
Income Tax Slabs (New Regime)
Total Income(Rs) Rate
Upto 2,50,000 Nil
From 2,50,001 to 5,00,000 5 percent.
From 5,00,001 to 7,50,000 10 percent.
From 7,50,001 to 10,00,000 15 percent.
From 10,00,001 to 12,50,000 20 percent.
From 12,50,001 to 15,00,000 25 percent.
Above 15,00,000 30 percent.
Health and Education Cess @4% extra
Following are the deductions and exemptions that an assessee needs to forgo before he chooses to taxed under New tax regime: –
(i) Leave travel allowance exemption which is currently available to salaried employees twice in a block of four years
(ii) House rent allowance normally paid to salaried individuals as part of salary. Other allowances like Conveyance, Relocation, Children Education, Helper, Other Special allowances as per Sec 10(14) is also not allowed.
(iii) Standard deduction of Rs 50,000 currently available to salaried taxpayers
(iv) Deduction available under section 80TTA/80TTB i.e. Deduction in respect of Interest on deposits in savings account and 80TTB (Deduction in respect of Interest on deposits to senior citizens) will not be available to the taxpayers.
(v) Deduction for entertainment allowance(for government employees)and employment/professional tax as contained in section16
(vi) Tax benefit u/s 24 on interest paid on housing loan taken for a self-occupied or vacant house property.
(vii) Deduction of Rs.15000 allowed from family pension under clause (iia) of section57
(viii) The most commonly claimed deductions under Section 80C will have to be forgone. This includes the commonly availed section 80C deductions claimed for provident fund contributions, life insurance premium, school tuition fee for children and various specified investments such as ELSS, NPS, PPF etc.
(ix) The deduction claimed for medical insurance premium under section 80D will also not be claimable
(x) Tax benefits for disability under sections 80DD and 80DDB will not be claimable
(xi) Tax break on interest paid on education loan will not be claimable-section 80E
(xii) Tax break on donations to charitable institutions available under section 80G will not be available.
So for all assesses who are under employment, we suggest you to make appropriate tax planning and accordingly submit a declaration as per Circular F.No 370142/13/2020- TPL dated April 13,2020, to respective Employers, so that TDS liability determination is done at early stage.
For any query, you can call us or email.