Introduction of the new tax regime in the Financial plan 2020, many are not confounded which are the Income Tax Derivations are accessible for them. Let us see the total rundown of Income Tax Allowances F.Y 2020-21 under both the old and new tax regime.
Tax Planning is a significant piece of financial planning. Be that as it may, while investing or choosing the derivations, our thought ought to be to focus from the start on our financial objectives rather than simply concentrating on tax saving. Henceforth, understanding the accessible choices is a lot of significant.
You might know that during Financial plan 2020, the Government introduced the two kinds of tax regimes. According to that, the income tax sections are as beneath.
Rundown of Income Tax Deduction F.Y 2020-21 – Under New and Old Tax Regime
Let us presently talk about the rundown of income tax allowances FY 2020 – 21. I will partition them as new and old tax regime for your straightforwardness.
Rundown of Income Tax Allowances F.Y 2020-21 under New Tax Regime
Here are a few insights regarding “New Tax Regime – Complete rundown of exclusions and derivations not permitted”. In this post, concentrating on the accessible allowances.
# Section 80CCD(2) ( Entitle if the option is New Tax Regime)
Under this section, manager commitment on account of the representative in advised benefits plans like EPF, NPS, and/or Super Comment Account can be asserted up to Rs.7.5 lakh limit.
A business can contribute a sum equivalent to 12% of the worker’s essential month to month pay to his/her EPF account. Additionally, a business can contribute a sum equivalent to 10% of the worker’s fundamental compensation to the Level I account of NPS (For Focal Government Representatives it is presently 14% of Essential + DA powerful from first April 2019). In a superannuation account, a business can contribute a limit of Rs 1.5 lakh absolved from tax in a financial year.
Allude the point by point post on NPS Tax Advantages at “NPS Tax Advantages 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)”.
The Spending plan 2020 confined the tax-excluded 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 hands of a representative.
# Section 10(15)(i) ( Entitle if the option is New Tax Regime)
Interest got on mail center savings account balance is excluded up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. As far as possible is Rs.7,000 in the event of joint savings account.
# Gratuity ( Not Entitle if the option is New Tax Regime)
Gratuity is tax-excluded up to Rs 20 lakh in a lifetime for non-government representatives. For government workers, all tip got is tax-excluded, regardless of the sum got by them. (Allude my post “Gratuity – New Cutoff, Qualification, Equation, Taxation and Calculator”)
Beneath benefits up to certain edge limits (assuming any) are permitted under new tax regime also;
• LTA benefits ( Not Entitle if the option is New Tax Regime)
• Leave encashment on retirement
• Retrenchment benefits
• VRS benefits
• NPS withdrawal benefits
• Education benefits ( Not Entitle if the option is New Tax Regime)
• Payments of grants instituted in the public interest
# Interest on EPF Account, SSY and PPF ( Not Entitle if the option is New Tax Regime)
The interest got from the EPF account continues to be absolved from tax in the new tax regime just as the old tax regime.
The Interest and development sum got on the Sukanya Samriddhi account, PPF account are without tax in both old and new tax regimes.
# Section 87A ( Not Entitle if the option is New Tax Regime)
Individuals having taxable income of up to Rs.5 lakh will be qualified for tax refund under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.