UNION BUDGET 2020-21 AND
|
Income
|
IT RATES FOR
FY 2019-20 |
IT RATES UNDER NEW REGIME
|
DIFFERENCE
|
UP TO RS 2.5.LAKHS
|
0 %
|
0%
|
NIL
|
2.5 TO 3.00 LAKHS
|
0%
|
5%
|
-5%
|
3.00 TO 5.00 LAKHS
|
5%
|
5%
|
NIL
|
5.00 TO 7.5 LAKHS
|
20%
|
10%
|
10%
|
7.5 TO 10.00 LAKHS
|
20%
|
15%
|
5%
|
10.00 TO 12.50 LAKHS
|
30%
|
20%
|
10%
|
12.5 TO 15 LAKHS
|
30%
|
25%
|
5%
|
ABOVE 15 LAKHS
|
30%
|
30%
|
NIL
|
NOTE : If Income is less than Rs 5,00,000 , Rebate of Rs 12,500 can be used in both the regime and hence there will be NIL Taxation in both the regimes up to Rs 5.00 lakh income
We can see from the above chart that there is savings up to 10 % in each of the slabs , if we opt for new regime . New regime appears simple with lower taxes . But the new regime comes with a clause like " Terms & conditions apply " in commercial advertisement . If you opt for new regime , you have to forgo most of the rebates / deductions you were claiming in the earlier years .
New Updated Article
TAX PLANNING FOR FY 2021-22 ( AY 2022-23 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
TAX PLANNING FOR FY 2021-22 ( AY 2022-23 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
WHAT SENIOR CITIZENS LOSE / GAIN IN THE NEW IT REGIME ?
THE PRIVILEGES SENIOR CITIZENS TO LOSE :
1. Pensioners will lose standard deduction of Rs 50,000 in the new regime .
2. Deduction of Rs 50,000 under section 80 TTB on interest income from bank deposits will not be available for senior citizens .
3. Health insurance premium paid up to Rs 50,000 available to senior citizens under section 80 D will not be available in the new scheme .
4. Senior citizens having more than Rs 5 lakh total income have to pay now for slab between Rs 2.50 lakh to Rs 3.00 lakh which was not being paid earlier ( Additional tax payment of Rs 2,500 )
5. Super Senior citizens will have to pay now for slab between Rs 2.50 lakhs to Rs 5 .lakhs which was earlier exempted , if total income exceeds Rs 5 lakhs . ( Additional tax payment of Rs 12,500 )
There are more than 70 rebates and deductions which senior citizens may have to forgo along with other citizens . But you may not be using all of them now .
2. Deduction of Rs 50,000 under section 80 TTB on interest income from bank deposits will not be available for senior citizens .
3. Health insurance premium paid up to Rs 50,000 available to senior citizens under section 80 D will not be available in the new scheme .
4. Senior citizens having more than Rs 5 lakh total income have to pay now for slab between Rs 2.50 lakh to Rs 3.00 lakh which was not being paid earlier ( Additional tax payment of Rs 2,500 )
5. Super Senior citizens will have to pay now for slab between Rs 2.50 lakhs to Rs 5 .lakhs which was earlier exempted , if total income exceeds Rs 5 lakhs . ( Additional tax payment of Rs 12,500 )
There are more than 70 rebates and deductions which senior citizens may have to forgo along with other citizens . But you may not be using all of them now .
THE PRIVILEGES SENIOR CITIZENS WILL RETAIN IN THE NEW REGIME :
The following tax exemptions available on Retirement benefits will continue to be available under the new tax regime also .
1. Tax free gratuity up to Rs 20 lakhs
2. Leave encashment on retirement
a. Government employees - No limit
b. Others - Rs 3.00 lakhs
3. Benefits available on VRS - Maximum of Rs 5 .00 lakhs
4. Deductions available on Commuted Pension .
1. Tax free gratuity up to Rs 20 lakhs
2. Leave encashment on retirement
a. Government employees - No limit
b. Others - Rs 3.00 lakhs
3. Benefits available on VRS - Maximum of Rs 5 .00 lakhs
4. Deductions available on Commuted Pension .
THE ADDITIONAL PRIVILEGES FOR SENIOR CITIZENS IN THE NEW REGIME :
NIL
except for the new tax structure which is lower than the present one
except for the new tax structure which is lower than the present one
HOW MUCH A SENIOR CITIZEN CAN SAVE IN THE NEW REGIME ?
In order to find how much gain a senior citizen can have or how much he / she loses by opting for new regime , we have taken four examples of senior citizens who are eligible for different levels of rebates and deductions . We will work out for each category for their different levels of income . The four categories are .
1. CATEGORY A : Businessmen and Professionals who are not enjoying any rebate and deductions like standard deduction , interest income , etc . Their rebates are NIL now .
2. CATEGORY B :Retirees and pensioners who are enjoying standard deduction of Rs 50,000 , Deduction on bank deposit interest up to Rs 50,000 and Rebate of Rs 50,000 under 80D for health insurance premium . Total Rebates they are enjoying is Rs 1,50,000 .
3. CATEGORY C :Retirees and pensioners who are enjoying standard deduction of Rs 50,000 , Deduction on bank deposit interest up to Rs 50,000 and Rebate of Rs 50,000 under 80D for health insurance premium . Further they are enjoying additional benefits of Rs 1,50,000 under section 80C by contributing to LIC premium etc . Total Rebates they are enjoying is Rs 3,00,000 .
4. CATEGORY D :Retirees and pensioners who are enjoying standard deduction of Rs 50,000 , Deduction on bank deposit interest up to Rs 50,000 and Rebate of Rs 50,000 under 80D for health insurance premium . Further they are enjoying additional benefits of Rs 1,50,000 under section 80C by contributing to LIC premium etc and additional deductions for housing loan etc up to another Rs 1,50,000 . Total Rebates they are enjoying is Rs 4,50,000 .
1. CATEGORY A : Businessmen and Professionals who are not enjoying any rebate and deductions like standard deduction , interest income , etc . Their rebates are NIL now .
2. CATEGORY B :Retirees and pensioners who are enjoying standard deduction of Rs 50,000 , Deduction on bank deposit interest up to Rs 50,000 and Rebate of Rs 50,000 under 80D for health insurance premium . Total Rebates they are enjoying is Rs 1,50,000 .
3. CATEGORY C :Retirees and pensioners who are enjoying standard deduction of Rs 50,000 , Deduction on bank deposit interest up to Rs 50,000 and Rebate of Rs 50,000 under 80D for health insurance premium . Further they are enjoying additional benefits of Rs 1,50,000 under section 80C by contributing to LIC premium etc . Total Rebates they are enjoying is Rs 3,00,000 .
4. CATEGORY D :Retirees and pensioners who are enjoying standard deduction of Rs 50,000 , Deduction on bank deposit interest up to Rs 50,000 and Rebate of Rs 50,000 under 80D for health insurance premium . Further they are enjoying additional benefits of Rs 1,50,000 under section 80C by contributing to LIC premium etc and additional deductions for housing loan etc up to another Rs 1,50,000 . Total Rebates they are enjoying is Rs 4,50,000 .
Now let us examine the tax liability under both old and new regimes for each of the categories at different income levels
CATEGORY A ( WITH NIL EXEMPTIONS AND REBATES ) :
INCOME
|
TAX UNDER OLD SCHEME
|
TAX UNDER NEW REGIME
|
DIFFERENCE
|
5 LAKHS
|
NIL
|
NIL
|
NIL
|
6. LAKHS
|
30,000
|
22,500
|
7,500
|
7 LAKHS
|
50,000
|
32,500
|
17,500
|
8 LAKHS
|
70,000
|
45,000
|
25,000
|
9 LAKHS
|
90,000
|
60,000
|
30,000
|
10 LAKHS
|
1,10,000
|
75,000
|
35,000
|
11 LAKHS
|
1,40,000
|
95,000
|
45,000
|
12 LAKHS
|
1,70,000
|
1,15,000
|
55,000
|
13 LAKHS
|
2,00,000
|
1,37,500
|
62,500
|
14 LAKHS
|
2,30,000
|
1,62,500
|
67,500
|
15 LAKHS
|
2,60,000
|
1,87,500
|
72,500
|
HEALTH INSURANCE PLANS FOR SENIOR CITIZENS
WITH OR WITHOUT ENTRY AGE RESTRICTION
TO READ THE ARTICLE
CLICK HERE
WITH OR WITHOUT ENTRY AGE RESTRICTION
TO READ THE ARTICLE
CLICK HERE
CATEGORY B ( WITH EXEMPTIONS AND REBATES OF TOTAL RS 1,50,000 ) :
INCOME
|
TAX UNDER
OLD SCHEME |
TAX UNDER
NEW REGIME |
DIFFERENCE
|
RS 5 LAKHS
|
NIL
|
NIL
|
NIL
|
6 LAKHS
|
NIL
|
22,500
|
-22,500
|
7 LAKHS
|
20,000
|
32,500
|
-12,500
|
8 LAKHS
|
40000
|
45,000
|
-5,000
|
9 LAKHS
|
60000
|
60,000
|
NIL
|
10 LAKHS
|
80,000
|
75,000
|
5,000
|
11 LAKHS
|
1,00,000
|
95,000
|
5,000
|
12 LAKHS
|
1,25,000
|
1,15,000
|
10,000
|
13 LAKHS
|
1,55,000
|
1,37,500
|
17,500
|
14 LAKHS
|
1,85,000
|
1,62,500
|
22,500
|
15 LAKHS
|
2,15,000
|
1,87,500
|
27,500
|
CATEGORY C ( WITH EXEMPTIONS AND REBATES OF TOTAL RS 3,00,000 )
INCOME
|
TAX UNDER
OLD SCHEME |
TAX UNDER
NEW REGIME |
DIFFERENCE
|
5 LAKHS
|
NIL
|
NIL
|
NIL
|
6 LAKHS
|
NIL
|
22,500
|
-22,500
|
7 LAKHS
|
NIL
|
32,500
|
-32,500
|
8 LAKHS
|
NIL
|
45,000
|
-45,000
|
9 LAKHS
|
30,000
|
60,000
|
-30,000
|
10 LAKHS
|
50,000
|
75,000
|
-25,000
|
11 LAKHS
|
70,000
|
95,000
|
-25,000
|
12 LAKHS
|
90,000
|
1,15,000
|
-25,000
|
13 LAKHS
|
1,10,000
|
1,37,500
|
-27,500
|
14 LAKHS
|
1,40,000
|
1,62,500
|
-22,500
|
15 LAKHS
|
1,70,000
|
1,87,500
|
-17,500
|
INVESTMENT OPTIONS FOR SENIOR CITIZENS
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CLICK HERE TO READ
CATEGORY D ( WITH EXEMPTIONS AND REBATES OF TOTAL RS 4,50,000 )
INCOME
|
TAX UNDER
OLD SCHEME |
TAX UNDER
NEW REGIME |
DIFFERENCE
|
5 LAKHS
|
NIL
|
NIL
|
NIL
|
6 LAKHS
|
NIL
|
22,500
|
-22,500
|
7 LAKHS
|
NIL
|
32,500
|
-32,500
|
8 LAKHS
|
NIL
|
45,000
|
-45,000
|
9 LAKHS
|
NIL
|
60,000
|
-60,000
|
10 LAKHS
|
20,000
|
75,000
|
-55,000
|
11 LAKHS
|
40,000
|
95,000
|
-55,000
|
12 LAKHS
|
60,000
|
1,15,000
|
-55,000
|
13 LAKHS
|
80,000
|
1,37,500
|
-57,500
|
14 LAKHS
|
1,00,000
|
1,62,500
|
-62,500
|
15 LAKHS
|
1,25,000
|
1,87,500
|
-62,500
|
GREEN DENOTES NEW REGIME IS BENEFICIAL RED DENOTES OLD SCHEME IS BENEFICIAL
NOTES :
1. Senior citizens with no exemptions at all now will have tax benefit up to Rs 72,500 under the new regime compared to old one .
2. Pensioners / retirees who are having exemptions of Rs 1, 50,000 will be better off with the old scheme if their total income does not exceed Rs 9.00 lakhs . If they exceed Rs 9.00 lakhs total income , they may benefit up to Rs 27,500 as their total income increases .
3 . Senior citizens who have exemptions up to Rs 3.00 lakh and above will not have any benefit under the new regime whatever may be their income . In fact , they will lose up to Rs 62,500 under the new regime .
1. Senior citizens with no exemptions at all now will have tax benefit up to Rs 72,500 under the new regime compared to old one .
2. Pensioners / retirees who are having exemptions of Rs 1, 50,000 will be better off with the old scheme if their total income does not exceed Rs 9.00 lakhs . If they exceed Rs 9.00 lakhs total income , they may benefit up to Rs 27,500 as their total income increases .
3 . Senior citizens who have exemptions up to Rs 3.00 lakh and above will not have any benefit under the new regime whatever may be their income . In fact , they will lose up to Rs 62,500 under the new regime .
CONCLUSION : The new regime is made simple by removing most of the privileges senior citizens hitherto enjoying . Though it is simple , it makes most of the retirees / pensioners and other senior citizens pay higher income tax and pinches their already taxed pockets . Most of the senior citizens will say " Madam , you have your new regime with you . We are old people and we will have old scheme with us which is more comfortable "
Silver lining of the new simple regime is it is optional . So senior citizens can say no to it and opt for the old . But alas ! Their hopes of lower taxes dashed .
Silver lining of the new simple regime is it is optional . So senior citizens can say no to it and opt for the old . But alas ! Their hopes of lower taxes dashed .