Budget 2021

Union Budget 2021 | Income tax calculator

Less taxing: Tax-efficient investments will leave more money for current consumption.  

Without making any changes to the personal income tax slab, the Union Budget 2021- 22 has provided relief to senior citizens in the filing of I-T returns; reduced the time limit for I-T proceedings; announced the setting-up of a Dispute Resolution Committee and faceless Income Tax Appellate Tribunal proceedings; provided relaxations for Non-Resident Indians (NRI); offered an increase in the exemption limit from audit; and accounted for relief for dividend income.

Last year, Ms. Sitharaman introduced a new personal income tax regime, where there is a possibility of paying lesser tax for those who forgo reliefs and exemptions. The new are, however, optional.

Income (per annum)

Proposed Tax Rate

Old Tax Rate

Upto ₹2.5 lakh

No tax

No tax

₹2.5 lakh-₹5 lakh

No tax

5%

₹5 lakh to ₹7.5 lakh

10%

20%

₹7.5 lakh to ₹10 lakh

15%

20%

₹10 lakh to ₹12.5 lakh

20%

30%

₹12.5 lakh to ₹15 lakh

25%

30%

Above ₹15 lakh

30%

30%

 

Here we take a look at three scenarios of taxable income for salaried individuals.

Illustration 1 - Salaried Individual - Taxable income below ₹10 lakhs

ParticularsOld Regime New Regime 
Income from Salary    
Basic Salary450,000 450,000 
House Rent Allowance (HRA)180,000 180,000 
Leave Travel Assistance (LTA)75,000 75,000 
Special Allowance80,000 80,000 
Employer's contribution to NPS45,000 45,000 
Additional Perquisite- - 
 830,000 830,000 
Exemptions    
HRA- - 
LTA- - 
     
Less: Standard deduction(50,000) - 
Less: Professional tax(2,400)777,600-830,000
     
Income from House Property   -
     
Income from Other Sources    
Interest on Savings Bank Account10,000 10,000 
Interest on Fixed Deposits40,00050,00040,00050,000
     
     
Gross Total income 827,600 880,000
     
Deductions under Chapter VIA    
Section 80C (54,000)  
Employee Contribution to Provident Fund54,000 - 
Contribution to Public Provident Fund- - 
LIC Premium    
Tuition fee    
ELSS    
     
Section 80CCD (45,000) (45,000)
NPS- Employee Additional Contribution  - 
NPS- Employer Contribution45,000 45,000 
     
Section 80D - Medical Insurance Premium----
     
Section 80TTA - Interest from savings bank-(10,000)--
Pre Tax Income (Total Taxable income) 718,600 835,000
     
Income-tax 56,220 50,250
Less: Rebate under section 87A - -
Total tax payable after Rebate 56,220 50,250
     
Surcharge @10% / 15% / 25% / 37% - -
Total tax payable after surcharge 56,220 50,250
Health and Education Cess @ 4% 2,249 2,010
     
Total tax, surcharge and education cess 58,470 52,260
     
Impact in tax liability (in )   6,210

 

Illustration 2 - Salaried Individual - Taxable income in the range of ₹10 Lakh to ₹15 Lakh

ParticularsOld Regime New Regime 
Income from Salary    
Basic Salary850,000 850,000 
House Rent Allowance (HRA)150,000 150,000 
Leave Travel Assistance (LTA)75,000 75,000 
Special Allowance500,000 500,000 
Employer's contribution to NPS85,000 85,000 
Additional Perquisite- - 
 1,660,000 1,660,000 
Exemptions    
HRA(80,000) - 
LTA(75,000) - 
     
Less: Standard deduction(50,000) - 
Less: Professional tax(2,400)1,452,600-1,660,000
     
Income from House Property (200,000) -
     
Income from Other Sources    
Interest on Savings Bank Account30,000 30,000 
Interest on Fixed Deposits15,00045,00015,00045,000
     
     
Gross Total income 1,297,600 1,705,000
     
Deductions under Chapter VIA    
Section 80C (150,000) -
Employee Contribution to Provident Fund102,000 - 
Contribution to Public Provident Fund50,000 - 
LIC Premium    
Tuition fee    
ELSS    
     
Section 80CCD (135,000) (85,000)
NPS- Employee Additional Contribution100,000 - 
NPS- Employer Contribution85,000 85,000 
     
Section 80D - Medical Insurance Premium (18,000) -
     
Section 80TTA - Interest from savings bank (10,000) -
Pre Tax Income (Total Taxable income) 984,600 1,620,000
     
Income-tax 109,420 223,500
Less: Rebate under section 87A - -
Total tax payable after Rebate 109,420 223,500
     
Surcharge @10% / 15% / 25% / 37% - -
Total tax payable after surcharge 109,420 223,500
Health and Education Cess @ 4% 4,377 8,940
     
Total tax, surcharge and education cess 113,800 232,440
     
Impact in tax liability (in )   (118,640)

 

Illustration 3 - Salaried Individual - Taxable income in the range of ₹15 Lakh to ₹50 Lakh

ParticularsOld Regime New Regime 
Income from Salary    
Basic Salary1,150,000 1,150,000 
House Rent Allowance (HRA)500,000 500,000 
Leave Travel Assistance (LTA)150,000 150,000 
Special Allowance700,000 700,000 
Employer's contribution to NPS115,000 115,000 
Additional Perquisite- - 
 2,615,000 2,615,000 
Exemptions    
HRA(305,000) - 
LTA(75,000) - 
     
Less: Standard deduction(50,000) - 
Less: Professional tax(2,400)2,182,600-2,615,000
     
Income from House Property (200,000) -
     
Income from Other Sources    
Interest on Savings Bank Account50,000 50,000 
Interest on Fixed Deposits25,00075,00025,00075,000
     
     
Gross Total income 2,057,600 2,690,000
     
Deductions under Chapter VIA    
Section 80C (150,000) -
Employee Contribution to Provident Fund138,000 - 
Contribution to Public Provident Fund50,000 - 
LIC Premium    
Tuition fee    
ELSS    
     
Section 80CCD (165,000) (115,000)
NPS- Employee Additional Contribution100,000 - 
NPS- Employer Contribution115,000 115,000 
     
Section 80D - Medical Insurance Premium (18,000) -
     
Section 80TTA - Interest from savings bank (10,000) -
Pre Tax Income (Total Taxable income) 1,714,600 2,575,000
     
Income-tax 326,880 510,000
Less: Rebate under section 87A - -
Total tax payable after Rebate 326,880 510,000
     
Surcharge @10% / 15% / 25% / 37% - -
Total tax payable after surcharge 326,880 510,000
Health and Education Cess @ 4% 13,075 20,400
     
Total tax, surcharge and education cess 339,960 530,400
     
Impact in tax liability (in )   (190,440)

 

These calculations are based on E&Y calculations. To try out various scenarios, download Google Sheet at bit.ly/taxscenario

Disclaimer - This tax calculator works under certain assumptions to calculate estimated tax liability; and may not provide accurate results in all circumstances. Thus, your actual tax liability may be different. Readers are advised to seek appropriate professional tax advice and compute their tax based on applicable provisions of the Income-tax Act, 1961 and Income-tax Rules, 1962.

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Printable version | Apr 13, 2021 5:08:22 AM | https://www.thehindu.com/business/budget/union-budget-2021-income-tax-calculator/article33726732.ece

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