Concessional rate of Tax applicability for individual business owners, Individuals, HUF and professionals as per the new amendment of Finance bill 2020 for Financial year 2020-21
Please read the entire article to get a hold of the optional tax benefit given to Individuals & HUF
New tax structure is as follows:
| Annual Income | New Income Tax Slab Rate |
| Nil to Rs. 2.5 lakh | Exempt |
| Above Rs. 2.5 lakh to Rs. 5 lakh | 5% |
| Above Rs. 5 lakh to Rs. 7.5 lakh | 10% |
| Above Rs. 7.5 lakh to Rs. 10 lakh | 15% |
| Above Rs. 10 lakh to Rs. 12.5 lakh | 20% |
| Above Rs. 12.5 lakh to Rs. 15 lakh | 25% |
| Above Rs. 15 lakh | 30% |
However, to claim the above tax rate benefits there are few deductions which cannot be claimed while you file your ITR
- Chapter VIA Deductions like Insurance, Mediclaim, housing loan, donation, educational loans, etc.
- Sec 24b deduction which is interest repayment on housing loan upto 2 Lakh
- Section 35/ 35AD/ 35CCC,
- Clause (iia) of Section 57. (family pension)
- No set off losses from earlier assessment year.
- No claiming of depreciation u/s 32 of Income tax act
- No exemption or deduction with respect to allowance or perquisites like house rent allowance, Leave travel allowance, deduction for employment allowance, professional tax etc.
Few deductions that are allowed under the new scheme
- Any allowance for the cost of travel or transfer
- Daily allowance given under certain conditions by the employers
- Transport allowance given for handicapped
- Deduction in respect of contribution to pension account
Please note that the new tax regime is optional. You can continue with your old tax regime and claim all the above benefits which is not available if you go for new tax regime. To opt for new tax regime, you have to exercise the option before the due date of furnishing his return of income. Even professionals can claim this benefit.
The new tax rates as mentioned above are really less but it takes away lot of deductions which the individuals and HUF had before. In my opinion, the new tax rates will be beneficial for high income tax earners who fall in the bracket of 30% as these deductions are really marginal for them. However, for income upto 10 lacs, people can go for this concessional rate of tax.
Let me know your opinion.
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Is car lease option is available under new tax regime or not ? by this option, sufficient tax is saved by giving lease amount to third person in old regime and against that perquisite value of Rs. 21,600/- is added to employee taxable income. Is this option available under new tax regime or not ?