Use this income tax calculator to calculate whether you will benefit by opting for the new tax regime.
From the financial year FY 2020-21, an individual taxpayer has to choose between the new tax regime (sans tax-exemption and deductions) and the existing tax regime (continue with existing deductions).
Use ET Wealth Online’s income tax calculator to see if you will benefit by opting for the new tax regime:
Given below are answers of some of your queries related to the new income tax regime.
- Is there any deduction that can be claimed under the new tax regime?
Yes, the new income tax regime allows a deduction under section 80CCD (2) of the Income-tax Act, 1961. This deduction is available if an employer contributes to an employee’s NPS account. An employee can claim a maximum deduction of 10 per cent of salary (salary means basic plus dearness allowance).
- Does new tax regime offer a higher tax-exemption limit on income on the basis of age?
No. Unlike existing tax regime which offers higher tax-exemption limit for senior citizens (age 60 years and above but less than 80 years) and super senior citizens (age 80 years and above), the new tax regime does not offer a higher tax-exemption limit on income.
- If I opt for new income tax regime and my total taxable income in FY 2020-21 is Rs 4.90 lakh. Do I have to pay tax on it?
The new income tax regime also offers a maximum tax rebate of Rs 12,500 under section 87A of the Income-tax Act. Therefore, an individual is not required to pay any tax on income up to Rs 5 lakh in FY 2020-21 under the new tax regime.
- How can an individual arrive at net taxable income?
To arrive at net taxable income, for a financial year, an individual first needs to calculate the total of incomes that are taxable. Then, one needs to total the amount of deductions that an individual is eligible to claim in a financial year. To arrive at net taxable income, one needs to deduct the total amount deductions from the total taxable income.
- How do I know in which tax slab is applicable to my income?
The total tax liability is calculated on the basis of your net taxable income falling into a particular tax slab. As your income increases, income at different levels will be taxed at different tax slab rates. Click here to read more about it.
SOURCE – economictimes.indiatimes.com