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 salary | 7,50,000 | 10,00,000 | 12,50,000 | 15,00,000 | 20,00,000 |
| Tax | |||||
| Rs.2,50,001-5,00,000 5% | 12,500 | 12,500 | 12,500 | 12,500 | 12,500 |
| Rs.5,00,001-7,50,000 10% | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 |
| 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 Payable | 37,500 | 75,000 | 1,25,000 | 1,87,500 | 3,37,500 |
| Health Education Cess 4% | 1,500 | 3,000 | 5,000 | 7,500 | 13,500 |
| Total Tax Payable | 39,000 | 78,000 | 1,30,000 | 1,95,000 | 3,37,500 |
Existing Tax Regime
| Case I-Salaried individual those who are not claiming any exemptions or deductions | Amount (Rs.) | ||||
| Gross salary | 7,50,000 | 10,00,000 | 12,50,000 | 15,00,000 | 20,00,000 |
| Tax | |||||
| Rs.5,00,001-10,00,000 20% | 50,000 | 1,00,000 | 1,00,000 | 1,00,000 | 1,00,000 |
| Rs.10,00,001-and above 30% | |||||
| Tax Payable | 50,000 | 1,00,000 | 1,75,000 | 2,50,000 | 4,00,000 |
| Health Education Cess 4% | 2,000 | 4,000 | 7,000 | 10,000 | 16,000 |
| Total Tax Payable | 52,000 | 1,04,000 | 1,82,000 | 2,60,000 | 4,00,000 |
| Excess Tax in new Regime | (13,000) | (26,000) | (52,000) | (65,000) | (62,500) |
| Case II— Salaried individual claiming only deductions or exemptions. under sections 80C, 80D and standard deduction | Amount (Rs.) | ||||
| Gross salary | 7,50,000 | 10,00,000 | 12,50,000 | 15,00,000 | 20,00,000 |
| Less: Standard Deduction | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |
| Total Income | 7,00,000 | 9,50,000 | 12,00,000 | 14,50,000 | 19,50,000 |
| Less: 80C | 1,50,000 | 1,50,000 | 1,50,000 | 1,50,000 | 1,50,000 |
| 80D | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 |
| Net Total Income | 5,25,000 | 7,75,000 | 10,25,000 | 12,75,000 | 17,75,000 |
| Tax on Total Income | 5,000 | 55,000 | 1,07,500 | 1,82,500 | 3,32,500 |
| Health Education Cess 4% | 200 | 2,200 | 4,300 | 7,300 | 13,300 |
| Total Tax Payable | 5,200 | 57,200 | 1,11,800 | 1,89,800 | 3,45,800 |
| Excess Tax in new Regime | 33,800 | 20,800 | 18,200 | 5,200 | (8,300) |
| Case III- Salaried individual claiming more exemptions/deduction, i.e. under sections 80C, 80D, standard deduction and HRA exemption | Amount (Rs.) | ||||
| Gross salary | 7,50,000 | 10,00,000 | 12,50,000 | 15,00,000 | 20,00,000 |
| Less: HRA | 1,50,000 | 2,00,000 | 2,50,000 | 3,00,000 | 3,50,000 |
| Less: Standard Deduction | 50,000 | 50,000 | 50,000 | 50,000 | 50,000 |
| Total Income | 5,50,000 | 7,50,000 | 9,50,000 | 11,50,000 | 16,00,000 |
| Less: 80C | 1,50,000 | 1,50,000 | 1,50,000 | 1,50,000 | 1,50,000 |
| 80D | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 |
| Net Total Income | 3,75,000 | 5,75,000 | 7,75,000 | 9,75,000 | 14,25,000 |
| Tax on Total Income | – | 15,000 | 55,000 | 95,000 | 2,27,500 |
| Health Education Cess 4% | – | 600 | 2,200 | 3,800 | 9,100 |
| Total Tax Payable | – | 15,600 | 57,200 | 98,800 | 2,36,600 |
| Excess Tax in new Regime | 39,000 | 62,400 | 72,800 | 96,200 | 1,00,900 |
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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