Comparison Between Old Income Tax Slab 2020 Vs New Income Tax Slab 2021

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In the year 2020, the Finance Minister introduced a new tax regime that is optional, and individuals have the option to choose between Old Tax Regime and the New Tax Regime. The New Tax Regime has comparatively lower tax rates as compared to the Old Tax Regime but with few exemptions.

Income tax in India is based on the slab system that enables progressive taxation system in the country. This implies that the tax of an individual is directly proportional to the income of the individual. While the old taxation system has different tax slabs for individuals, HUF and NRI of different age groups and senior citizens the new tax slab is same for all. To pay taxes according to the new tax slab the assessee would have to give up certain rebates and deductions that are permissible under the old tax regime.

Here Is A Comparison Between The Old Tax Slab And The New Tax Slab:


Income Tax Slab Old tax regime New Tax regime
Below 60 years 60 years – 80 years Above 80 years  
Rs. 0 – 2.5Lakhs NIL NIL NIL NIL
Rs. 2.5 lakhs – Rs. 3 lakhs 5% (tax rebate u/s 87a is available) NIL NIL 5% (tax rebate u/s 87a is available)
Rs. 3 lakhs – Rs. 5 lakhs 5% (tax rebate u/s 87a is available) NIL
Rs. 5 lakhs – Rs. 7.5 lakhs 20% 20% 20% 10%
Rs. 7.5 lakhs – Rs. 10.00 lakhs 20% 20% 20% 15%
Rs. 10 lakhs –  Rs. 12.50 lakhs 30% 30% 30% 20%
Rs.12.50 lakhs – Rs.15.00 Lakhs 30% 30% 30% 25%
Rs. 15.00 lakhs  and above 30% 30% 30% 30%


When Can You Choose To Opt For The Old And New Regime?

If an employee wishes to opt for the New Tax regime, he/she would have to intimate the employer at the beginning of the year. However, the employee cannot choose to opt out of the tax regime during the entire year but can change during filling of Income tax slab 2021.

A business can choose to opt for any one of the tax regime only once.

What are the various conditions for opting New Tax Regime

The taxpayers who opt for new tax regime will have to forgo few exemptions while a few of the exemptions are allowed.

The exemptions that are not allowed are – Leave Travel Allowance, House Rent Allowance, Conveyance allowance, Standard Deduction in salary, Professional tax, Interests on home loan, Children’s Education allowance, etc.

The exemptions allowed are – Transport allowance for differently abled, conveyance allowance of travelling to office for work, travel expenses for the transfer of job or employment, etc.

Which Tax Regime Is Best To Choose?

 Let’s take an example of an individual earning 10 Lakhs per annum. We will check out which tax regime would be best to opt.

Particulars Old Tax Regime (in Lakhs) New Tax Regime (in Lakhs)
Gross Income 10,00,000 10,00,000
U/s SEC 80 C: 1,50,000  
U/s SEC 80 D: 25,000  
U/s SEC 24(b): 75,000  
Taxable Income 7,50,000 10,00,000
0 – 2.5 lakhs    
2.5 lakhs – 5 lakhs 12,500 12,500
5 lakhs – 7.5 lakhs   25,000
7.5 lakhs – 10 Lakhs 50,000 37,500
Total Income tax 62,500 75,000
Cess 4% 2,500 3,000
Total tax to be paid 65000 78000


So with a salary of 10 lakhs, an employee will have to give Rs. 65,000 under Old Tax Regime and Rs. 78,000 under New Tax Regime.




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