However, the Government has not announced any changes, which aptly reminds us of Sir Benjamin Franklin’s famous words, “Only two things are certain in life, death and taxes.” During this lock down period, those who have amassed wealth for their future generations and those who earn their livelihood on a daily basis have come to a common ground. Therefore, though the world is open for everyone to live with their own choices, in today scenario, no one can walk freely as they wish. We all have different options to live here, however it is our choice to choose the way our life. As Bible reminds all have to be wise and prudent in selecting their choices. In the example of ten virgins – Five of them took their lamps, and took no oil with them, other five took oil in their vessels with their lamps. It simply indicates, be vigilant in selecting your choices. “Therefore keep watch, because you do not know the day or the hour”.
Through the Finance Bill 2020, Hon’ble finance minister Smt. Nirmala Sitharaman introduced a new taxation structure in India, Option A, Live today! lower tax rates for those who don’t want to have tax saving plans, and giving more cash flows to their hands. In other words, on the other side, option B, with higher tax rates for those who have tax saving plans. This make you to take the call on your own taxation. While Option A looks nice and easier, is this giving a lower tax benefit? Tax payers have to be more cautious and practical in selecting their choices.
Wishing you a smart and successful Financial Year and a Prudent tax planning!
For instance, Salient features of Income tax calculator for salaried employees- F.Y. 2020-21
1. Useful for the salaried employees of government and private sector.
2. Private sector employees can use their Flexi allocation option and link it to the tax planning.
3. Tax and rebate/deduction calculation for all type if income, to arrive at the annual tax liability.
4. Marginal relief on surcharge, where income crosses the prescribed limits.
5. Automated HRA exemption/Sec 80GG deduction calculation based on the salary and rent payments.
6. Validation on the limits of Chapter VI A deduction, Housing loan interest set off.
7. Best tax regime suggestion for the tax payers.
8. Highlights of tax changes when the taxable income crosses 50 Lakh/1 Crore
Above all, how do you select the tax regime/method?
New tax regime is simple; Tax rates are lower than the old regime. This is a better option for those who do not have tax plans, not paying rent or not having any housing loans.
The Old tax regime can be used for all those have tax saving investments, pay rent, have housing loans and so on.
In addition, It is Interesting that the National pension scheme contribution through employer is deductible under both the regime. A tax free, long term, investments.
After that, suggest for you to check the better option before taking a final decision on the tax method/regime. Do check which exemptions and deductions you are eligible for. Then do the calculations on whether your tax liability will be lower in the new regime or the old one.
Similarly, when do you select the option? Income tax act allows you time till your personal tax return filing in 2022, In conclusion, you will have to communicate your option to the employer in April/May, the same can be changed before they finalise the tax plans with the actual proof validation before the financial year closure.
Download Automated Income Tax Calculator as well as Advance Income Tax Calculator for the Financial Year 2020-2021 and Assessment Year 2021-22, on the basis of the Finance Budget 2020 [ This Calculator Calculate as per the OLD REGIME ]