Comparative analysis on budget 2020 for Salaried Individual

Comparative analysis on budget 2020 for Salaried Individual

Under New Tax Regime

Case I-Salaried individual those who
are not claiming any exemptions or deductions
Amount (Rs.)
Gross salary7,50,00010,00,00012,50,00015,00,00020,00,000
Rs.2,50,001-5,00,000 5%12,50012,50012,50012,50012,500
Rs.5,00,001-7,50,000 10%25,00025,00025,00025,00025,000
Rs.7,50,001-10,00,000 15%
Rs.10,00,001-12,50,0000 20%
Rs.12,50,001-15,00,000 25%
Rs.15,00,001-20,00,000 30%
Tax Payable37,50075,0001,25,0001,87,5003,37,500
Health Education Cess 4%1,5003,0005,0007,50013,500
Total Tax Payable39,00078,0001,30,0001,95,0003,37,500

Existing Tax Regime

Case I-Salaried individual those who
are not claiming any exemptions or deductions
Amount (Rs.)
Gross salary7,50,00010,00,00012,50,00015,00,00020,00,000
Rs.5,00,001-10,00,000 20%50,0001,00,0001,00,0001,00,0001,00,000
Rs.10,00,001-and above 30%
Tax Payable50,0001,00,0001,75,0002,50,0004,00,000
Health Education Cess 4%2,0004,0007,00010,00016,000
Total Tax Payable52,0001,04,0001,82,0002,60,0004,00,000
Excess Tax in new Regime(13,000)(26,000)(52,000)(65,000)(62,500)
Case II— Salaried individual
only deductions
or exemptions. under sections 80C, 80D and standard deduction
Amount (Rs.)
Gross salary7,50,00010,00,00012,50,00015,00,00020,00,000
Less: Standard Deduction50,00050,00050,00050,00050,000
Total Income7,00,0009,50,00012,00,00014,50,00019,50,000
Less: 80C1,50,0001,50,0001,50,0001,50,0001,50,000
Net Total Income5,25,0007,75,00010,25,00012,75,00017,75,000
Tax on Total Income5,00055,0001,07,5001,82,5003,32,500
Health Education Cess 4%2002,2004,3007,30013,300
Total Tax Payable5,20057,2001,11,8001,89,8003,45,800
Excess Tax in new Regime33,80020,80018,2005,200(8,300)
Case III- Salaried individual
claiming more exemptions/deduction, i.e. under sections 80C, 80D,
standard deduction and HRA exemption
Amount (Rs.)
Gross salary7,50,00010,00,00012,50,00015,00,00020,00,000
Less: HRA1,50,0002,00,0002,50,0003,00,0003,50,000
Less: Standard Deduction50,00050,00050,00050,00050,000
Total Income5,50,0007,50,0009,50,00011,50,00016,00,000
Less: 80C1,50,0001,50,0001,50,0001,50,0001,50,000
Net Total Income3,75,0005,75,0007,75,0009,75,00014,25,000
Tax on Total Income15,00055,00095,0002,27,500
Health Education Cess 4%6002,2003,8009,100
Total Tax Payable15,60057,20098,8002,36,600
Excess Tax in new Regime39,00062,40072,80096,2001,00,900

Note: If the salaried employee is claiming deductions under
section 80C, 80D (medical premium), HRA exemption, LTA exemption and deduction
of interest paid on housing loan taken for self occupied property up to
permissible limits, he is is likely to be better off in the existing personal
tax regime. A high earner claiming only these deductions is likely to save tax
under the new regime but lower income earners up to gross salary of Rs 12.5 lakh
will end up paying more tax.To see if the new regime is beneficial, each
individual will have to make their own comparative calculations. It will depend
the level of deductions and exemptions you are claiming at the moment.

This new tax regime is the option to those people who are unable to avail
exemptions or deductions. Those who are new in job ,one who has not yet planned
to buy a house, he might be putting little money in PF (provident fund) and
insurance. He may find that, depending on his income, this new scheme is better.

A person can freely opt in scheme and opt out of the scheme. The tax Rates will
be applicable as per the Option exercised at the time of filing of Return every
year. Income Tax Return has to be filed by Due Date. If ITR is late, then Tax
payable at Normal rate.

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