Income Tax in India (FY 20-21)

Income Tax

Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction.
Income tax is the source of revenue for Government. there are two types of taxes one is personal income tax and another one is corporate tax.

  • Personal Income tax 

Personal income tax is levied on an individuals wages, salaries and other types of income.

  • Corporate Income tax

Business income taxes apply to corporations, partnerships, small businesses, and people who are self-employed.

In this article we will be focusing on only Personal Income Tax 

Income Tax Slab

In India, where all the individuals earn an income in very large and diversified range, levying a tax on all individuals at a specific rate would not be a fair policy. The Act, therefore, segregates income ranges and levies tax at different rates as per the segregation. These groups are thus known as tax slabs.

The slabs also vary based on age if the taxpayer is an individual and as per the classification of entities. Income tax slabs are amended and revised each year during the Central Government’s Budget Session. 

There are three age based categories are made
  • Individuals within the age of 60 years or less, which includes residents as well as non-residents.
  • Senior citizens with age above 60 years but below 80 years.
  • Super senior citizens with age above 80 years.
Income tax slab for individual below 60 years of age for FY 20-21 & FY 19-20 is shown in below table

Income Tax

As per Government of India One can opt for new regime as per above table in FY 20-21 or else he/her can stay with the old tax regime as per FY 19-20.
If any individual opt a new tax regime then he/her can not claim any income tax exemptions. like
  • Leave Travel Allowance (LTA)
  • House Rent Allowance
  • Conveyance
  • Daily expenses in the course of employment
  • Relocation allowance
  • Helper allowance
  • Children education allowance
  • Other special allowance [Section 10(14)]
  • Standard deduction
  • Professional tax
  • Housing loan interest (Section 24)
  • Deduction under Chapter VI-A (80C, 80D, 80E, and so on) (Except section 80CCD(2) – NPS contribution by the employer and 80JJA)
If any individual stays with the old tax regime then he/her can alive all the above mentioned tax exemptions during FY 20-21

Important Things to Remember while Opting for the New Tax Regime

The options to be exercised on or before for every previous year where the individual or the HUF has no business income.
In case a taxpayer having a business income, an option once exercised cannot be taken back. Further, in case the taxpayer withdraws the option, it will be an irreversible option as he/she won’t be able to opt-in for the option again.

Income tax slab for individual above 60 years and below 80 years of age for FY 20-21 is shown in below table
Income tax 60 years plus
Income tax slab for individual above 80 years of age for FY 20-21 is shown in below table

income tax
Surcharges for Resident Individuals

For the FY 2019-20, new surcharge rates have also been introduced on the income of the rich people. The table below shows how it applies.

Income Tax

Know in which slab your income lies and plan accordingly for your tax payments.


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