Budget 20-21 : new tax regime tax calculation

Today everyone was looking something that someone can get out of this budget. Experts says government focused only demand creation and push the economy. Here are lots of things that might impact you and your financials in one way or another. Most importing thing in budget is new tax regime which introduce new tax slabs which are completely optional yet.

This new tax regime will give you additional tax calculation scheme which might benefit you but first lets check out old regime.

Old Tax Regime

Taxable income slabsIncome tax rates
Up to 2.5 Lakhnil
2.5 + Lakh to 5.0 Lakh5%
5.0 + Lakh to 10.0 Lakh20%
10.0 + Lakh 30%

Example: if you earn 18 lpa then
0 – 2.5 lakh = 0 Rs
2.5 – 5.0 lakh = 12,500 Rs
5.0 – 10.0 lakh = 1,00,000 Rs
10.0 – 18.0 lakh = 2,40,000 Rs
Total Tax = 3,52, 500 Rs

Lets say you claim simple 1,50,000 Rs in 80c and 1,00,000 in HRA
Now your taxable income is almost 15.5 lpa
0 – 2.5 lakh = 0 Rs
2.5 – 5.0 lakh = 12,500 Rs
5.0 – 10.0 lakh = 1,00,000 Rs
10.0 – 15.5 lakh = 1,65,000 Rs
Total Tax = 2,77, 500 Rs
There are various other exemptions, you can be benefited from these. These are also some cess which are not included in calculation. If you have more tax saving option like home loan and LTA etc. then you can save more tax.

New tax regime

Taxable income slabs Income tax rates
Up to 5 lakhnil
5.0 – 7.5 lakh10%
7.5 – 10.0 lakh15%
10.0 – 12.5 lakh20%
12.5 – 15.0 lakh25%
15.0 + lakh30%

Example: if you earn 18 lpa and want pay tax as per new regime
0 – 5 lakh = 0 Rs
5 – 7.5 lakh = 25,000 Rs
7.5 – 10.0 lakh = 37,500 Rs
10.0 – 12.5 lakh = 50,000 Rs
12.5 – 15.0 lakh = 62,500 Rs
15.0 – 18.0 lakh = 90,000 Rs
Total Tax = 2,65,000 Rs

The New Tax regime comes with the condition that no exemption can be applied. so there is no option to make the tax amount any less then the calculation. This is done to simplify the tax calculation.

There were more than 100 tax exemption which are now reduced to almost 30. We will have to wait to know what are these 30 tax exemptions. These tax exemptions can only be used with old tax regime. You can read the budget from the site of union ministry. Read our other articles here.

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