On February 1, 2020, India’s Finance Minister, Nirmala Sitharaman, presented the Union Budget, 2020, which included New Income Tax Slabs. Regular individuals, senior citizens, and HUFs now have access to a new tax regime that allows them to pay taxes at lower income tax slab rates. Let’s look at the income tax slabs for 2020, both under the existing and new tax regimes.
Table of Contents
New Income Tax Slab for FY 2022-23 & AY 2021-22
Read the table below to know about the new income tax slabs rates for 2020:
| Annual Income | Old Tax Regime | New Tax Regime |
| Up to Rs.2.5 lakh | Exempt | Exempt |
| Rs.2.5 lakh – Rs.5 lakh | 5%* | 5%* |
| Rs.5 lakh – Rs.7.5 lakh | 20% | 10% |
| Rs.7.5 lakh – Rs.10 lakh | 20% | 15% |
| Rs.10 lakh – Rs.12.5 lakh | 30% | 20% |
| Rs.12.5 lakh – Rs.15 lakh | 30% | 25% |
| Above Rs.15 lakh | 30% | 30% |
New Income Tax Slab in 2020-21 for Senior Citizens
According to the Income Tax Act of 1961, taxpayers over the age of 60 but under the age of 80 are called Senior Citizens. Let’s look at the income tax slabs for senior citizens under the previous tax system.
| Annual Income | Old Tax Regime |
| Up to Rs.3 lakh | Exempt |
| Rs.3 lakh – Rs.5 lakh | 5% |
| Rs.5 lakh – Rs.10 lakh | 20% |
| Above Rs.10 lakh | 30% |
Note: Individuals and older citizens are both subject to the new tax regime’s income tax slab rates. Under the new tax regime, senior citizens will not be eligible for any exemptions in the income tax slab 2020.
Income Tax Slab in 2020-21 for Super Senior Citizens
Taxpayers beyond the age of 80 are considered super senior citizens under the Income Tax Act of 1961. Super senior citizens will be obligated to pay taxes according to the income tax slabs shown in the table below for FY 2022-23 and AY 2021-22 (previous tax regime):
| Annual Income | Old Tax Regime |
| Up to Rs.5 lakh | Exempt |
| Rs.5 lakh – Rs.10 lakh | 20% |
| Above Rs.10 lakh | 30% |
Note: Under the new tax regime, super senior citizens can also choose the Income-tax slab 2020. For all taxpayers, the income tax slab rates for 2020-21 are the same (individuals, senior citizens, and super senior citizens).
Surcharge on Income Tax for Senior Citizens and Individuals
If the assessee’s total income exceeds a certain threshold, a surcharge is imposed on the tax amount. Let’s look at the income tax surcharge for FY 2020-21.
Current Surcharge Rates 2020-21
| Income | Surcharge Rate |
| Less than Rs.50 lakh | NIL |
| Rs.50 lakh – Rs.1crore | 10% |
| Rs.1 crore – Rs.2 crore | 15% |
| Rs.2 crore – Rs.5 crore | 25% |
| Rs.5 crore – Rs.10 crore | 37% |
| More than Rs.10 crore | 37% |
Note: Sections 111A, 112A, and 115AD of the Income Tax Act, 1961 exempt taxable income from the 25% and 37% surcharges on income tax. In this situation, there is a 15% surcharge on income tax. However, in certain circumstances, there is a marginal reduction in the income tax surcharge.
Income Tax Slab for HUF 2020
Individuals and HUFs can choose between the old and new tax regimes for FY 2020-21, according to the Union Budget 2020. For FY 2022-23 & AY 2021-22, the HUF Income Tax Slab is as follows:
| Annual Income | New Tax Regime | Old Tax Regime |
| Up to Rs.2.5 lakh | Exempt | Exempt |
| Rs.2.5 lakh – Rs.5 lakh | 5% | 5% |
| Rs.5 lakh – Rs.7.5 lakh | 10% | 20% |
| Rs.7.5 lakh – Rs.10 lakh | 15% | 20% |
| Rs.10 lakh – Rs.12.5 lakh | 20% | 30% |
| Rs.12.5 lakh – Rs.15 lakh | 25% | 30% |
| Above Rs.15 lakh | 30% | 30% |
New Income Tax Slab for Domestic Company 2020
The domestic corporate income tax slabs for 2020-21 is set at a flat rate of 30%. Check out the income tax slabs for domestic companies for the fiscal years 2022-23 and 2021-22 below:
| Domestic Company | AY 2022-23 | AY 2021-22 |
| Total Turnover / Gross Receipt for FY 2017-18 up to Rs.400 crore | 25% | NA |
| Total Turnover / Gross Receipt for FY 2018-19 up to Rs.400 crore | NA | 25% |
| Any other domestic company | 30% | 30% |
For the assessment years 2022-23 and 2021-22, a domestic company can choose a unique income tax rate. The following are the domestic company’s special income tax rates:
| Domestic Company | AY 2022-23 | AY 2021-22 |
| Opted for Section 115BA | 25% | 25% |
| Opted for Section 115BAA | 22% | 22% |
| Opted for Section 115BAB | 15% | 15% |
Surcharge for Domestic Company on Income Tax
If the taxable income is more than Rs.1 crore but less than Rs.10 crore, a surcharge of 7% of the income tax amount is imposed on domestic companies. If your taxable income exceeds Rs.10 crore, you’ll have to pay a surcharge of 12% of your income tax. In some situations, however, there is a marginal relief on the surcharge on income tax. The surcharge rate for firms electing to be taxed under Section 115BAA or Section 115BAB is 10%, regardless of total taxable revenue.
Income Tax Slab for Partnership Firm2020-21
For the fiscal year 2020-21, the income tax slab rates for partnership firms have been set at a flat rate of 30%.
Surcharge on Income Tax for Partnership Firm
When a partnership firm’s total taxable income exceeds Rs.1 crore, it is subject to a 12% surcharge on income tax. In some situations, however, the partnership surcharge on income tax is entitled to a marginal reduction.
Income Tax Slab Comparison for FY 2019-20 vs FY 2018-19
For Individuals:
| Income Range | Income Tax Slab FY 2019-20, AY 2020-21 | Income Tax Slab FY 2018-19, AY 2019-20 |
| Up to Rs.2,50,000 | – | – |
| Rs.2,50,000 – Rs.5,00,000 | 5% | 5% |
| Rs.5,00,000 – Rs.10,00,000 | 20% | 20% |
| Above Rs.10,00,000 | 30% | 30% |
For senior Citizens:
| Income Range | Income Tax Slab FY 2019-20, AY 2020-21 | Income Tax Slab FY 2018-19, AY 2019-20 |
| Up to Rs.3,00,000 | – | – |
| Rs.3,00,000 – Rs.5,00,000 | 5% | 5% |
| Rs.5,00,000 – Rs.10,00,000 | 20% | 20% |
| Above Rs.10,00,000 | 30% | 30% |
For super senior Citizens:
| Income Range | Income Tax Slab FY 2019-20, AY 2020-21 | Income Tax Slab FY 2018-19, AY 2019-20 |
| Up to Rs.5,00,000 | – | – |
| Rs.5,00,000 – Rs.10,00,000 | 20% | 20% |
| Above Rs.10,00,000 | 30% | 30% |
About New Tax Regime?
Under Section 115BAC of the Income Tax Act, 1961, the Finance Minister introduced a new tax structure for individual and HUF taxpayers. Concessional income tax rates are available under the new tax regime. However, in the new tax regime, you will not be able to avail 70 deductions. [2]. The new tax regime was created to simplify income tax by lowering the new income tax rate for taxpayers who forgo some of the deductions and exemptions allowed under the Income Tax Act of 1961.
List of Deductions in New Tax Regime which are not available
Individuals who choose the income tax slabs 2020 under the new tax regime may not avail of some of the most popular deductions and exemptions available under the Income Tax Act of 1961. Out of 70 deductions [2], the following are some of the deductions and exemptions that you will have to forego under the new tax regime: [3]
- Section 80C deduction
- Section 80D
- Any deduction under Chapter VI-A
- Standard Deduction
- Leave Tax Allowance (LTA)
- House Rent Allowance (HRA)
- Interest on Housing Loan u/s 24
- Professional Tax
- *Except Section 80CCD (2) and 80JJAA
Comparison between Old Tax Regime and New Tax Regime
Due to the fact that there are two tax regimes available for the fiscal year 2020-21, it is important that you choose which one you should choose to decrease your income tax burden. However, you cannot claim up to 70 deductions when calculating your income tax for the financial year 2020-21 if you wish to take advantage of the new income tax slab 2020 under the new tax regime.
Let’s look at some examples to see which is preferable: the old tax regime or the new tax regime for various salary groups.
Case 1 : Taxable Income Less than Rs.10 lakh
Reema, a 26-year-old, works for a startup company and earns Rs.7 lakh a year. If she invests Rs.1.5 lakh under Section 80C and pays a Rs.10,000 health insurance premium, she can avail under Section 80D of the Income Tax Act, 1961. Let’s examine the income tax rate in 2020 and the amount of tax payable in FY 2022-23 (AY 2021-22) under the old and new tax regimes:
| Particulars | New Tax Regime (in Rs.) | Old Tax Regime (in Rs.) |
| Gross Total Income | 7,00,000 | 7,00,000 |
| Less: Section 80C Deductions | – | (1,50,000) |
| Less: Section 80D Deductions | – | (10,000) |
| Less: Standard Deduction | – | (50,000) |
| Taxable Income | Rs.7,00,000 | Rs.4,90,000 |
| Tax Payable as per the Income Tax Slab 2020-21 | ||
| Up to Rs.2.5 lakh | 0 | 0 |
| Rs.2.5 lakh – Rs.5 lakh | 12,500 | 12,000 |
| Rs. 5 lakh – Rs.7.5 lakh | 20,000 | – |
| Total | 32,500 | 12,000 |
| Less: Rebate u/s 87A* | – | 12,000 |
| Add: Health & Education Cess (4%) | 1300 | – |
| Net Tax Payable | 33,800 | NIL |
Note: Rebate u/s 87A of the Income Tax Act, 1961 is of Rs.12500 or Actual tax payable, whichever is low. Individuals with taxable income of up to Rs.5 lakh per year are eligible for this.
Case 2: Taxable Income between Rs.10 lakh to Rs.15 lakh
Rohan, a 30-year-old man, is employed by a corporation. He is paid a total of Rs.12, 00,000. He intends to invest Rs.1.5 lakh under Section 80C, as well as Rs.50, 000 in the National Pension System under Section 80CCD.
| Particulars | New Tax Regime (in Rs.) | Old Tax Regime (in Rs.) |
| Gross Total Income | 12,00,000 | 12,00,000 |
| Less: Section 80C Deductions | – | (1,50,000) |
| Less: Section 80CCD Deductions | – | (50,000) |
| Less: Section 80D Deductions | – | (20,000) |
| Less: Standard Deduction | – | (50,000) |
| Taxable Income | Rs.12,00,000 | Rs.9,30,000 |
| Tax Payable as per the Income Tax Slab 2020-21 | ||
| Up to Rs.2.5 lakh | 0 | 0 |
| Rs.2.5 lakh – Rs.5 lakh | 12,500 | 12,500 |
| Rs. 5 lakh – Rs.7.5 lakh | 25,000 | 50,000 |
| Rs.7.5 lakh – Rs. 10 lakh | 37,500 | 36,000 |
| Rs. 10 lakh – Rs.12.5 lakh | 40,000 | 0 |
| Total | 1,15,000 | 98500 |
| Add: Health & Education Cess (4%) | 4600 | 3940 |
| Net Tax Payable | 1,19,600 | Rs.1,02,440 |
Case 3: Taxable Income More than 15 lakh
Amit, a 37-year-old man, works for a multinational corporation and earns Rs.16 lakh each year. He intends to make certain tax-saving investments this fiscal year. He intends to make a Section 80C investment of Rs.1.5 lakh and a Section 80CCD investment of Rs.50, 000 in NPS. He is also paying Rs. 25,000 health insurance premium, which he can deduct under Section 80D. He also owes money to his house. He will also be able to deduct Rs. 2 lakh for home loan interest under Section 24.
Let’s analyze the income tax due under the old and new tax regimes for FY 2022-23 (AY 2021-22):
| Particulars | New Tax Regime (in Rs.) | Old Tax Regime (in Rs.) |
| Gross Total Income | 16,00,000 | 16,00,000 |
| Less: Section 80C Deductions | – | (1,50,000) |
| Less: Section 80CCD Deductions | – | (50,000) |
| Less: Section 80D Deductions | – | (25,000) |
| Less: Section 24 Deduction | – | (2,00,000) |
| Less: Standard Deduction | – | (50,000) |
| Taxable Income | Rs.16,00,000 | Rs.11,25,000 |
| Tax Payable as per the Income Tax Slab 2020-21 | ||
| Up to Rs.2.5 lakh | 0 | 0 |
| Rs.2.5 lakh – Rs.5 lakh | 12,500 | 12,500 |
| Rs. 5 lakh – Rs.7.5 lakh | 25,000 | 50,000 |
| Rs.7.5 lakh – Rs. 10 lakh 15% | 37,500 | 50,000 |
| Rs. 10 lakh – Rs.12.5 lakh 20% | 50,000 | 37,500 |
| Rs.12.5 lakh – Rs.15 lakh 25% | 62,500 | – |
| More than Rs.15 lakh 30% | 30,000 | – |
| Total | 2,17,500 | 1,50,000 |
| Add: Health & Education Cess (4%) | 8700 | 6,000 |
| Net Tax Payable | 2,26,200 | Rs.1,56,000 |
For income tax segments up to Rs.15 lakh, the new income tax regime introduced lower income tax slab rates. However, you can only take advantage of the new tax regime if you are willing to forego 70 deductions that were previously accessible.Leave Travel Allowance, House Rent Allowance, and deductions under Chapter VI-A of the Income Tax Act, such as Sections 80C, 80CCC, 80CCD, 80D, 80DD, 80E, 80EE, 80G, 80GG, 80GGA, 80GGC, and others, are among the exemptions and deductions available. Not only that, but you won’t be able to take advantage of Section 24’s basic deduction and home loan interest deductions.
So, if you are making specific investments under the aforementioned areas, it is highly suggested that you continue under the old tax regime because you will be able to lower your taxable income and hence your income tax liability.
On the other hand, if you are searching for a simple income tax computation and filing process, or if you do not wish to make tax-saving investments, you can choose the new tax regime.