Budget 2020, had introduced new tax rate regime for individuals and HUF after same was introduced for Companies.
The new tax regime for Individual and HUF has been introduced under section 115BAC of the Income tax act.
The new regime will be made applicable from FY 2020-21, hence while filing Income tax return for AY 2021-22 an individual and HUF can choose whether to opt for new regime or stay in old regime.
To opt for new regime the assessee has to file a form i.e. Form 10-IE before filing the return of income and only after that it can claim benefit of such section. Format of Form 10-IE has been released by CBDT, to read the same CLICK HERE.
The only drawback for above scheme is for person earning income from business or profession because once they have opted for new regime they can opt out of same only once. Whereas person earning other than income from business and profession can opt in and opt out of this scheme every year.
Now, the very first difference between the same is with regard to rate of tax which as under:
| S. No | Total income | Rate of tax | |
| Under new regime | Under old regime | ||
| 1 | Upto 2.5 lakh | Nil | Nil |
| 2 | From 2,50,001 to 5,00,000 | 5% | 5% |
| 3 | From Rs 5,00,001 to Rs 7,50,000 | 10% | 20% |
| 4 | From Rs 7,50,001 to Rs 10,00,000 | 15% | |
| 5 | From Rs 10,00,001 to Rs 12,50,000 | 20% | 30% |
| 6 | From Rs 12,50,001 to Rs 15,00,000 | 25% | |
| 7 | Above Rs 15,00,000 | 30% | |
Few important points to note here with regard to tax rate is as under:
- There is no separate Income tax rate announced for senior citizen or super senior citizen as is available under normal Income tax rate.
- Rebate u/s 87A will be available under both the sections as same is not restricted.
Now let’s have a look at the income head wise and section by section comparison between the two regime. As we know there are main 5 heads of income under Income tax act: Salary income, Income from house property, Income from business and profession, Capital gain and Income from other sources.
Let’s have a look at head wise difference between old and new tax regime:
Do remember that there is no restriction on any provision of capital gain under new or old regime of tax.
Also, any losses under the head business income due to provisions mentioned above cannot be carried forward once assessee opt for new provision.
Further, if an employee had opted for new regime while submitting declaration to employer and later he wants to opt for old regime or vice versa, same can be done while filing Income tax return but there are some consequences of same which needs to be kept in mind.
Further our team has even prepared a calculation sheet so that people can compare their tax payment under new and old tax regime. To download the chart CLICK HERE.
In the end although ITR 1 and 4 have been made available by Income tax department but one cannot still file the same and hence this is the right time to take a decision whether to opt for new regime or stay in old regime.
If you need any consultation of CA expert or wants an expert to file your Income tax return CLICK HERE and book your slot.
Guidance on above article by:
CA Naman Maloo (C.A., B.Com)
He is currently working as Partner – Direct Tax with Jain Shrimal & Co. in Jaipur having experience in dealing Assessments, Tax Audit, Tax planning for NRI, Business planning and consultation.
E-mail: naman.maloo@jainshrimal.in
