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Income Tax Calculation FY 2020-21 – Which Tax Structure to Select? With Automated Income Tax Revised Form 16 Part A&B and Part B for F.Y. 2019-20

How to do Income Tax
Calculation for FY 2020-21? Which Tax Structure to Select?

According to Taxplan 2020, you can’t guarantee any assessment reasoning or exclusion on the off
chance that you intend to pick a new Income Tax Slab. Along these lines, as an
individual citizen on the off chance that you settle on the new assessment
system with a decrease charge rate, you have to do without all tax cuts
accessible today. Luckily, you have an alternative to proceed with old duty
structure. A salaried individual can switch among old and new assessment
structure.

Therefore, we will
discuss which charge conclusion and exception you have to do without on the off
chance that you pick new expense structure with diminishing charge rate.
Furthermore, we will step through hardly any exam cases and do annual
assessment estimation for FY 2020-21 to realize which duty structure to choose?

In other words, reduce of Tax Deductions
and Exemption not permitted in new Tax Structure

However,the most well-known duty
finding of 1.5 Lakh under segment 80C isn’t appropriate for new expense
structure. This implies you can’t guarantee any profit for venture made in the
instruments, for example, PF, PPF, Life protection premium, school education
costs of youngsters, ELSS, PPF, NPS and so on.

You can guarantee a
conclusion under area 80CCD for the business commitment because of
representative for NPS.

No duty finding takes
into consideration the clinical protection premium and preventive wellbeing
test under segment 80D for new expense structure.

3 No LTA Benefits

For instance, new Tax Rate of 
LTA – Leave travel remittance exception which is at present accessible to a
salaried worker for twice in the square of four years isn’t permitted.

4 HRA

HRA is house lease
recompense. HRA is paid to salaried people my boss as a piece of compensation.
Prior citizen had the option to guarantee HRA up as far as possible. In a new
assessment structure, it isn’t passable.

A standard conclusion
advantage of Rs.50000 as of now accessible to a salaried citizen isn’t
appropriate in the new assessment section.

6 Section 80TTA Benefits

Above all, Section 80TTA gives the
conclusion of Rs.10000 on intrigue salary. On a new assessment system, this
advantage isn’t accessible.

7 Section 80DDB Benefits

In addition, advantages for handicap
under segment 80DDB up to Rs.40000 not accessible in the event that you are
intending to select new decreased duty structure.

8 Section 80E Education
Loan

Tax reduction passable on
the intrigue paid on training advance won’t be claimable under area 80E.

9 Section 80G of
Donation

After that, you had the option to
make a gift under area 80G and guarantee annual tax cut of the identical sum.
The said reasoning isn’t accessible in decreased expense structure.

10 Section 24 Home Loan
Interest

Under area 24 of the
Income charge act, an individual had the option to guarantee charge finding on
the intrigue installment on the lodging advance up to a most extreme measure of
Rs.200000. This advantage isn’t broadened in the event that you pick new duty
structure.

Similarly, all derivation
material under part VIA like segment 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E,
80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB,
80-IBA, and so forth) won’t be claimable by those deciding on the new duty
system.

Income Tax Calculation FY
2020-21 (AY 2021-2022)

Now let’s calculate actual tax benefits by doing Income Tax
Calculation and comparing both the tax structures in various cases.

Case 1 – Salaried Individual
claiming common deduction (80C,80D) and Home Loan Benefits

In first case I will take example of salaried individual with
income of 20 Lakh & 10 Lakh. Let’s consider in both the cases individual
takes benefits of standard deduction Rs.50000, deduction of Rs.1.5 Lakh under
section 80C, Rs.25000 under section 80D and Interest on home loan up to
Rs.200000.

Now two options are available to the salaried individual. First
he/she can opt for old tax structure with all above deduction or he/she can
forgo all deduction and opt for new reduced tax structure.

If individual has annual income of 20 Lakh and
old tax structure is opted with tax deductions. Applicable tax is 2.85 Lakh. If
new tax structure is adopted applicable tax amount is 3.37 Lakh. Similarly, if
annual income is 10 Lakh and old tax structure is adopted applicable tax is
Rs.27500. For new tax structure applicable tax is Rs.75000. Calculation is
given below.

Case 2 – Salaried Individual claiming common deduction under
section 80C, 80D and Standard Deduction

Gross
Income Rs/-

Tax as per
Old Tax Structure Rs/-

Tax as per
New Tax Structure Rs/-

Additional
Tax Saving Rs/- / Payable

7.5 Lakh

18200

39000

-20800

10 Lakh

70200

78000

-7800

12.5 Lakh

124800

130000

-5200

15 Lakh

202800

195000

7800

20 Lakh

358800

351000

7800

In the second case, we should expect that salaried individual is
taking full advantages of area 80C, 80D and standard derivations starting at
now. Under a new assessment system, these conclusions are not material. Assume
the salary level of individual is 10 Lakh. In the event that the old assessment
system is chosen payable duty is Rs.70200 then again if

New tax
regime is selected payable tax is Rs.78000.

Case 3 – Salaried Individual not claiming any deduction or
exemptions

In third case let’s
assume that salaried individual is not claiming any deduction of exemptions as
of now. So, under new tax regime he/she will get benefit of reduced tax rates
and he/she needs to pay less taxes. Suppose income level of individual is 15
Lakh. If old tax regime is selected payable tax is Rs.257400 on the other hand
if new tax regime is selected payable tax is Rs.195000 only.

ross Income Rs/-

Tax as per Old Tax Structure Rs/-

Tax as per New Tax Structure Rs/-

Additional Tax Saving Rs/-

7.5 Lakh

54600

39000

15600

10 Lakh

106600

78000

28600

12.5 Lakh

179400

130000

49400

15 Lakh

257400

195000

62400

20 Lakh

413400

351000

62400

In conclusion,

From the model of the above case
clearly in the greater part of the cases old expense rate with derivation
offers higher tax reductions. New diminished expense rate is advantageous just
in the event that you are not guaranteeing any reasoning starting at now.
(which is uncommon)

In the event that you have home
advance and higher pay, you will get higher tax cuts in old assessment rate
contrasted with new expense rate.




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