Union Budget 2021 | Income tax calculator


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

Particulars Old Regime   New Regime  
Income from Salary        
Basic Salary 450,000   450,000  
House Rent Allowance (HRA) 180,000   180,000  
Leave Travel Assistance (LTA) 75,000   75,000  
Special Allowance 80,000   80,000  
Employer’s contribution to NPS 45,000   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 Account 10,000   10,000  
Interest on Fixed Deposits 40,000 50,000 40,000 50,000
         
         
Gross Total income   827,600   880,000
         
Deductions under Chapter VIA        
Section 80C   (54,000)    
Employee Contribution to Provident Fund 54,000    
Contribution to Public Provident Fund    
LIC Premium        
Tuition fee        
ELSS        
         
Section 80CCD   (45,000)   (45,000)
NPS- Employee Additional Contribution      
NPS- Employer Contribution 45,000   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

Particulars Old Regime   New Regime  
Income from Salary        
Basic Salary 850,000   850,000  
House Rent Allowance (HRA) 150,000   150,000  
Leave Travel Assistance (LTA) 75,000   75,000  
Special Allowance 500,000   500,000  
Employer’s contribution to NPS 85,000   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 Account 30,000   30,000  
Interest on Fixed Deposits 15,000 45,000 15,000 45,000
         
         
Gross Total income   1,297,600   1,705,000
         
Deductions under Chapter VIA        
Section 80C   (150,000)  
Employee Contribution to Provident Fund 102,000    
Contribution to Public Provident Fund 50,000    
LIC Premium        
Tuition fee        
ELSS        
         
Section 80CCD   (135,000)   (85,000)
NPS- Employee Additional Contribution 100,000    
NPS- Employer Contribution 85,000   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

Particulars Old Regime   New Regime  
Income from Salary        
Basic Salary 1,150,000   1,150,000  
House Rent Allowance (HRA) 500,000   500,000  
Leave Travel Assistance (LTA) 150,000   150,000  
Special Allowance 700,000   700,000  
Employer’s contribution to NPS 115,000   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 Account 50,000   50,000  
Interest on Fixed Deposits 25,000 75,000 25,000 75,000
         
         
Gross Total income   2,057,600   2,690,000
         
Deductions under Chapter VIA        
Section 80C   (150,000)  
Employee Contribution to Provident Fund 138,000    
Contribution to Public Provident Fund 50,000    
LIC Premium        
Tuition fee        
ELSS        
         
Section 80CCD   (165,000)   (115,000)
NPS- Employee Additional Contribution 100,000    
NPS- Employer Contribution 115,000   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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4 thoughts on “Union Budget 2021 | Income tax calculator

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