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How to calculate income tax for F.Y 2020-21 U/s 115BAC As per the Budget 2020 ( Old and New Tax Regime) With Automated Income Tax Revised Form 16 for the F.Y.2020-21 and A.Y.2021-22
The new income tax discipline came into effect on April 1, 2020. It gives an individual the option to continue with existing ncome Tax duties (with ncome Tax rebates and exemptions) or to opt for the 70 new ncome Tax rebates and ncome Tax exemptions. For the convenience of salaried persons who have no business income, they have to choose between the existing and new tax system every financial year.
On the other hand, those who have business income should carefully evaluate whether they want to continue the existing ncome Tax discipline or choose the new one. This is because once they choose the new ncome Tax system, they can return to the existing ncome Tax system once in a lifetime.
The figure for ncome Tax slab for A.Y.2021-22
Under the new ncome Tax, a person is only eligible for a waiver under section 80CCD (2). This section allows the employer’s contribution to the NPS account to be deducted for a maximum of 10 per cent of the employee’s salary (here the salary means basic additional value-added allowance).
This can be explained by an example of the ncome Tax liability that you have under the new ncome Tax. Suppose your total income in the financial year 2000-2011 is 1 lakh rupees. In addition, your employer has contributed Rs.60,000 to your NPS account during the year, which is eligible for exemption under Section 80CCD (2). Therefore, your net taxable income will be Rs. 15,40,000 (Rs. 16 lakh minus Rs. 60,000).
In the new ncome Tax the system, the ncome Tax liability will be calculated at Rs 15.40 lakh. There will be no tax on the first two and a half lakh rupees from the above mentioned 15.40 lakh rupees. Now the income that still has to be taxed will be Rs 12.90 lakh (15.40 lakh minus Rs 2.5 lakh).
From the next Rs 2.99 lakh mentioned in the second phase of the table above, the next 2.5 lakh rupees (2.5 Lakh rupees under the exemption certificate) will be taxed at five per cent. The ncome Tax amount here will be Rs 12,500.
The applicable income for ncome Tax will be Rs. 10,40,000. The next two and a half lakh rupees (.5.5 lakh minus five lakh rupees) will be levied on the ten per cent ncome Tax as mentioned in the 3rd clause. The amount of ncome Tax comes out to Rs 25,000.
At the moment, the ncome Tax that is still taxable is Rs 7,90,000. From the 4th point, two and a half lakh rupees (minus one lakh rupees Rs. 5 lakh) will be 15 per cent and the ncome Tax liability will be 3,500 rupees.
After the fifth point, the amount of taxable income is Rs 5,40,000. From the fifth point, the next two and a half lakh rupees (12.5 lakh minus 10 lakh rupees) will be taxed at 20 per cent. The duty liability comes out as Rs 50,000.
The new tax comes out as a total ncome Tax liability of Rs 1,99,500 (0 12,500 25,000 37,500 50,000 62,500 12,000). Health and education will be added at a rate of 4 per cent. The amount of cess is Rs 7,980.
Now you need to compare it with the ncome Tax liability under your existing ncome Tax. The calculation of income tax under the existing ncome Tax duty works in the same way. First, you must deduct all ncome Tax deductions and deductions that you are entitled to from your total income, and then calculate your ncome Tax liability on net taxable income. Click here to read more about it.
Another way to compare the new and existing ncome Tax systems is to have the same ncome Tax liability in both ncome Tax systems so as to examine how many exemptions and/or ncome Tax exemptions are required.
Download Automated Income Tax Revised Form16 Part A&B for the Financial Year 2020-21 & Assessment Year 2021-22, as per the New Introduce Tax Section 115BAC in the Budget 2020 ( New & Old ncome Tax Regime)
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