Union budget 2021 | Income tax calculator
Without making any changes to the personal income tax slab, the 2021-22 Union budget granted relief to the elderly in the filing of computer returns; reduces the time taken for IT procedures; announced the establishment of a dispute resolution committee and anonymous income tax appeals tribunal proceedings; flexibilities provided for Non-Resident Indians (NRIs); offered an increase in the audit exemption limit; and taken into account the reduction of dividend income.
Last year, Ms. Sitharaman introduced a new personal income tax regime, where it is possible to pay less tax for those who forgo the reliefs and exemptions. The new ones are however optional.
|
Income (per year) |
Proposed tax rate |
Old tax rate |
|---|---|---|
|
Up to ₹ 2.5 lakh |
No taxes |
No taxes |
|
₹ 2.5 lakh- ₹ 5 lakh |
No taxes |
5% |
|
₹ 5 lakh to ₹ 7.5 lakh |
ten% |
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 examine three taxable income scenarios for salaried persons.
Illustration 1 – Employee – Taxable income less than 10 lakhs
| Details | Old regime | New regime | ||
| Salary income | ||||
| Base salary | 450,000 | 450,000 | ||
| Rent allowance (HRA) | 180,000 | 180,000 | ||
| Travel Leave Assistance (LTA) | 75,000 | 75,000 | ||
| Special allowance | 80,000 | 80,000 | ||
| Employer contribution to NPS | 45,000 | 45,000 | ||
| Additional benefits | – | – | ||
| 830,000 | 830,000 | |||
| Derogations | ||||
| HRA | – | – | ||
| LTA | – | – | ||
| Less: Standard deduction | (50,000) | – | ||
| Less: Business tax | (2,400) | 777,600 | – | 830,000 |
| Home ownership income | – | |||
| Income from other sources | ||||
| Interest on savings bank account | 10,000 | 10,000 | ||
| Interest on term deposits | 40,000 | 50,000 | 40,000 | 50,000 |
| Total gross income | 827,600 | 880,000 | ||
| Deductions under Chapter VIA | ||||
| Article 80C | (54,000) | |||
| Employee contribution to the contingency fund | 54,000 | – | ||
| Contribution to the public provident fund | – | – | ||
| LIC premium | ||||
| Tuition fees | ||||
| ELSS | ||||
| Article 80CCD | (45,000) | (45,000) | ||
| NPS – Employee Supplementary Contribution | – | |||
| NPS – Employer contribution | 45,000 | 45,000 | ||
| Article 80D – Health insurance premium | – | – | – | – |
| Article 80LTA – Interest from the savings bank | – | (10,000) | – | – |
| Pre-tax income (total taxable income) | 718,600 | 835,000 | ||
| Income tax | 56,220 | 50 250 | ||
| Less: Refund under section 87A | – | – | ||
| Total tax payable after reimbursement | 56,220 | 50 250 | ||
| Supplement @ 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 school tax | 58,470 | 52,260 | ||
| Impact on tax payable (in ??) | 6,210 |
Illustration 2 – Employee – Taxable income between ₹ 10 Lakh and ₹ 15 Lakh
| Details | Old regime | New regime | ||
| Salary income | ||||
| Base salary | 850,000 | 850,000 | ||
| Rent allowance (HRA) | 150,000 | 150,000 | ||
| Travel Leave Assistance (LTA) | 75,000 | 75,000 | ||
| Special allowance | 500,000 | 500,000 | ||
| Employer contribution to NPS | 85,000 | 85,000 | ||
| Additional benefits | – | – | ||
| 1,660,000 | 1,660,000 | |||
| Derogations | ||||
| HRA | (80,000) | – | ||
| LTA | (75,000) | – | ||
| Less: Standard deduction | (50,000) | – | ||
| Less: Business tax | (2,400) | 1,452,600 | – | 1,660,000 |
| Home ownership income | (200,000) | – | ||
| Income from other sources | ||||
| Interest on savings bank account | 30,000 | 30,000 | ||
| Interest on term deposits | 15,000 | 45,000 | 15,000 | 45,000 |
| Total gross income | 1,297,600 | 1,705,000 | ||
| Deductions under Chapter VIA | ||||
| Article 80C | (150,000) | – | ||
| Employee contribution to the contingency fund | 102,000 | – | ||
| Contribution to the public provident fund | 50,000 | – | ||
| LIC premium | ||||
| Tuition fees | ||||
| ELSS | ||||
| Article 80CCD | (135,000) | (85,000) | ||
| NPS – Employee Supplementary Contribution | 100,000 | – | ||
| NPS – Employer contribution | 85,000 | 85,000 | ||
| Article 80D – Health insurance premium | (18,000) | – | ||
| Article 80LTA – Interest from the savings bank | (10,000) | – | ||
| Pre-tax income (total taxable income) | 984,600 | 1,620,000 | ||
| Income tax | 109,420 | 223,500 | ||
| Less: Refund under section 87A | – | – | ||
| Total tax payable after reimbursement | 109,420 | 223,500 | ||
| Supplement @ 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 school tax | 113,800 | 232,440 | ||
| Impact on tax payable (in ??) | (118,640) |
Illustration 3 – Employee – Taxable income between ₹ 15 Lakh and ₹ 50 Lakh
| Details | Old regime | New regime | ||
| Salary income | ||||
| Base salary | 1,150,000 | 1,150,000 | ||
| Rent allowance (HRA) | 500,000 | 500,000 | ||
| Travel Leave Assistance (LTA) | 150,000 | 150,000 | ||
| Special allowance | 700,000 | 700,000 | ||
| Employer contribution to NPS | 115,000 | 115,000 | ||
| Additional benefits | – | – | ||
| 2,615,000 | 2,615,000 | |||
| Derogations | ||||
| HRA | (305,000) | – | ||
| LTA | (75,000) | – | ||
| Less: Standard deduction | (50,000) | – | ||
| Less: Business tax | (2,400) | 2 182 600 | – | 2,615,000 |
| Home ownership income | (200,000) | – | ||
| Income from other sources | ||||
| Interest on savings bank account | 50,000 | 50,000 | ||
| Interest on term deposits | 25,000 | 75,000 | 25,000 | 75,000 |
| Total gross income | 2,057,600 | 2,690,000 | ||
| Deductions under Chapter VIA | ||||
| Article 80C | (150,000) | – | ||
| Employee contribution to the contingency fund | 138,000 | – | ||
| Contribution to the public provident fund | 50,000 | – | ||
| LIC premium | ||||
| Tuition fees | ||||
| ELSS | ||||
| Article 80CCD | (165,000) | (115,000) | ||
| NPS – Employee Supplementary Contribution | 100,000 | – | ||
| NPS – Employer contribution | 115,000 | 115,000 | ||
| Article 80D – Health insurance premium | (18,000) | – | ||
| Article 80LTA – Interest from the savings bank | (10,000) | – | ||
| Pre-tax income (total taxable income) | 1,714,600 | 2,575,000 | ||
| Income tax | 326,880 | 510,000 | ||
| Less: Refund under section 87A | – | – | ||
| Total tax payable after reimbursement | 326,880 | 510,000 | ||
| Supplement @ 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 school tax | 339 960 | 530,400 | ||
| Impact on tax payable (in ??) | (190,440) |
These calculations are based on E&Y calculations. To try out different scenarios, download the Google Sheet from bit.ly/taxscenario
Disclaimer – This tax calculator works under certain assumptions to calculate the estimated tax payable; and may not provide accurate results in all circumstances. So your actual tax liability may be different. Readers are advised to seek appropriate professional tax advice and calculate their tax based on the applicable provisions of the Income Tax Act 1961 and Income Tax Rules 1962.
