Overview : Which income tax slab for AY 2021-22 is better old or new ?

New Income Tax Slab Rate for FY 2020-21 (AY 2021-22)

In the new income tax structure, some income tax slabs have been lowered if one exclude exemptions. This is optional and to help you make an informed decision we are going to take a look at what income tax rates will continue and which ones are lowered if you leave exemptions.

As a taxpayer, you have two options available:

1. New Income Tax Structure – Not applicable exemptions and breaks to avail lower tax rates
2. Old Income Tax Structure – All the existing income tax rates, benefit and exemptions applicable

Income Tax Slabs for FY2020-21 (AY2021-22)
Taxable Income (Rs.)	Existing Tax Rate	New Tax Rate*
Up to ₹2.5 Lakh	Nil	Nil
₹2.5 – ₹5 Lakh	5%	5%
₹5 – ₹7.5 Lakh	20%	10%
₹7.5 – ₹10 Lakh	20%	15%
₹10 – ₹12.5 Lakh	30%	20%
₹12.5 – ₹15 Lakh	30%	25%
₹15 Lakh and above	30%	30%
*All exemptions and breaks have to be foregone to avail these tax rates *For tax payers below the age of 60 years

Tax Deductions and Exemptions not allowed in the new tax structure

1. Section 80C – The most popular tax deduction under Section 80C of up to ₹1.5 Lakh is not applicable in the new tax structure. This means that any profits made from investments such as Life Insurance, PPF, School tuition fees, ELSS, PF etc. is not applicable. However, one can still claim deduction under Section 80CCD for employer contribution to the employee NPS.
2. Section 80D – Tax exemption under section 80D which allows for deduction for medical insurance premium and preventive health checkup is also not allowed.
3. LTA – Leave Travel Allowance exemption which is given to salaried individuals twice a year in a period of four years is also not allowed.
4. HRA – HRA or House Rent Allowance is a house rent limit provided by the employer to the employee for renting a house. In the old tax structure, one could claim a deduction up to a certain limit, but in the new tax structure it is not allowed.
5. Standard Deduction – A standard deduction of ₹50,000 was initially available to salaried individuals. This is not permitted in the new tax structure.
6. Section 80TTA – Section 80TTA provides an exemption of up to ₹10,000 on income generated from interest earned. This is not allowed in the new tax regime.
7. Section 80DDB – Section 80DDB provides benefits for disability up to ₹40,000. This is also not allowed in the new tax structure in case you were planning to switch over.
8. Section 80E – Section 80E allows for a tax break on the interest paid for education loans. This is also not permitted in the new structure.
9. Section 80G – Section 80G which concerns donations, says that one can claim a deduction of the equivalent amount made towards a donation. This also cannot be claimed in the new tax structure.
10. Section 24 – Section 24 for a Home Loan Interest allowed an individual to claim a tax deduction on the interest paid on a home loan up to an amount of ₹200,000. This benefit is also not available to you if you go for the new tax slabs.

 

Compression Between old & New Income Tax Slab for FY2020-21 (AY2021-22)

 

Tax Calculation on income of Rs 10,00000/- as per Old & New Regime