Question: How do I choose a new or old tax regime?

Should I select new or old tax regime?

The net tax benefit forgone is higher than the tax liability of Rs. 62,500 under new scheme. For those in 30% tax slab the tax effect of the benefit forgone @ 30% would be 1.20 lakh against the tax saving of Rs. 37,500 accruing by opting for new regime.

Can we choose new tax regime?

A salaried taxpayer can choose the new tax regime at the beginning of FY 2020-21 and intimate their employer. The employee cannot change their choice anytime during the financial year. However, the change can be done at the time of filing the income tax return in July 2021.

Which tax regime is better for 20 lakhs?

Assessing your Tax Slab

For a salary ranging between Rs 20 lakhs and Rs 25 lakhs, the applicable tax rate under the new tax regime would be the highest, that is 30%. Incidentally, this is the same tax slab that your salary would fall under according to the existing tax regime, that is 30%.

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Which tax regime is better for 10 lakhs?

Comparison of tax slab and rate in new and old tax regime

Income slab Old Tax regime New Tax regime
Rs. 5 lakh- Rs. 7.5 lakh 20.00% 10.00%
Rs. 7.5 lakh- Rs. 10 lakh 20.00% 15.00%
Rs. 10 lakh- Rs. 12.5 lakh 30.00% 20.00%
Rs. 12.5 lakh – Rs. 15 lakh 30.00% 25.00%

Can I change tax regime every year?

Individuals with business income will not be eligible to choose between the two regimes every year. Once they select a new tax regime, they have only once in a lifetime option for switching back to the old regime. Once they switch back to the old regime, they won’t be able to choose a new regime anytime in future.

What is the new tax regime 2020?

Income tax slab rate FY 2020-21 (AY 2021-22) – Applicable for New Tax regime

Income Tax Slab New Regime Income Tax Slab Rates FY 2020-21 (Applicable for All Individuals & HUF)
Rs. 5.00 lakhs- Rs 7.5 Lakhs 10%
Rs 7.5 lakhs – Rs 10.00 Lakhs 15%
Rs 10.00 lakhs – Rs. 12.50 Lakhs 20%
Rs. 12.5 lakhs- Rs. 15.00 Lakhs 25%

How is tax calculated in a new regime?

This has been increased to Rs 50,000 in budget 2019. In case you opt for the new tax regime, these exemptions will not be available to you.

How to calculate income tax? (See example)

Up to Rs 2,50,000 Exempt from tax
Rs 10,00,000 to Rs 12,50,000 20% (20% of Rs 12,50,000 less Rs 10,00,000) 50,000
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How much tax do I pay on 50 lakhs?

Surcharges on tax remain untouched. Taxpayers with income between Rs 50 lakh and Rs 1 crore continue to pay 10% surcharge, between Rs 1 crore and Rs 2 crore pay 15%, between Rs 2 crore and Rs 5 crore pay 25% and those with income over Rs 5 crore pay 37%.

How can I save tax on 20 lakhs?

Tax Exempted Salary Components

  1. Meal Coupons.
  2. Car Maintenance.
  3. EPF (Contribution by Employer)
  4. NPS (Contribution by Employer)
  5. Gift voucher.
  6. Mobile Phone and the Internet Bill Reimbursement.
  7. Newspaper/Journal Allowance.
  8. Children Education/Hostel Allowance.

How can I save my income tax 2020-21?

Tips for Saving Tax in FY 2020-21

  1. Invest in Equity-Linked Saving Scheme (ELSS)
  2. Invest in the National Pension Scheme.
  3. Invest in Sukanya Samriddhi Yojna.
  4. Know When to Opt for the New Tax Regime.

How can I avoid 10 lakhs tax?

Tax exemptions can be availed by investing in the following tools:

  1. Senior Citizen Savings Scheme (SCSS)
  2. Sukanya Samriddhi Yojana (SSY)
  3. National Pension Scheme (NPS)
  4. Public Provident Fund (PPF)
  5. National Pension Scheme (NPS)

How much tax do I pay on 10 lakh salary?

Tax Rate for Individual Taxpayers for FY 2020-21 (AY 2021-22)

Tax Slab Old Rates New Rates
Income from 2.5 Lakh – 5 Lakh 5% 5%
Income from 5 Lakh – 7.5 Lakh 20% 10%
Income from 7.5 Lakh – 10 Lakh 20% 15%
Income from 10 Lakh – 12.5 Lakh 30% 20%