The Indian Income Tax act considers certain Tax Deductions/Tax Exceptions which can be professed to spare tax. You can take away tax allowances from your Gross Income and your taxable income gets diminished to that degree.
A new income tax regime was proposed in Financial plan 2020. Financial plan 2020 has started a new discussion on which income tax chunk rates are advantageous for tax assessees (New Tax Regime Versus old one). A taxpayer can select it by forgoing 70 income tax exclusions.
Most recent Income Tax Section Rates FY 2020-21/AY 2021-22
Offering a discretionary lower pace of income tax to individuals, Finance Minister Nirmala Sitharaman in the Financial plan 2020-21 proposed new income tax sections of 15% and 25% notwithstanding the 10%, 20% and 30% chunk rates.
Income Tax Allowances under New Tax Regime FY 2020-21
Individuals opting to pay tax under the new proposed lower individual income tax regime should forgo practically all tax breaks that you have been claiming in the old tax structure.
The following is the rundown of the main tax exclusions and derivations that are not accessible for the tax payers on the off chance that you decide on the new regime; (Not Entitled In the New Tax Regime-who are pick in the New Tax Regime U/s 115 BAC)
• The most usually asserted allowances under section 80C will go.
o Section 80C allowances asserted for opportune store commitments, extra security premium, school educational expense for kids and different determined investments, for example, ELSS, NPS, PPF can not be profited.
• House rent allowances
• Leave Travel exemption
• Standard Derivation of Rs 50,000
• Deduction accessible under section 80TTA (Deduction in regard of Interest on stores in a savings account) and 80TTB (Allowance in regard of Interest on stores to senior residents).
• Interest paid on housing advance taken (Section 24).
o Under the new tax regime, set-off of misfortune under Income from House Property isn’t permitted. Be that as it may, you can even now utilize it to invalidate rental income from a let-out property.
• The allowance guaranteed for clinical insurance charge under section 80D will likewise not be claimable.
• Tax break on interest paid on training credit won’t be claimable-section 80E.
• Tax break on gifts to altruistic institutions accessible under segment 80G won’t be accessible
In this way, all allowances under part through (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, and so forth) won’t be claimable by those opting for the new tax regime.
The above are allowances and tax exemptions that won’t be accessible in the new tax regime.
Income Tax Deductions and Exclusions permitted under New Tax Regime A.Y 2021-22
It is also noted that on account of representative in notified benefits plans like EPF, NPS as well as Super Annuation Account can be asserted up to Rs 7.5 lakh limit.
A business can contribute a sum equivalent to 12% of the worker’s fundamental month to month compensation to his/her EPF account. Thus, a business can contribute a sum equivalent to 10% of the representative’s essential compensation to the Level I account of NPS. In a superannuation account, a business can contribute limit of Rs 1.5 lakh excluded from tax in a financial year.
The spending plan has confined the tax-absolved superannuation, NPS and EPF account commitment by the business to limit of Rs 7.5 lakh in a financial year. Further, the spending states that any interest or gains earned from the overabundance commitment will likewise be taxable in the possession of a representative.
Interest got on Post Office Savings Account
Interest got on Post Office Savings account balance is absolved up to Rs 3,500 under segment 10(15)(i) of the Income-tax Act. (Exclusion of up to Rs 7,000 for joint savings account). ( Not Entitled In the New Tax Regime-who are select in the New Tax Regime U/s 115 BAC )
Interest on EPF Account
The interest got from EPF NOT ENTITLED IN THE NEW TAX REGIME to be absolved from tax in the new tax regime also, if it doesn’t surpass 95.%.
The Interest and development sum got on Sukanya Samriddhi account, PPF account are without tax in both old and new tax regimes. (Not Entitled In the New Tax Regime-who are select in the New Tax Regime U/s 115 BAC )
Tax Discount of up to Rs 12,500 u/s Segment 87A
Individuals having taxable income of up to Rs 5 lakh will be Not Qualified for tax discount under segment 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime. (Not Entitled In the New Tax Regime-who are pick in the New Tax Regime U/s 115 BAC)
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