How To Calculate Income Tax For Assessment Year 2020-21.

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How To Calculate Income Tax For Assessment Year 2020-21.

From the announcement of a full tax rebate on an annual income up to Rs. 5 lakh to a 25 per cent hike in standard deduction applicable to the salaried and pensioners, the Budget 2019 proposes few key changes to income tax laws. Once the new income tax rules come into effect, that is, from Assessment Year 2020-21, individual assessees’ tax outgo will change accordingly. Financial experts have shared few examples to explain the changes in income tax liability as per the proposed changes in laws.



 

But before that, here’s a brief description of two noteworthy changes in income tax laws proposed in the February 1 Budget:

  • Full tax rebate on annual personal income up to Rs. 5 lakh; in other cases, income tax rates/slabs remain unchanged
  • Standard deduction limit (applicable to employees and pensioners) raised from Rs. 40,000 (Budget 2018) to Rs. 50,000 (Budget 2019)

Here are some of those examples underlining the changes in income tax liability from assessment year 2020-21:

Budget 2019 tax calculation examples
Taxable annual income in rupees (after adjusting deductions)3,50,0004,00,0005,00,00010,00,000
Tax5,000 (@ 5% on 1,00,000)7,500 (@ 5% on 1,50,000)12,500 (@ 5% on 2,50,000)1,12,500 (@5% on 2,50,000, 20% on 5,00,000)
Rebate under Section 87A of I-T Act5,0007,50012,500NA
Tax liability0001,12,500
Cess @ 4%0004,500
Tax payable (after cess)0001,17,000
Budget 2018 examples
Taxable income3,50,0004,00,0005,00,00010,00,000
Tax5,0007,50012,5001,12,500
Rebate2,500NANANA
Balance Tax2,5007,50012,5001,12,500
Cess1003005004,500
Tax payable2,6007,80013,0001,17,000

 



 

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