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Income tax slab applicable to salaried employees for AY 2021-22

Salaried employees can opt for the existing tax regime or the new tax regime with a lower rate of taxation (u/s 115 BAC of the Income Tax Act)

The taxpayer opting for concessional rates in the new tax regime will not be allowed certain exemptions and deductions (like 80C, 80D,80TTB, HRA) available in the Existing Tax Regime.

For employees (resident or non-resident) less than 60 years of age anytime during the previous year

Existing Tax Regime

New Tax Regime u/s 115BAC

Income Tax Slab

Income Tax Rate

Income Tax Slab

Income Tax Rate

Up to Rs 2,50,000    

Nil

Up to Rs 2,50,000

Nil

Rs 2,50,001 – Rs 5,00,000    

5% above Rs 2,50,000

Rs 2,50,001 – Rs 5,00,000

5% above Rs 2,50,000

Rs 5,00,001 – Rs 10,00,000

Rs 12,500 + 20% above Rs 5,00,000

Rs 5,00,001 – Rs 7,50,000

Rs 12,500 + 10% above Rs 5,00,000

Above Rs 10,00,000 

Rs 1,12,500 + 30% above Rs 10,00,000

Rs 7,50,001 – Rs 10,00,000

Rs 62,500 + 15% above Rs 7,50,000

 

 

Rs 10,00,001 – Rs 12,50,000

Rs 1,00,000 + 20% above Rs 10,00,000

 

 

Rs 12,50,001 – Rs 15,00,000

Rs 1,50,000 + 25% above Rs 12,50,000

 

 

Above Rs 15,00,000

Rs 2,12,500 + 30% above Rs 15,00,000

For employee (resident or non-resident), 60 years or more but less than 80 years of age anytime during the previous year

Existing Tax Regime

New Tax Regime u/s 115BAC

Income Tax Slab

Income Tax Rate

Income Tax Slab

Income Tax Rate

Up to Rs 3,00,000    

Nil

Up to Rs 2,50,000

Nil

Rs 3,00,001 – Rs 5,00,000    

5% above Rs 3,50,000

Rs 2,50,001 – Rs 5,00,000

5% above Rs 2,50,000

Rs 5,00,001 – Rs 10,00,000

Rs 10,000 + 20% above Rs 5,00,000

Rs 5,00,001 – Rs 7,50,000

Rs 12,500 + 10% above Rs 5,00,000

Above Rs 10,00,000 

Rs 1,10,000 + 30% above Rs 10,00,000

Rs 7,50,001 – Rs 10,00,000

Rs 62,500 + 15% above Rs 7,50,000

 

 

Rs 10,00,001 – Rs 12,50,000

Rs 1,00,000 + 20% above Rs 10,00,000

 

 

Rs 12,50,001 – Rs 15,00,000

Rs 1,50,000 + 25% above Rs 12,50,000

 

 

Above Rs 15,00,000

Rs 2,12,500 + 30% above Rs 15,00,000

For employees (resident or non-resident) 80 years of age or more anytime during the previous year

Existing Tax Regime

New Tax Regime u/s 115BAC

Income Tax Slab

Income Tax Rate

Income Tax Slab

Income Tax Rate

Up to Rs 5,00,000  

Nil

Up to Rs 2,50,000

Nil

Rs 5,00,001 – Rs 10,00,000

20% above Rs 5,00,000

Rs 2,50,001 – Rs 5,00,000

5% above Rs 2,50,000

Above Rs 10,00,000 

Rs 1,00,000 + 30% above Rs 10,00,000

Rs 5,00,001 – Rs 7,50,000

Rs 12,500 + 10% above Rs 5,00,000

 

 

Rs 7,50,001 – Rs 10,00,000

Rs 62,500 + 15% above Rs 7,50,000

 

 

Rs 10,00,001 – Rs 12,50,000

Rs 1,00,000 + 20% above Rs 10,00,000

 

 

Rs 12,50,001 – Rs 15,00,000

Rs 1,50,000 + 25% above Rs 12,50,000

 

 

Above Rs 15,00,000

Rs 2,12,500 + 30% above Rs 15,00,000

 

Note-

1. The rates of surcharge and health & education cess are the same under both the tax regimes

2. Rebate u/s 87-A resident individual whose total income is not more than Rs 5,00,000 is also eligible for a rebate of 100% of income tax or Rs 12,500, whichever is less. This rebate is available in both tax regimes.

Surcharge

Surcharge is an additional charge levied for persons earning Income above the specified limits, it is charged on the amount of income tax calculated as per applicable rates

10% - Taxable Income above ₹ 50 lakh – up to ₹ 1 crore
15% - Taxable Income above ₹ 1 crore - up to ₹ 2 crore
25% - Taxable Income above ₹ 2 crore - up to ₹ 5 crore
37% - Taxable Income above ₹ 5 crore

Maximum surcharge on Income by way of dividend or income under the provisions of sections 111A, 112A, and 115AD is 15%

Marginal Relief

Marginal relief is a relief from the surcharge, provided in cases where the surcharge payable exceeds the additional income that makes the person liable for the surcharge. The amount payable as surcharge shall not exceed the amount of income earned exceeding ₹ 50 lakh, ₹ 1 crore, ₹ 2 crore,s or ₹ 5 crores respectively.

Health and education cess

Health & education cess @ 4% shall also be paid on the amount of income tax plus Surcharge (if any).

When employee can opt for a new tax regime?

Employees have the option to select the tax regime at the beginning of every year. If a new tax slab regime is selected at the beginning of the year, it cannot be changed during the year for TDS purposes, however, the option can be changed at the time of filing of Income-tax return.

Allowable expenses and deductions under new tax regime

  • Leave Travel Allowance (LTA)
  • House Rent Allowance (HRA)
  • Conveyance allowance
  • Daily expenses in the course of employment
  • Relocation allowance
  • Helper allowance
  • Children education allowance
  • Other special allowances [Section 10(14)]
  • Standard deduction on salary
  • Professional tax
  • Interest on housing loan (Section 24)
  • Deduction under Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2))

Non-allowable expenses and deductions under new tax regime

  • Transport allowance for specially-abled people
  • Conveyance allowance for expenditure incurred for travelling to work
  • Investment in Notified Pension Scheme under section 80CCD(2)
  • Deduction for employment of new employees under section 80JJAA
  • Depreciation u/s 32 of the Income-tax act except for additional depreciation.
  • Any allowance for traveling for employment or on transfer

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TaxGyata Team

TaxGyata Team