In India, different income tax slabs rates are prescribed for individuals based on age and income generated during the financial year.
In this article, we will be discussing income tax slab rates applicable to the financial year 2020-21 (AY 2021-22). Which means tax rates applicable to your income generated during the period starting from 01.04.2020 to 31.03.2021.
Now let us discuss income tax slabs rates applicable to an individual for the financial year 2020-21 (assessment year 2021-22).
Income tax slab rates for FY 2020-21 (AY 2021-22) – Option 1 – Old tax regime
The Government of India has given you an option to go for option 2 (discussed below in this article) in case you don’t like option 1 or if it’s not beneficial to you.
In option 1, they have continued the old tax rate as it was applicable to the financial year 2019-20. Which means income tax slab rates for the financial year 2020-21 (AY 2021-22) will be the same as it was in financial year 2019-20 (AY 2020-21).
For the financial year 2020-21 (AY 2021-22), individual taxpayer has been divided to following three categories;
- those who are below the age of 60 years,
- resident senior citizens aged 60 years and above but below the age of 80 years, and
- resident super senior citizens who are above the age of 80 year.
For the above categories, the government has also defined different income tax slabs rates.
Income tax slab rates for FY 2020-21 (AY 2021-22) – When assessee is less than 60 years of age
| Income tax slab | Tax rate |
| Up to Rs 2,50,000 | NIL |
| Rs 2,50,001 to Rs 5,00,000 | 5% |
| Rs 5,00,001 to Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Above income slab and tax rates are also applicable to following taxpayers;
- Any other resident individual who is not a senior citizen or super senior citizen.
- Any HUF, AOP, BOI, artificial juridical person.
- Any non-resident individual irrespective of age.
Income tax slab rates for senior citizens: FY 2020-21 (AY 2021-22)
As per income tax law, a senior citizen is an individual who is 60 years old or above during the financial year. Which means if an individual has attended the age of 60 years or above during the financial year 2020-21, then he / she will be considered as a senior citizen.
For senior citizens, we have tax relaxation.
Senior citizen has been further divided into two categories;
- those who are 60 years old or above but less than 80 years of age, and
- those who are more than 80 years old
Here is the tax bracket applicable to resident individuals for the financial year 2020-21 (AY 2021-22) who are 60 years of age at any time during the previous year but less than 80 years on the last day of the previous year;
| Income tax slabs | Tax rates |
| Up to Rs 3,00,000 | NIL |
| Rs 3,00,000 to Rs 5,00,000 | 5% |
| Rs 5,00,001 to Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Now it’s time to know the income tax slab rates applicable to super senior citizens for the financial year 2020-21 (AY 2021-22). A super senior citizen is a resident individual who is at least 80 years of age at any time during the previous year.
Here are the income tax slab rates applicable to a super senior citizen;
| Income tax slabs | Tax rates |
| Up to Rs 5,00,000 | NIL |
| Rs 5,00,001 to Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
Table showing income tax slab rates for above three categories : FY 2020-21 (AY 2021-22)
| Income slabs | Up to 60 Years of age | 60 Years to 80 Years | Above 80 years |
| Up to Rs 2,50,000 | NIL | NIL | NIL |
| Rs 2,50,001 to Rs 3,00,000 | 5% | NIL | NIL |
| Rs 3,00,001 to Rs 5,00,000 | 5% | 5% | NIL |
| Rs 5,00,001 to Rs 10,00,000 | 20% | 20% | 20% |
| Above Rs 10,00,000 | 30% | 30% | 30% |
Income tax slab rates for FY 2020-21 (AY 2021-22) – Option 2 – New tax regime
From assessment year 2021-22 (FY 2020-21), an individual can opt for the alternative tax regime introduced by the government within the parameters of section 115BAC.
Which means, from 1st April 2020, an individual taxpayer has the option to either continue with the old tax rates as discussed above or opt for this new tax regime.
Here are the income tax slab rates applicable under alternative tax regime for the financial year 2020-21 (AY 2021-22);
| Income tax slabs | Tax rate |
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 to Rs 5,00,000 | 5%(Note: Tax rebate U/s 87A available) |
| Rs 5,00,001 to Rs 7,50,000 | 10% |
| Rs 7,50,001 to Rs 10,00,000 | 15% |
| Rs 10,00,001 to Rs 12,50,000 | 20% |
| Rs 12,50,001 to Rs 15,00,000 | 25% |
| Rs 15,00,000 and above | 30% |
Government has given you the option to avail above slab rates or old applicable tax rates.
If you avail above tax rates under the new regime, you need to give up certain exemption and deductions.
Therefore, before taking this option, you need to make sure that this new tax rate is beneficial to you.
Here is a list of important exemptions and deductions that you need to give up if you have decided to go for new tax regime;
- Leave Travel Allowance (LTA) – Section 10(5)
- House Rent Allowance (HRA) – Section 10(13A)
- Conveyance
- Daily expenses in the course of employment
- Relocation allowance
- Helper allowance
- Children education allowance
- Other special allowances [Section 10(14)]
- Standard deduction (section 16(ia))
- Professional tax
- Interest on housing loan (Section 24)
- Chapter VI-A deduction (80C to 80U as applicable to you, except Section 80CCD(2) and 80JJA)
Now the question is, what is the last date to avail this option of a new tax regime?
You need to avail this option on or before the due date of filing return of income for the financial year 2020-21 (AY 2021-22).
Income tax slab rates under the new tax regime as discussed above is also applicable to a senior citizen and super senior citizen.
We do not have any separate income slab and tax rates as it’s under the old regime. Which means, under the new tax regime, the exemption limit applicable to a senior and super senior citizen is Rs 2, 50,000.
Important conditions for new tax regime
An individual may exercise the option of an old or new tax regime in respect of a previous year to be taxed under the said section 115BAC alongwith his return of income to be furnished u/s 139(1) of the act for each year.
Salaried individuals who have no business income, can choose between the old and new tax regime every year as per their convenience.
If you have business income, once you have opted for the new tax regime, you can switch back to the old regime only once in a lifetime. Which means business income persons need to be very careful while choosing between the old and new tax regime. Therefore, it’s better if you first calculate your tax liability under both regimes and then select the most beneficial option.
How TDS will be deducted when assessee opted new tax regime
An employee having income other than the income under the head “profits and gains of business or profession” and intending to opt for the concessional rate u/s 115BAC of the Act ( which is new tax regime), may intimate the deductor being his employer of such intention for each previous year.
Upon such intimation, the deductor shall compute his total income, and make TDS theron in accordance with the provision of section 115BAC.
If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 115BAC of the Act. Which means TDS will be calculated as per old tax regime if the employee did not intimate to the employer.
Intimation made by the employee to the employer shall be only for the purpose of TDS during the previous year and cannot be modified during that year.
However, the intimation would not amount to exercising an option in terms of sub-section (5) of section 115BAC of the Act and the person shall be required to do so alongwith the return to be furnished u/s 139(1) of the act for that previous year.
Thus the option at the time of filing return of income u/s 139(1) of the act could be different from the intimation made by such employee to the employer for that previous year.
In case of a person who has income under the head “profits and gains of business or profession” also, the option for taxation u/s 115BAC of the Act once exercised for a previous year at the time of filing of return of income u/s 139(1) of the act cannot be changed for subsequent previous year except in certain circumstances. Accordingly the above clarification would apply to such a person with a modification that the intimation to the employer in his case for subsequent previous year must not deviate from the option u/s 115BAC of the Act once exercised in a previous year.
TDS related provision has been clarified by the department through circular number 1/2020. You can refer to the circular number C1/2020, dated april 13, 2020 here.
Is income tax rebate u/s 87A applicable to old and new regime?
Tax rebate under section 87A is allowed to resident individuals up to a maximum amount of Rs 12,500 for the financial year 2020-21 when total income for the year is up to Rs 5, 00,000. Rebate is 100% of income tax or Rs 12,500, whichever is lower.
Tax rebate under section 87A is allowed to individuals in both old and new regime up to a maximum amount of Rs 12,500 for the financial year 2020-21 when total income for the year is up to Rs 5, 00,000.
Surcharge for the financial year 2020-21 (AY 2021-22)
Before getting into surcharge and marginal relief, you need to remember that these two para will be applicable only when your income is more than Rs 50 lakhs.
If your income is below Rs 50 lakhs, you need not look into these two para as its not applicable. Therefore, you can directly go to health and education cess para.
If your income is more than Rs 50 lakhs for the financial year 2020-21, you must look into it as it will increase your total tax liability.
Surcharge is applicable to both tax regimes.
Which means, surcharge applicable under the existing (old) tax regime is also applicable in the case of alternative or new tax regime u/s 115BAC.
| Income limit | Surcharge rate on the amount of income tax |
| Up to Rs 50 lakhs | Nil |
| Net income exceeds Rs 50 Lakh but doesn’t exceed Rs 1 crore | 10% |
| Net income above Rs 1 crore but doesn’t exceed Rs 2 crore | 15% |
| Net income exceeds Rs 2 crore but doesn’t exceed Rs 5 crore | 25% |
| Net income exceeds Rs 5 crore | 37% |
If income includes capital gain taxable u/s 11A and / or 112A, surcharge cannot exceed 15% of income tax.
Marginal relief in case surcharge is applicable
Marginal relief is available from surcharge in following manner;
- In case where net income exceeds Rs 50 lakh but doesn’t exceed Rs 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.
- in case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
- in case where net income exceeds Rs. 2 crore but doesn’t exceed Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore.
- in case where net income exceeds Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than the amount of income that exceeds Rs. 5 crore.
Health and education cess
Health and education cess is applicable to the old and new regime.
In addition to the tax rates and surcharge as applicable, you are also liable to pay additional 4% health and education cess for the financial year 2020-21 (AY 2021-22).
Remember, 4% will be added after taking the benefits of rebate under section 87A.
