A new scheme of taxation has been introduced by the Finance Act ,2020 by insertion of a new Section 115BAC. The basic feature of this new tax regime is lower tax rates as compared to existing slab rates but on the other hand the assessee has to forego around 70 exemptions and deductions presently available .
The Budget 2020 introduces a new regime under section 115BAC giving individuals and HUF taxpayers an option to pay income tax at lower rates. The new system is applicable for income earned from 1 April 2020 (FY 2020-21), which relates to AY 2021-22.
The new Section 115BAC of the Income-tax Act, 1961 provides that a person, being an individual or an undivided Hindu family (HUF) having income other than income from profession or business, may exercise the option concerning of a previous year to be taxed under the Section 115 BAC along with his/her return of income ...
Opting New Tax Regime will take away many exemptions such as HRA Exemption, etc and Deductions including Section 80C, 80D etc. From the assessment year 2021-22 (FY 2020-21), individual and HUF taxpayers have an option to opt for taxation under section 115BAC of the Act.
The option of new tax regime is available to all individuals and HUFs. This is optional. Under the new tax regime tax is payable at lower slab rates on the income up to Rs. ... If you wish to opt for the new tax regime you have to forgo various tax deductions and exemptions otherwise available under old regime.
The tax regime defines the tax slabs and rates. In 2020 the government introduced a new tax regime with higher tax rates but more options for tax savings. The new tax regime also gives taxpayers the option to select either old or new regimes making taxation all the more complicated.
Hi, Section 115BAC is the newly inserted section in the Income Tax Act, 1961 that deals with the new income tax regime. This section and alternate tax regime was introduced in U nion Budget 2020 and is applicable to individuals and Hindu Undivided Families (HUFs) only.
Yes. It is beneficial to those person who do not claim substantial additional deduction in returns, such as housing loan interest, nps, etc. Those who claim only standard deduction and deduction as per slabs in return will be benefited. The new income tax regime is good if you have low salary.
Even if you don't have any home loan(both principal and interest are tax exempted upto a certain limit), education loan and 80CCD, old tax regime is better for middle class taxpayers and they could end up saving upto Rs. 15000/annum.
From the FY 2020-21 the benefit under section 80TTB will only be available under the old tax regime and taxpayers opting for new tax regime cannot claim this benefit while filing ITR.
Individuals with business income will not be eligible to choose between the two regimes every year. Once they select a new tax regime, they have only once in a lifetime option for switching back to the old regime. Once they switch back to the old regime, they won't be able to choose a new regime anytime in future.
Standard deduction under Section 16(ia) is a flat deduction that is allowed from the salary income. The concept of standard deduction was introduced in the Union Budget of 2018 wherein it replaced the tax-deductible transport allowance and medical allowance of INR 19,200 and INR 15,000 respectively.
The Central Government has inserted Section 115BAC with effect from AY 2021-22 to provide Optional Tax Regime to Individuals /HUFs. Note: in this regime the exemption limit for all categories of individuals such as Individual, Senior Citizen & Super Senior Citizen are the same i.e., Rs. 2,50,000. REBATE U/S.
The old tax regime is with various deductions to save tax. One can make specific tax saving investments and income to the extent of those investments would be free from taxation. The new tax regime is without any deduction. One can avail lower rates of new tax regime and cannot claim any deduction further to save tax.
There is no better slab. For those who invest traditionally as in the old regime, the old slab saves more tax. For those who go for riskier investments out of their money than tax saving investments, the new slabs save more tax.
If senior citizen with no interest income, no savings etc. go for new regime. In short, if you already have maximum 80C of 150000, and paying rent/home loan, you stick with old only. If no loan/rent, consider if you have addnl deductions such as med insurance, edu loan, donations etc.
Certain categories of taxes are fully exempted such as allowances given to judges at the Supreme Court and the High Courts. Allowances such as house rent allowance are partially exempted as per Section 10(13A). Other allowances such as city compensatory allowance are fully taxable.
Types of Exempt Income
House Rent Allowance. Allowance on transportation, children's education, subsidy on hostel fee. Exemption on Housing Loan. Income defined as per Section 10, Section 54 of the Income Tax Act, 1961.
The following individuals are exempted to pay Professional Tax: Parents of children with permanent disability or mental disability. ... Parents or guardians of individuals suffering from mental disability. Individuals, above 65 years of age.
An employee, having income other than the income under the head “profits and gains of business or professions” and intending to opt for the concessional rate under section 115BAC of the act, may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor ...
The finance bill 2020 allows salaried individuals and pensioners with no business income to switch between the two tax regimes every assessment year as per their prevailing financial situation.
Section 80TTB is a provision whereby a taxpayer who is a resident senior citizen, aged 60 years and above at any time during a Financial Year (FY), can claim a specified amount as a deduction from his gross total income for that FY. This Section is applicable w.e.f. 1st April 2018.
Amount of Deduction under 80TTB
If the interest income is less than Rs 50000 then the total amount of interest income is tax-exempt. However, if the interest income is more than Rs 50,000 (including interest from all the deposits) then Rs 50,000 is available as a deduction.