Budget 2021: No Tweak In Personal Income Tax For FY 2021-22
In her budget speech, Sitharaman said that the tax system should put minimum burden on the taxpayers. And there has been made no overhaul in tax rates for FY 2021-22. Earlier tax experts and professional bodies recommended the government to increase 80C deduction limit.
Also, there has been no Covid 19 cess introduced as was being feared by the markets to cover up the cost of Covid 19 vaccination drive.So, the existing tax slab and rate for the new tax regime and old one would continue.
In the previous Budget, Finance Minister Sitharaman came up with a new tax regime that offered taxpayers a choice to pay tax under the new structure at lower rates but forego deductions or pay tax as per the current tax laws and claim available deductions and exemptions.
Income tax Slabs for FY 2021-22 as per the new tax regime introduced last year
| Income slab | Tax rate |
|---|---|
| Income up to Rs. 2.5 lakh | Tax exempt |
| Rs. 2.5 lakh- Rs. 5 lakh | 5% |
| Rs. 5 lakh- Rs. 7.5 lakh | 10% |
| Rs. 7.5 lakh- Rs. 10 lakh | 15% |
| Rs. 10 lakh- Rs. 12.5 lakh | 20% |
| Rs. 12.5 lakh- Rs. 15 lakh | 25% |
| Rs. 15 lakh and above | 30% |
The new tax regime did not allowed deductions under Section 80C. Other exemptions such as home loan, insurance and standard deductions are also not offered as part the new regime.
Tax slabs as per the old tax regime:
| Income slab | Tax rate |
|---|---|
| Income up to Rs. 2.5 lakh | Nil |
| Rs. 2.5 lakh- Rs. 5 lakh | 5% (Rebate under section 87A of Rs. 12500) |
| Rs. 5 lakh- Rs. 10 lakh | 20% |
| Rs. 10 lakh and above | 30% |
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