Income Tax Department has launched an e-calculator for taxpayers to estimate tax liability if they opt for a new tax regime. Notably, those opting for the new tax slabs will not be able to claim deductions and exemptions for filing income tax returns. The calculator compares taxes in the old and the new tax regimes for the financial year 2020-21. It has been hosted on the department's official e-filing website -- incometaxindiaefiling.gov.in.
The web portal is used for filing of electronic income tax returns (ITRs) by individuals and various other categories of taxpayers. Taxpayers in three age categories of normal citizen (below 60 years), senior citizen (60-79 years) and super senior citizen (above 79 years) can punch in estimated annual income from all sources, total eligible deductions, and exemptions to see what'll be their total taxable income if they continue in the old regime or opt for the new one.
During her Budget 2020 speech, Finance Minister Nirmala Sitharaman had announced "a new and simplified personal tax regime" with revised income tax slabs and tax rates. She said those earning Rs 5-7.5 lakh would now pay just 10 per cent income tax, while those earning up to Rs 5 lakh in a year will pay no tax. Income tax rates will be significantly reduced for those who forego deductions and exemptions, Sitharaman said.
For income between Rs 7.5 lakh and Rs 10 lakh per annum, the income tax rate has been reduced to 15 per cent from the current 20 per cent. For income between Rs 10 lakh to Rs 12.5 lakh per annum, income tax has been reduced to 20 per cent from the current 30 per cent. For those earning between 12.5 lakh to Rs 15 lakh, income tax of 25 per cent will be imposed. A person earning Rs 15 lakh per anum and not availing any deductions will pay Rs 1.95 lakh tax in place of Rs 2.73 lakh, the FM said. The tax cuts will cost the government Rs 40,000 crore per annum.
The old or the existing income tax rate regime allows a standard deduction of Rs 50,000 and investment of Rs 1.5 lakh in saving schemes with a rate of 5 per cent, 10 per cent or 30 per cent tax depending on various income levels.
Edited by Manoj Sharma with agency inputs