The tax calculated on the basis of such rates will be subject to health and education
Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will
to give up certain exemptions and deductions.
Here is the list of exemptions and deductions that a taxpayer will have to give up while
choosing the new tax regime.
Leave Travel Allowance (LTA)
House Rent Allowance (HRA)
Daily expenses in the course of employment
Children education allowance
Other special allowances [Section 10(14)]
Interest on housing loan (Section 24)
Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
Points to remember while opting for the new tax regime:
Option to be exercised on or before the due date of filing return of income for AY
In case a taxpayer has a business income and exercised the option, he/she can withdraw
from the option only once. A business taxpayer withdrawing from the optional tax regime
has to follow the regular income tax slabs.
According to the current income tax laws in India, the income tax rate
on resident individuals varies based on their age. There are different tax slabs applicable to
the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual,
aged below 60 years, with an income less than Rs 2.5 lacs is exempt from paying income tax.
Given below are the tables for the latest income tax slabs for FY 2018-19 and FY 2019-20.
No tax for individuals with income less than ₹ 2,50,000
0%-5% tax with income ₹ 2.5 lacs to 5 lacs for different age groups
20% tax with income ₹ 5 lacs to 10 lacs
30% tax with income above ₹ 10 lacs
A tax rebate under section 87A is allowed to individual taxpayers a maximum amount
– Rs 2,500 for total income up to Rs 3.5 lakh for FY 2018-19
– Rs 12,500 for total income up to Rs 5 lakh for FY 2019-20
Investments upto ₹ 1.5 lacs under Sec 80C can save ₹ 46,800 in taxes.
Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
Let’s understand the tax calculation for rebate with the help of an example:
Let’s understand the tax calculation for a rebate with the help of an example:
In addition cess and surcharge is levied as follows:
Cess: 4% of corporate tax
However, the rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be 10% irrespective of amount of total income.
Note: An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
Surcharge applicable to the individuals covered in Part I, II and III:
In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax
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