Home / Knowledge Center / Old vs New Tax Regime Calculator
Are you confused about which regime (old or new) you should take so that you can maximize your tax savings and claim refund if your Tax has already been deducted. Then use the below calculator to help you out more about the tax regime and its calculations.
Want to file your Income Tax Returns for FY 2021-22
| F.Y. 2020-21 Slab option 1 (With Exemptions) |
F.Y. 2020-21 Slab option 2 (Without Exemptions) |
|
|---|---|---|
| Income from Salaries | ₹ 0 | ₹ 0 |
| Less: Allowances & Exemptions | ₹ 0 | ₹ 0 |
| Income from Business | ₹ 0 | ₹ 0 |
| Income from House Property | ₹ 0 | ₹ 0 |
| Income from Other Sources | ₹ 0 | ₹ 0 |
| F.Y. 2020-21 Slab option 1 (With Exemptions) |
F.Y. 2020-21 Slab option 2 (Without Exemptions) |
|
|---|---|---|
| Basic Deductions (80C) | ₹ 0 | ₹ 0 |
| Medical Insurance Premium (80D) | ₹ 0 | ₹ 0 |
| Interest from Savings (80TTA) | ₹ 0 | ₹ 0 |
| Other Deductions | ₹ 0 | ₹ 0 |
| Standard Deduction / Allowance | ₹ 0 | ₹ 0 |
| F.Y. 2020-21 Slab option 1 (With Exemptions) |
F.Y. 2020-21 Slab option 2 (Without Exemptions) |
|
|---|---|---|
| Basic Tax | ₹ 0 | ₹ 0 |
| Rebate u/s 87a | ₹ 0 | ₹ 0 |
| Surcharge | ₹ 0 | ₹ 0 |
| Education Cess | ₹ 0 | ₹ 0 |
| Total Tax Liability | ₹ 0 | ₹ 0 |
| Difference in Tax Amount | ₹ 0 | ₹ 0 |
A new tax slab has been introduced in Budget 2020 which will be effective from 1 April 2020. This new income tax slab has lower rates of tax for higher incomes. It allows you to lower your tax liability subject to certain conditions and is optional.
If you choose to calculate your taxes using the new tax regime, the specified deductions and exemptions available under the Income Tax Act, 1961 would not be available. Under the old tax regime, however, the deductions and exemptions would be available. Here’s the tax slabs under both the new tax regime and the old one.
Comparison Of Old v/s New Tax Slab Rates
| Income Tax Slab for New FY 2020-21 | New Tax Rate | Existing Tax Rate |
|---|---|---|
| Upto Rs 2.5 Lakhs | Exempt | Exempt |
| Rs 2.5- Rs 5 Lakhs | 5% | 5% |
| Rs 5- Rs 7.5 Lakhs | 10% | 20% |
| Rs 7.5 -Rs 10 Lakhs | 15% | 20% |
| Rs 10 - Rs 12.5 Lakhs | 20% | 30% |
| Rs 12.5 - Rs 15 Lakhs | 25% | 30% |
| Above Rs 15 Lakhs | 30% | 30% |
Note: If the net taxable income of a salaried individual is up to INR 5 lakhs, they can enjoy the rebate under Section 87A of the Income Tax Act, 1961. A rebate of INR 12,500 or the actual tax liability, whichever is lower would be allowed thereby making the tax liability zero.
The Government has introduced the new tax regime to give taxpayers the option to pay the lowest tax on their incomes. Since the new regime is optional, taxpayers can compare and choose the regime which is more beneficial for them in lowering their tax outgo. The new tax regime has removed approximately 70 out of 100 exemptions to make tax filing simple and easier for taxpayers so that they can calculate their tax liability themselves in an easy manner.
Lower your tax liability with the right slab for your income
The budget has removed 70 of the available 100 exemptions. The following exemptions and deductions are some of the most important ones which would not be available if the new tax slab is chosen for tax calculation –
The following deductions and exemptions would be available under the new tax regime –
Ever since the new tax regime was proposed, many are debating as to which tax regime is better, the old one with deductions or the new one without them? The answer is relative. One tax regime cannot be universally beneficial for all. Your income, its type, available deductions and exemptions determine which tax regime would give you better tax benefits. You should calculate your tax liability using both the regimes and the regime which gives you the lowest tax liability should be chosen depending on your requirement.
Here are some calculations showing you the tax liability under both the tax slabs for different types of incomes –
Salary Income of INR 12 lakhs for a salaried employee
| Particulars | Old Regime | New Regime |
|---|---|---|
| Gross Salary | 12,00,000 | 12,00,000 |
| Less: HRA exemption | 2,00,000 | NA |
| Less: LTA exemption | 50,000 | NA |
| Less: Standard deduction | 50,000 | NA |
| Less: Section 80C deductions | 1,50,000 | NA |
| Less: Section 80D deductions for self | 25,000 | NA |
| Less: Section 80D deductionfor senior citizen parents | 50,000 | NA |
| Less: Other deductions | 10,000 | NA |
| Taxable Income | 6,65,000 | 12,00,000 |
| Tax Payable including cess | 47,320 | 1,19,600 |
Let us understand with another example :
| - | Old Regime | New Regime |
|---|---|---|
| GrossSalary | 12,00,000 | 12,00,000 |
| Less:Standarddeduction | 50,000 | NA |
| Less:80Cdeductions | 50,000 | NA |
| TaxableIncome | 11,00,000 | 12,00,000 |
| TaxPayable includingcess | 1,48,200 | 1,19,600 |
So, a salaried employee can benefit from the old tax regime on the basis of availability of exemptions/ deductions to him. In case the taxpayer wants to claim more exemptions/ deductions then he should opt for the old tax regime subject to other conditions.
In the second example, since the exemptions/ deductions available to him were lower as compared to the previous example, it was more beneficial for him in opting for the new tax regime. Further, the decision of suitable tax regime depends on case to case.
Some more examples showing taxability at different income levels:
| - | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | - | 500,000 | 500,000 |
| Less : | Std. Ded. | 50,000 | - |
| - | 80C,80D, etc. | Zero | - |
| - | HRA | Zero | - |
| - | LTA | Zero | - |
| Net Taxable Income | - | 450,000 | 500,000 |
| Tax | - | - | - |
Note: There is NO impact on tax payments because of rebate u/s 87A.
| - | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | - | 800,000 | 800,000 |
| Less : | Std. Ded. | 50,000 | - |
| - | 80C,80D, etc. | 150,000 | - |
| - | HRA | 50,000 | - |
| - | LTA | Zero | - |
| Net Taxable Income | - | 550,000 | 800,000 |
| Tax | - | 23,400 | 46,800 |
| Old Tax Regime saves more tax. | |||
| - | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | - | 1,500,000 | 1,500,000 |
| Less : | Std. Ded. | 50,000 | - |
| - | 80C,80D, etc. | 150,000 | - |
| - | HRA | 75,000 | - |
| - | LTA | 20,000 | - |
| Net Taxable Income | - | 1,205,000 | 1,500,000 |
| Tax | - | 180,960 | 195,000 |
| Old Tax Regime saves more tax. | |||
| - | Old Regime | New Regime | |
|---|---|---|---|
| Gross Income | Â | 2,000,000 | 2,000,000 |
| Less : | Std. Ded. | 50,000 | - |
| - | 80C,80D, etc. | 150,000 | - |
| - | HRA | 75,000 | - |
| - | LTA | 20,000 | - |
| Net Taxable Income | - | 1,705,000 | 2,000,000 |
| Tax | - | 336,960 | 351,000 |
| Old Tax Regime saves more tax. | |||
Let's get a brief over some of the indifference points between old and new tax regime:
| Gross Income | Deductions and exemptions including Standard deduction | Tax under old tax regime* | Tax under new tax regime* |
|---|---|---|---|
| INR 8,00,000 | INR 1,38,000 | INR 47,000 | INR 47,000 |
| INR 10,00,000 | INR 1,88,000 | INR 78,000 | INR 78,000 |
| INR 12,00,000 | INR 1,91,000 | INR 1,20,000 | INR 1,20,000 |
| INR 15,00,000 | INR 2,50,000 | INR 1,95,000 | INR 1,95,000 |
| Gross Annual Income | Deductions and exemptions including Standard deduction | Existing tax* | New tax* | Difference |
|---|---|---|---|---|
| Rs. 5 lakh | - | 0 | 0 | - |
| Rs. 6 lakh | Rs. 50,000 | 23,400 | 23,400 | - |
| Rs. 7 lakh | Rs. 1 lakh | 33,800 | 33,800 | - |
| Rs. 8 lakh | Rs. 1.38 lakh | 46,800 | 46,800 | - |
| Rs. 9 lakh | Rs. 1.62 lakh | 62,400 | 62,400 | - |
| Rs. 10 lakh | Rs. 1.87 lakh | 78,000 | 78,000 | - |
| Rs. 12 lakh | Rs. 1.91 lakh | 119,600 | 119,600 | - |
| Rs. 14 lakh | Rs. 2.33 lakh | 169,000 | 169,000 | - |
| Rs. 15 lakh | Rs. 2.50 lakh | 195,000 | 195,000 | - |
| Rs. 16 lakh | Rs. 2.50 lakh | 226,200 | 226,200 | - |
| Rs. 18 lakh | Rs. 2.50 lakh | 288,600 | 288,600 | - |
| Rs. 20 lakh | Rs. 2.50 lakh | 351,000 | 351,000 | - |
*Tax amount has been rounded off to the nearest thousands.
In the cases mentioned above, the taxpayer will be indifferent to both the schemes. Both the schemes will result in approximately the same amount of tax.
Besides the introduction of the new tax slab, few other relevant changes are given below which may also impact the tax liability of the taxpayer –
Dividend taxable in the hands of the receiver
As per the new rules, Dividend Distribution Tax payable by companies has been removed. Instead, the dividend would be charged in the hands of the investor. Therefore, Dividend is taxable in the hands of the receiver now.
Extension of time limit for Section 80EEA
The existing provisions of section 80EEA of the Act provide for a deduction in respect of interest on loan taken from any financial institution for acquisition of an affordable residential house property. The deduction allowed is up to one lakh fifty thousand rupees and is subject to certain conditions. One of the conditions is that loan has been sanctioned by the financial institution during the period from 1st April, 2019 to 31st March, 2020. In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021.
The various benefits or disadvantages of old and new tax regime include
| Benefits | Disadvantages |
|---|---|
| OLD TAX REGIME | |
| Option to avail around 70 exemptions and deductions under the Income Tax Act | Investment only in specified options were required to claim the tax benefit. |
| Practice to submit false disclosures for investment proofs is prevalent | |
| NEW TAX REGIME | |
| Tax Rates Reduced | Not attractive to those who were already investing and have binding premiums |
| No major tax saving options given, increasing cash flow in hands of taxpayer | |
The bottom line
The bottom line comes down to numbers. Before deciding on which regime is suitable for you, you need to calculate your tax liability under both the regimes with and without deductions and exemptions. The regime which gives you the lowest tax liability would be better depending on your requirements. Mrs. Sitharaman has given you the choice of reducing your tax liability in any way possible and so, the onus is on you to find out which regime works better for you.
Yes, a salaried individual can make a choice for every year as to which tax regime should be chosen. There is no compulsion if one scheme is selected for a year then it should be adhered every year. Taxpayers can switch amongst the schemes yearly.
Tax under the new regime can be calculated as per the income tax slabs rates prescribed or with the help of income tax calculator.
House Rent Allowance or HRA exemption is not available under the new tax regime pronounced in Budget 2020.
New tax regime is more beneficial particularly for those who have not invested and are not looking forward for making investment in tax saving options eligible under the old scheme. This option is more lucrative for new joinees or senior citizens willing to have more liquidity in hand s compared to investments.
The choice of opting for the new tax regime shall depend upon your willing to make tax saving investments. In case you are a rental income earner and you are not looking forward for making any tax deductible contributions then you should preferably opt for the old tax regime. Still it would be suggested to take more informed decision by calculating your tax liability under both the regimes.
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