Income Tax Slabs 2021 | Revised Tax Rates for FY 2020-21/AY 2021 – 22 (New Tax Regime)

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.

New Income Tax Slabs

New Income Tax Slab for FY 2020-21 & AY 2021-22

Read the table below to know about the new income tax slabs rates for 2020:

Annual IncomeOld Tax RegimeNew Tax Regime
Up to Rs.2.5 lakhExemptExempt
Rs.2.5 lakh – Rs.5 lakh5%*5%*
Rs.5 lakh – Rs.7.5 lakh20%10%
Rs.7.5 lakh – Rs.10 lakh20%15%
Rs.10 lakh – Rs.12.5 lakh30%20%
Rs.12.5 lakh – Rs.15 lakh30%25%
Above Rs.15 lakh30%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 IncomeOld Tax Regime
Up to Rs.3 lakhExempt
Rs.3 lakh – Rs.5 lakh5%
Rs.5 lakh – Rs.10 lakh20%
Above Rs.10 lakh30%

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 2020-21 and AY 2021-22 (previous tax regime):

Annual IncomeOld Tax Regime
Up to Rs.5 lakhExempt
Rs.5 lakh – Rs.10 lakh20%
Above Rs.10 lakh30%

Note:Under the new tax regime, super senior citizens can also choose the Income tax slab 2020. For all tax payers, 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

IncomeSurcharge Rate
Less than Rs.50 lakhNIL
Rs.50 lakh – Rs.1crore10%
Rs.1 crore – Rs.2 crore15%
Rs.2 crore – Rs.5 crore25%
Rs.5 crore – Rs.10 crore37%
More than Rs.10 crore37%

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 marginal reduction on the income tax surcharge.

Income Tax Slab for HUF 2020

Individuals and HUFs can choose between the old and new tax regimes for the FY 2020-21, according to the Union Budget 2020. For FY 2020-21 & AY 2021-22, the HUF Income Tax Slab is as follows:

Annual IncomeNew Tax RegimeOld Tax Regime
Up to Rs.2.5 lakhExemptExempt
Rs.2.5 lakh – Rs.5 lakh5%5%
Rs.5 lakh – Rs.7.5 lakh10%20%
Rs.7.5 lakh – Rs.10 lakh15%20%
Rs.10 lakh – Rs.12.5 lakh20%30%
Rs.12.5 lakh – Rs.15 lakh25%30%
Above Rs.15 lakh30%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 2020-21 and 2021-22 below:

Domestic CompanyAY 2020-21AY 2021-22
Total Turnover / Gross Receipt for FY 2017-18 up to Rs.400 crore25%NA
Total Turnover / Gross Receipt for FY 2018-19 up to Rs.400 croreNA25%
Any other domestic company30%30%

For the assessment years 2020-21 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 CompanyAY 2020-21AY 2021-22
Opted for Section 115BA25%25%
Opted for Section 115BAA22%22%
Opted for Section 115BAB15%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 marginal reduction.

Income Tax Slab Comparison for FY 2019-20 vs FY 2018-19

For Individuals:

Income RangeIncome Tax Slab FY 2019-20, AY 2020-21Income Tax Slab FY 2018-19, AY 2019-20
Up to Rs.2,50,000
Rs.2,50,000 – Rs.5,00,0005%5%
Rs.5,00,000 – Rs.10,00,00020%20%
Above Rs.10,00,00030%30%


For senior Citizens:

Income RangeIncome Tax Slab FY 2019-20, AY 2020-21Income Tax Slab FY 2018-19, AY 2019-20
Up to Rs.3,00,000
Rs.3,00,000 – Rs.5,00,0005%5%
Rs.5,00,000 – Rs.10,00,00020%20%
Above Rs.10,00,00030%30%


For super senior Citizens:

Income RangeIncome Tax Slab FY 2019-20, AY 2020-21Income Tax Slab FY 2018-19, AY 2019-20
Up to Rs.5,00,000
Rs.5,00,000 – Rs.10,00,00020%20%
Above Rs.10,00,00030%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 2020-21 (AY 2021-22) under the old and new tax regimes:

ParticularsNew Tax Regime (in Rs.)Old Tax Regime (in Rs.)
Gross Total Income7,00,0007,00,000
Less: Section 80C Deductions(1,50,000)
Less: Section 80D Deductions(10,000)
Less: Standard Deduction(50,000)
Taxable IncomeRs.7,00,000Rs.4,90,000
Tax Payable as per the Income Tax Slab 2020-21
Up to Rs.2.5 lakh00
Rs.2.5 lakh – Rs.5 lakh12,50012,000
Rs. 5 lakh – Rs.7.5 lakh20,000
Total32,50012,000
Less: Rebate u/s 87A*12,000
Add: Health & Education Cess (4%)1300
Net Tax Payable33,800NIL

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.

ParticularsNew Tax Regime (in Rs.)Old Tax Regime (in Rs.)
Gross Total Income12,00,00012,00,000
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 IncomeRs.12,00,000Rs.9,30,000
Tax Payable as per the Income Tax Slab 2020-21
Up to Rs.2.5 lakh00
Rs.2.5 lakh – Rs.5 lakh12,50012,500
Rs. 5 lakh – Rs.7.5 lakh25,00050,000
Rs.7.5 lakh – Rs. 10 lakh37,50036,000
Rs. 10 lakh – Rs.12.5 lakh40,0000
Total1,15,00098500
Add: Health & Education Cess (4%)46003940
Net Tax Payable1,19,600Rs.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 2020-21 (AY 2021-22):

ParticularsNew Tax Regime (in Rs.)Old Tax Regime (in Rs.)
Gross Total Income16,00,00016,00,000
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 IncomeRs.16,00,000Rs.11,25,000
Tax Payable as per the Income Tax Slab 2020-21
Up to Rs.2.5 lakh00
Rs.2.5 lakh – Rs.5 lakh12,50012,500
Rs. 5 lakh – Rs.7.5 lakh25,00050,000
Rs.7.5 lakh – Rs. 10 lakh 15%37,50050,000
Rs. 10 lakh – Rs.12.5 lakh 20%50,00037,500
Rs.12.5 lakh – Rs.15 lakh 25%62,500
More than Rs.15 lakh 30%30,000
Total2,17,5001,50,000
Add: Health & Education Cess (4%)87006,000
Net Tax Payable2,26,200Rs.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.

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