Government has come up with new scheme of tax for Individuals in the Budget 2020, which will be applicable from the Tax return of F.Y. 2020-21.
Who can opt for the scheme?
The Individuals and HUFs who does not have any Business income can opt for New Scheme.
Points of difference between both schemes:
1. Rate of Tax –
| Income | Old Scheme | New Scheme |
| 0 – 2,50,000 | NIL | NIL |
| 2,50,001 – 5,00,000 | 5% | 5% |
| 5,00,001 – 7,50,000 | 20% | 10% |
| 7,50,001 – 10,00,000 | 20% | 15% |
| 10,00,001 – 12,50,000 | 30% | 20% |
| 12,50,001 – 15,00,000 | 30% | 25% |
| 15,00,001 or More | 30% | 30% |
2. Allowance of Tax Deductible Investment –
| Old Scheme | New Scheme |
| All Tax Deductible Investment allowed as Deduction for Calculation of Tax | No Deduction allowed |
| Like – PPF, LIC, NPS etc. |
Income tax Calculation for both Schemes:
Ex. 1 – With Less Tax deductible Investment
Mr. Amit has income of 18,00,000/- from Salary.
He made some Investments as follows-
1. PPF – 1,00,000
2. NPS – 50,000
3. Mediclaim Premium – 20,000
| Particulars | Old Scheme (A) | New Scheme (B) | Difference Amount (A-B) |
| Total Income | 18,00,000 | 18,00,000 | |
| Less: | |||
| PPF | 1,00,000 | 0 | 1,00,000 |
| NPS | 50,000 | 0 | 50,000 |
| Mediclaim Premium | 20,000 | 0 | 20,000 |
| Net Taxable Income | 16,30,000 | 18,00,000 | 1,70,000 |
| Tax Calculation: | |||
| 0 – 2,50,000 | 0 | 0 | 0 |
| 2,50,001 – 5,00,000 | 12,500 | 12,500 | 0 |
| 5,00,001 – 7,50,000 | 50,000 | 25,000 | 25,000 |
| 7,50,001 – 10,00,000 | 50,000 | 37,500 | 12,500 |
| 10,00,001 – 12,50,000 | 75,000 | 50,000 | 25,000 |
| 12,50,001 – 15,00,000 | 75,000 | 62,500 | 12,500 |
| 15,00,001 or More | 39,000 | 90,000 | (51,000) |
| Tax Payable | 3,01,500 | 2,77,500 | 24,000 |
As per above example by selecting new scheme you can save Tax of Rs.24,000/-.
Ex. 2 – With More Tax Deductible Investment
Mr. Amit has income of 18,00,000/- from Salary.
He made some Investments as follows-
1. PPF – 1,00,000
2. NPS – 50,000
3. Mediclaim Premium – 20,000
4. House Loan Interest – 2,00,000
| Particulars | Old Scheme (A) | New Scheme (B) | Difference Amount (A-B) |
| Total Income | 18,00,000 | 18,00,000 | |
| Less: | |||
| PPF | 1,00,000 | 0 | 1,00,000 |
| NPS | 50,000 | 0 | 50,000 |
| Mediclaim Premium | 20,000 | 0 | 20,000 |
| House Loan Interest | 2,00,000 | 0 | 2,00,000 |
| Net Taxable Income | 14,30,000 | 18,00,000 | 3,70,000 |
| Tax Calculation: | |||
| 0 – 2,50,000 | 0 | 0 | 0 |
| 2,50,001 – 5,00,000 | 12,500 | 12,500 | 0 |
| 5,00,001 – 7,50,000 | 50,000 | 25,000 | 25,000 |
| 7,50,001 – 10,00,000 | 50,000 | 37,500 | 12,500 |
| 10,00,001 – 12,50,000 | 75,000 | 50,000 | 25,000 |
| 12,50,001 – 15,00,000 | 54,000 | 62,500 | (8,500) |
| 15,00,001 or More | 0 | 90,000 | (90,000) |
| Tax Payable | 2,41,500 | 2,77,500 | 36,000 |
As per above example by selecting new scheme you can save Tax of Rs.36,000/-.
As per the above Examples we can conclude that:
1. If your Tax Deductible Investments are More – Select Old Scheme
2. If your Tax Deductible Investments are Less – Select New Scheme
How to Compare the Tax Benefit for both the Schemes:
Any individual Person can compare their tax benefit from both schemes by following below mentioned Steps:
1. Go to https://www.incometaxindiaefiling.gov.in
2. Select “Tax Calculator FY 2020-21”
3. Select your age from Drop Down
4. Fill the data of your Income and Deduction
5. Click on button “Compare Tax under Existing and New Regime”
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