Based on above points keep in mind, then we can follow the below examples to understand the basic calculation procedure of both the Old tax structure and New tax structure. Free Download Automated Excel Based Income Tax All in One TDS on Salary for the Govt &Non-Govt Employees with Automated Arrears Relief Calculator U/s 89(1) with Form10E for the Financial Year 2020-21 & Assessment Year 2021-22 ( Both of Old Tax Regime and New Tax Regime) Feature of this Excel Utility are :- 1) Prepare https://www.youtube.com/watch?v=9-4KqKBx1G8 all the Income Tax Calculation in one single file like as Automated Tax Computed Sheet + Automated House Rent Exemption Calculation U/s 10(1) A + Automated Arrears Relief calculation U/s 89(1) for F.Y.2020-21,Automated Form 10E + Automated Revised Form 16 Part B for F.Y.2020-21 2) Automated Income Tax Computed Sheet for both of Govt & Non-Govt employees as per Budget 2020 ( Old & New Tax Regime) 3) Inbuilt the Salary Structure as per the all of the Government & Non-Government Employees Salary Pattern
1. The tax rate slabs of both the Old tax regime and New tax regime are as mentioned below :-
Calculation of Tax under Old tax structure | |
Tax Slab | Tax rate |
Up to 2,50,000 | NIL |
2,50,001 to 5,00,000 | 5% |
5,00,000 to 10,00,000 | 20% |
Above 10,00,000 | 30% |
Calculation of Tax under New tax structure | |
Tax Slab | Tax rate |
Up to 2,50,000 | NIL |
2,50,001 to 5,00,000 | 5% |
5,00,001 to 7,50,000 | 10% |
7,50,001 to 10,00,000 | 15% |
10,00,001 to 12,50,000 | 20% |
12,50,001 to 15,00,000 | 25% |
Above 15,00,000 | 30% |
2. Health and Education cess @ 4% will be added to the “Tax payable amountafter deduction of rebate u/s 87A”.
3. Surcharge is levied on taxable income above Rs50,00,000
4. The individuals who are having taxable income of up to Rs5,00,000 will be eligible for tax rebate u/s 87A up to maximum of Rs12,500, and thereby no need to pay any tax either in old tax regime or new tax regime. (The detailed notes will be there below about sec 87A).
5. Under the new tax regime, the individuals are eligible for only one deduction u/s 80CCD(2) which allows deduction on the employer’s contribution to the National Pension Scheme (NPS) Account for maximum of 10% of the respective employee’s salary (Basic + DA). Other commonly available deductions such as u/s 80C, 80D, 80E, 80G, and 80U, etc. under chapter VI A, and tax exemptions like House Rent Allowance (HRA), Leave Travel Allowance (LTA),etc. are not available in the newtax regime. The deductions and tax exemptsunder chapter VI A are mentioned below :-
Deductions under chapter VI A |
1. Total aggregate deduction up to Rs1,50,000 of below 3 items i.e. (a), (b), and (c) |
(a) Investments in specified schemes, savings instruments, etc. such as :- |
(i) Employee contribution to Provident fund (PF) |
(ii) Employee contributions to Public provident fund (PPF) |
(iii) L I C premium |
(iv) Subscription to recognized National Savings Scheme certificates (NSC) |
(v) Contribution to Unit Linked Insurance Plan (ULIP) |
(vi) Subscription to equity shares and debentures forming part of approved public limited companies |
(vii) Subscription to approved Mutual funds |
(viii) Subscription to Term deposits for a fixed period of not less than 5 years of approved scheduled banks, and Post offices |
(ix) Subscription to notified bonds issued by NABARD |
(x) deposit to senior citizen savings scheme |
(xi) Subscription to 5-year term deposit with Post Offices. |
(b) Contribution to pension funds of LIC or other insurers u/s 80 CCC |
(c) Assessee's contributions to pension schemes of central government u/s 80 CCD (1) |
2. Other deductions under VI-A |
(d) Deduction up to Rs 50000 in addition to above points (a), (b), and (c) u/s 80 CCD (1B) |
(e ) Assessee's contributions to pension schemes of central government u/s 80 CCD (2) |
(f) Amount invested in Health insurance u/s 80 D |
(g) Interest paid on Educational loan u/s 80 E |
(h) Amount invested in listed shares u/s 80 CCG |
(i) Expenditure incurred for the medical treatment of a dependent u/s 80 DD |
(j) Expenditure incurred for the medical treatment of specified diseases u/s DDB |
(k) Interest on loan for acquired of residential house property u/s 80 EE |
(l) Interest on loan for acquired of electric vehicle u/s 80 EEB |
(m) persons with disability u/s 80 U |
(n) Donations to recognized trusts u/s 80 G |
(o) Rent paid for residential accommodation u/s 80 GG |
(p) Royalty Income of books u/s 80 QQB |
(q) Royalty Income of patents u/s 80 RRB |
(r) Interest on Savings Bank Accounts u/s 80 TTA |
(s) Interest in deposits with post offices, co-operative banks u/s 80 TTB |
6.Eligibility to claim rebate u/s 87A :-
The following conditions should satisfy if we claim the benefit of rebate u/s 87A :-
(a) we should be a resident individual,
(b) Our total taxable income (after deductions, but before calculating Health and Education cess) does not exceed Rs12,500.
Then, we are not required to pay any tax either under old tax structure or new tax structure. For example, see the below table.
Rebate u/s 87A under Old tax regime :- | |||
Total Taxable income | Tax payable | Rebate available u/s 87A | Tax payable before Health and Education cess calculated |
260000 | 500 (2,50,001 to 2,60,000) x 5% | 500 | NIL |
400000 | 7500 (2,50,001 to 4,00,000) x 5% | 7,500 | NIL |
580000 | 28500 (2,50,000 to 5,00,000) x 5% (5,00,001 to 5,80,000) x 20% | N/A | 28500 (12,500 + 16,000) |
Rebate u/s 87A under New tax regime :- | |||
Total Taxable income | Tax payable | Rebate available u/s 87A | Tax payable before Health and Education cess calculated |
260000 | 500 (2,50,001 to 2,60,000) x 5% | 500 | NIL |
400000 | 7500 (2,50,001 to 4,00,000) x 5% | 7,500 | NIL |
580000 | N/A | ||
28500 (2,50,000 to 5,00,000) x 5% (5,00,001 to 5,80,000) x 15% | 24500 (12,500 + 12,000) | ||
Example 1 :-
Particulars | Tax Rate | Old Tax Structure | New Tax Structure |
Total income or Gross Salary | 480000 | 480000 | |
Less : Standard deduction | 50000 | N/A | |
Income after standard deduction | 430000 | 480000 | |
Less : Deductions and Tax exemptions of Chapter VI A | 80000 | 0 | |
Taxable income | 350000 | 480000 | |
Calculation of Tax for Old tax structure:- | 7500 | 11500 | |
Up to 2,50,000 | NIL | ||
2,50,001 to 5,00,000 | 5% | ||
5,00,000 to 10,00,000 | 20% | ||
Above 10,00,000 | 30% | ||
Calculation of Tax for New Tax structure:- | |||
Up to 2,50,000 | NIL | ||
2,50,001 to 5,00,000 | 5% | ||
5,00,001 to 7,50,000 | 10% | ||
7,50,001 to 10,00,000 | 15% | ||
10,00,001 to 12,50,000 | 20% | ||
12,50,001 to 15,00,000 | 25% | ||
Above 15,00,000 | 30% | ||
Total Tax amount | 7500 | 11500 | |
Less : Tax rebate u/s 87 A | 7500 | 11500 | |
Total Taxable amount after rebate u/s 87 A | 0 | 0 | |
Add : Health and Education cess | 4% | N/A | N/A |
Total Tax Payable amount to Government | N/A | N/A |
Note 1 :-
The tax amount of Rs11,500 calculated as below :-
There is a taxable amount under New tax regime is Rs4,80,000
On first 2,50,000 | 0% | 0.00 |
From 2,50,001 to 4,80,000 (i.e. 2,30,000 x 5%) | 5% | 11500.00 |
11500.00 |
Note 2 :-
Total Taxable amount after rebate u/s 87A is considered zero because both the old and New tax regimes are having the rebate u/s 87A is below Rs12,500 which is under eligible limit.
Example 2 :-
Particulars | Tax Rate | Old Tax Structure | New Tax Structure |
Total income or Gross Salary | 860000 | 860000 | |
Less : Standard deduction | 50000 | N/A | |
Income after standard deduction | 810000 | 860000 | |
Less : Deductions and Tax exemptions of Chapter VI A | 235000 | 40000 | |
Taxable income | 575000 | 820000 | |
Calculation of Tax for Old tax structure:- | |||
Up to 2,50,000 | NIL | 0 | |
2,50,001 to 5,00,000 | 5% | 12500 | |
5,00,000 to 10,00,000 | 20% | 15000 | |
Above 10,00,000 | 30% | ||
Calculation of Tax for New Tax structure:- | |||
Up to 2,50,000 | NIL | 0 | |
2,50,001 to 5,00,000 | 5% | 12500 | |
5,00,001 to 7,50,000 | 10% | 25000 | |
7,50,001 to 10,00,000 | 15% | 10500 | |
10,00,001 to 12,50,000 | 20% | ||
12,50,001 to 15,00,000 | 25% | ||
Above 15,00,000 | 30% | ||
Total Tax amount | 27500 | 48000 | |
Less : Tax rebate u/s 87 A | 0 | 0 | |
Total Taxable amount after rebate u/s 87 A | 27500 | 48000 | |
Add : Health and Education cess | 4% | 1100 | 1920 |
Total Tax Payable amount to Government | 28600 | 49920 | |
Benefit by choosing old tax regime is Rs. | 21320 | ||
Note :-
The Health and Education cess @ 4% is calculated on “Total taxable amount after rebate u/s 87A”.
Example 3 :-
Particulars | Tax Rate | Old Tax Structure | New Tax Structure |
Total income or Gross Salary | 1700000 | 1700000 | |
Less : Standard deduction | 50000 | N/A | |
Income after standard deduction | 1650000 | 1700000 | |
Less : Deductions and Tax exemptions of Chapter VI A | 210000 | 10000 | |
Taxable income | 1440000 | 1690000 | |
Calculation of Tax for Old tax structure:- | |||
Up to 2,50,000 | NIL | 0 | |
2,50,001 to 5,00,000 | 5% | 12500 | |
5,00,000 to 10,00,000 | 20% | 100000 | |
Above 10,00,000 | 30% | 132000 | |
Calculation of Tax for New Tax structure:- | |||
Up to 2,50,000 | NIL | 0 | |
2,50,001 to 5,00,000 | 5% | 12500 | |
5,00,001 to 7,50,000 | 10% | 25000 | |
7,50,001 to 10,00,000 | 15% | 37500 | |
10,00,001 to 12,50,000 | 20% | 50000 | |
12,50,001 to 15,00,000 | 25% | 62500 | |
Above 15,00,000 | 30% | 57000 | |
Total Tax amount | 244500 | 244500 | |
Less : Tax rebate u/s 87 A | 0 | 0 | |
Total Taxable amount after rebate u/s 87 A | 244500 | 244500 | |
Add : Health and Education cess | 4% | 9780 | 9780 |
Total Tax Payable amount to Government | 254280 | 254280 | |
Benefit either by choosing old or New tax regime is Rs. | 0 | ||
Note :-
We understand that the old tax regime is beneficial for us when the below conditions are fulfilled ;-
(a) Total taxable income is more than Rs15,00,000, and
(b) The total deductions and exemptions of old tax regime are should be more than Rs2,50,000 (including standard deduction), comparing to the deductions under new tax regime which is applicable for only u/s80CCD(2).
If the total taxable income is below Rs15,00,000 then the above said deductions under old tax structure i.e. 2,50,000 gradually decrease, comparing to the deductions under new tax regime which is applicable for only u/s80CCD(2).
Hope this article gives you basic information to opt the suitable tax structure to pay Income Tax.
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