All Individuals & HUF can prefer to pay tax as per new slab rates without availing exemptions & deductions for the fiscal year 2020-21 and Assessment Year 2021-22 as per the Budget 2020.
Option has been given to all or any individuals/HUF to pay tax as per new slab rates (Optional tax regime) on total income computed without claiming any deductions/exemptions – As per Sec 115BAC inserted by Finance Act, 2020 -Applicable from FY 2020-21 (AY 2021-22). Below table summarizes tax rates as per optional tax regime Vs. old rates:
Option has been given to all or any individuals/HUF to pay tax as per new slab rates (Optional tax regime) on total income computed without claiming any deductions/exemptions – As per Sec 115BAC inserted by Finance Act, 2020 -Applicable from FY 2020-21 (AY 2021-22). Below table summarizes tax rates as per optional tax regime Vs. old rates:
| Total Income (Rs.) | Existing Tax Rates (%) | New Tax Rates (Optional) (%) |
0-2,50,000 | 0% | 0% |
2,50,001-5,00,000 | 5% | 5% |
5,00,001 – 7,50,000 | 20% | 10% |
7,50,001 – 10,00,000 | 15% | |
10,00,001 – 12,50,000 | 20% | |
12,50,001 – 15,00,000 | 25% | |
> 15,00,000 | 30% |
• Basic exemption limit for oldster and super citizen individuals remains unchanged at Rs.3,00,000 and Rs.5,00,000
• Rebate of tax (i.e. up to Rs.12,500 if total income doesn't exceed Rs.5,00,000) remains unchanged and equally applicable for resident individual albeit prefer to choose new tax
• No change in surcharge rates. However, surcharge on STT paid capital gains shall not exceed 15%.
Individuals/HUF who doesn't have business income & prefer to pay tax as per new regime, option shall be exercised for every year at the time of filing of ITR
Allowances/investments not eligible for claiming deductions/exemptions if choose new tax regime
An Individual/HUF who doesn't have business income and choose new tax regime shall not be eligible to say various allowances/investments as deductions/exemptions under different heads of income and therefore the same are summarized below:
• Rebate of tax (i.e. up to Rs.12,500 if total income doesn't exceed Rs.5,00,000) remains unchanged and equally applicable for resident individual albeit prefer to choose new tax
• No change in surcharge rates. However, surcharge on STT paid capital gains shall not exceed 15%.
Individuals/HUF who doesn't have business income & prefer to pay tax as per new regime, option shall be exercised for every year at the time of filing of ITR
Allowances/investments not eligible for claiming deductions/exemptions if choose new tax regime
An Individual/HUF who doesn't have business income and choose new tax regime shall not be eligible to say various allowances/investments as deductions/exemptions under different heads of income and therefore the same are summarized below:
Allowances/investments eligible for claiming as deductions/exemptions if choose new tax regime
An Individual/HUF who doesn't have business income and choose new tax regime shall eligible to say the below mentioned allowances/investments as deductions/exemptions only, under different heads of income:
Other conditions
i. Option shall be exercised for each year along side filing of tax return
ii. No exemption in respect of free coupon/meal vouchers (i.e. taxable within the hands of employee as perquisite) – Proposed to amend Rule 3 of tax Rules,
Individuals/HUF having business income & prefer to pay tax as per new rates, option are often exercised at any time on or before the maturity of filing ITR for any AY on or after 2021-22 and applicable for subsequent AY’s also.
Amounts not eligible for claiming as deductions under the top income from business or profession
An Individual/HUF having business income and prefer to pay tax as per new rates shall not be eligible to say various deductions under the top PGBP and therefore the same are summarized below:
An Individual/HUF who doesn't have business income and choose new tax regime shall eligible to say the below mentioned allowances/investments as deductions/exemptions only, under different heads of income:
Other conditions
i. Option shall be exercised for each year along side filing of tax return
ii. No exemption in respect of free coupon/meal vouchers (i.e. taxable within the hands of employee as perquisite) – Proposed to amend Rule 3 of tax Rules,
Individuals/HUF having business income & prefer to pay tax as per new rates, option are often exercised at any time on or before the maturity of filing ITR for any AY on or after 2021-22 and applicable for subsequent AY’s also.
Amounts not eligible for claiming as deductions under the top income from business or profession
An Individual/HUF having business income and prefer to pay tax as per new rates shall not be eligible to say various deductions under the top PGBP and therefore the same are summarized below:
Eligible to say deduction u/s 80JJAA in respect of additional employee cost
Not required to pay Alternate Minimum Tax (AMT) and not eligible to hold forward and depart of AMT credit, if any
• Provisions of AMT shall not apply to Individual/HUF having business income and prefer to pay tax as per new regime – Sec 115JC amended by Finance Act,
• Individual/HUF having business income and choose new tax regime, shall not be eligible to line off of brought forward AMT credit, if any and carry over and depart of AMT credit, if any – 115JD amended by Finance Act,
Time limit for loan sanction under affordable housing scheme extended till 31-Mar- 2021 for availing deduction of interest on loan taken by a private
• An individual is eligible to say deduction of interest payable up to Rs.1,50,000 on loan taken for purchase of residential house property for AY 2020-21 and subsequently if the subsequent conditions are satisfied:
> Loan taken from financial organization during 01-Apr-2019 to 31-Mar-2020 (extended till 31-Mar-2021 – Amended by Finance Act, 2020);
> stamp tax value of the property doesn't exceed 45,00,000
> Individual doesn't own any residential house property on the date of sanction of loan
• Deduction claimed under this section shall not be eligible to say as deduction once more under the other section under the
Cumulative employer’s contribution to recognized PF, approved pension fund and NPS in more than Rs.7.50 lakhs is taxable within the hands of employee as perquisite
• To bring a uniformity in taxation between high earning and low earning salaried employees in respect of employer’s contribution to recognized PF, approved pension fund and National Pension Scheme, Sec 17(2)(vii) of the Act was amended vide Finance Act, 2020 by introducing a combined upper cap limit of Rs.7,50,000 and any excess contribution made by an employer shall be taxable within the hands of employee as
• Further, clause (viia) of sub-section (2) of section 17 introduced to tax annual accretion by way of interest, dividend or the other amount of comparable nature during the previous year to the accumulated balance to the extent of contribution included in total income of the individual as per section 17(2)(vii).
Head-wise summary of Investments/expenses not eligible for claiming as deduction/ exemption if prefer to pay tax as per new rates
Not required to pay Alternate Minimum Tax (AMT) and not eligible to hold forward and depart of AMT credit, if any
• Provisions of AMT shall not apply to Individual/HUF having business income and prefer to pay tax as per new regime – Sec 115JC amended by Finance Act,
• Individual/HUF having business income and choose new tax regime, shall not be eligible to line off of brought forward AMT credit, if any and carry over and depart of AMT credit, if any – 115JD amended by Finance Act,
Time limit for loan sanction under affordable housing scheme extended till 31-Mar- 2021 for availing deduction of interest on loan taken by a private
• An individual is eligible to say deduction of interest payable up to Rs.1,50,000 on loan taken for purchase of residential house property for AY 2020-21 and subsequently if the subsequent conditions are satisfied:
> Loan taken from financial organization during 01-Apr-2019 to 31-Mar-2020 (extended till 31-Mar-2021 – Amended by Finance Act, 2020);
> stamp tax value of the property doesn't exceed 45,00,000
> Individual doesn't own any residential house property on the date of sanction of loan
• Deduction claimed under this section shall not be eligible to say as deduction once more under the other section under the
Cumulative employer’s contribution to recognized PF, approved pension fund and NPS in more than Rs.7.50 lakhs is taxable within the hands of employee as perquisite
• To bring a uniformity in taxation between high earning and low earning salaried employees in respect of employer’s contribution to recognized PF, approved pension fund and National Pension Scheme, Sec 17(2)(vii) of the Act was amended vide Finance Act, 2020 by introducing a combined upper cap limit of Rs.7,50,000 and any excess contribution made by an employer shall be taxable within the hands of employee as
• Further, clause (viia) of sub-section (2) of section 17 introduced to tax annual accretion by way of interest, dividend or the other amount of comparable nature during the previous year to the accumulated balance to the extent of contribution included in total income of the individual as per section 17(2)(vii).
Head-wise summary of Investments/expenses not eligible for claiming as deduction/ exemption if prefer to pay tax as per new rates
S No | Section/ Rule | Deductions/Exemptions | Head of income |
1. | 10(5) | Leave Travel Allowance (LTA) | Salary |
2. | 10(13A) | House Rent Allowance (HRA) | |
3. | 10(14) | Allowances covered (for e.g. allowances to meet cost of living or to meet personal expenses etc.) | |
5. | 16(ia) | Standard deduction of Rs.50,000 | |
6. | 16(ii) | Entertainment allowance (to government employees) Max. Rs. 5000/- | |
7. | 16(iii) | Tax on employment (i.e. Professional Tax – PT) | |
8. | 24(b) | Interest on housing loan (Self-occupied/Vacant Property – Sec. 23(2)) Max Rs.2,00,000/- | House Property |
9. | 57(iia) | Family Pension | Other Sources |
10. | 35AD | Capital expenditure on specified business | |
11. | 35CCC | Expenditure on agricultural extension project | |
12. | 80C | LIC Premium, Children Tuition Fees, PF contribution, Principal component of housing loan etc.., | |
13. | 80CCC | Contribution to certain pension funds | |
14. | 80CCD(1) | Employee’s contribution to national pension scheme | |
15. | 80D | Health Insurance Premium/Medical Expenditure/Preventive Health-check up | |
16. | 80DD | Maintenance/medical treatment of dependent disabled person | |
17. | 80DDB | Medical treatment of specified diseases | |
18. | 80E | Interest on loan taken for higher education | |
19. | 80EE | Interest on loan taken for residential house property | |
20. | 80EEA | Interest on loan taken for residential house property (if not eligible to claim u/s 80EE) | |
21. | 80EEB | Interest on loan taken for purchase of electric vehicle | |
22. | 80G | Donation institutions to certain funds/charitable | |
23. | 80GG | Rent paid (if not eligible deduction u/s 10(13A)) to claim HRA |
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Main Data Input Sheet
Employee's Details Input Portion
Deductor's Details Portion
Tax Computed Portion
Salary Structure for both of Govt and Non-Govt Employees
Automated Revised Form 16 Part A&B
Income Tax Revised Form 16 Part B
Automated Arrears Relief Calculation U/s 89(1) with Form 10E
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