Income Tax is the percentage of tax we pay to the government through the income we get, ie either through salaries we earn or through business we earn. The tax amount received is utilized in infrastructural development, salary payments to government and central government employees etc.
Income tax is applicable for individuals, businesses, corporate, and all other establishments that generate income. All taxes are levied based on Income Tax Act, 1961.
Either you be a salaried individual or a professional or a businessman, tax planning is an important part of a financial plan. With proper tax planning you can save taxes to certain extent. Before we go for Income Tax Saving tips it is important to know Income Tax Slab Rates.
There are 2 slabs as of now for taxpayers to choose ie., new slab or old slab.
New Slab Rates for FY 2020-21 (AY 2021-22)
This Income tax new slab is applicable to all ages of individuals, HUF, senior citizens, super senior citizens
| Taxable income | Tax Rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000 to Rs. 3,00,000 | 5% |
| Rs. 3,00,000 to Rs. 5,00,000 | 5% |
| Rs. 5,00,000 to Rs. 7,50,000 | 10% |
| Rs. 7,50,000 to Rs. 10,00,000 | 15% |
| Rs. 10,00,000 to Rs. 12,50,000 | 20% |
| Rs. 12,50,000 to Rs. 15,00,000 | 25% |
| Above Rs. 15,00,000 | 30% |
Surcharge:
10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore
25% of tax where total income exceeds Rs. 2 crore
37% of tax where total income exceeds Rs. 5 crore
Health and Education cess:
4% of tax is accountable in all cases.
Old Slab Rates for FY 2020-21 (AY 2021-22)
Individual (resident or non resident-NRI) and HUF age less than 60 years:
| Taxable income | Tax Rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000 to Rs. 5,00,000 | 5% |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Surcharge:
10% if total income exceeds Rs. 50 lakh
15% if total income exceeds Rs. 1 crore
Health and Education cess:
4% of tax is accountable in all cases.
Individual Senior Citizen (resident or non-resident) and HUF age between 60 – 80 years:
| Taxable income | Tax Rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,000 – Rs. 5,00,000 | 5% |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Surcharge:
10% if total income exceeds Rs. 50 lakh
15% if total income exceeds Rs. 1 crore
Health and Education cess:
4% of tax plus surcharge
Individual Senior Citizen (resident or non-resident) and HUF age above 80 years and more:
| Taxable income | Tax Rate |
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Surcharge:
10% if total income exceeds Rs. 50 lakh
15% if total income exceeds Rs. 1 crore
Health and Education cess:
4% of tax plus surcharge
Below Are Tax Deductions Sections Available For Your Taxable Amount As Per Old Slab :
Section 80C
Deduction of Rs 1,50,000 can be claimed from your total income under this section, Below are list of investments, expenditures that covers under Section 80C
- life Insurance Policies (Term Insurance, Accident Policy, Unit Linked Insurance Plan (ULIP), Retirement Plans, Endowment Plans, Money Back Policies, Child Plan (education, marriage, etc.) ).
- Contribution to provident fund such as Employee Provident Fund (EPF)
- PPF (Public Provident Fund) or VPF (Voluntary Provident Fund)
- Investment in National Savings Certificate (NSC)
- Investment in KVP
- Senior Citizen Savings Scheme (SCSS)
- 5-year Post Office Term deposits
- 5-year bank fixed deposits (FD)
- Sukanya Samriddhi Scheme
- Children’s Tuition Fees
- Repayment of Principal for Home Loan
- Stamp Duty and Registration Charges for House Property
Section 80CCC
Under section 80CCC a deduction of Rs 1,50,000 is allowed to an Individual or a HUF for amount paid or deposited in any annuity plan of LIC or any other insurer that pays pension or a periodical annuity. maximum total deduction available under all three sections 80C, 80CCC & 80CCD is 1,50,000.
Section 80CCD
Under section 80CCC a deduction of Rs 1,50,000 is allowed to an Individual or a HUF for Contribution to Pension Account ie. EPF, NPS. maximum total deduction available under all three sections 80C, 80CCC & 80CCD is 1,50,000.
Section 80CCD (1) : Tax savings is allowed to an individual whose contributions made to notified pension scheme. 10% of the salary in case of an employee, or 20% of the gross total income in case of self-employed
Section 80CCD (1B) : An additional deduction of a maximum of Rs 50,000 from gross total income will be allowed to assessee, if he invests this in notified pension scheme like National Pension System, Atal Pension Yojana etc
Section 80CCD (2) : Tax deductions can be claimed by an individual if their employer make contribution to your NPS account as per section 80CCD (2). The employer’s contribution cannot exceed 10% of the employee’s salary
Section 80D
Section 80D belongs to health related (health insurance). Under this section Rs. 25,000 per year is applicable for deduction on health insurance for self, spouse and dependent children. Rs.50,000 per year for senior citizens.
For Parents below 60 years of age a deduction of Rs. 25,000 can be claimed for health insurance, If above 60 years of age a deduction of Rs. 50,000 can be claimed for health insurance.
Section 80DD
Under section 80DD tax deduction is available to an Individual or a HUF on medical expenses of disabled dependent. It is applicable if any dependent of tax payer is Handicapped / Disabled.
If disability is 40% or more but less than 80% a fixed deduction of Rs 75,000
If disability is 80% or more a fixed deduction of Rs 1,25,000
Certificate of disability is required for claim and certificate should be provided from prescribed medical authority. For individuals, a disabled dependent can be a spouse, child (son / daughter), parents, siblings (brother/sister).
Section 80DDB
Under section 80DDB tax deduction is available to an Individual or a HUF on medical expenses incurred on specified diseases. For individuals, can be self, spouse, child (son / daughter), parents, siblings (brother/sister). For HUFs can be any member of the HUF.
Note : Above mentioned is purely informative we suggest you to take help from experts before applying for income tax refunds
