Income tax dept launches e-calculator to compare new & old tax slabs

February 7: While presenting the Union Budget, 2020, Finance Minister Nirmala Sitharaman introduced new tax slabs. However, to pay tax under the new lower personal income tax regime, people will have to forgo almost all tax breaks they were claiming in the current tax structure. Essentially, individual tax payers have now have the choice to choose between the two tax regimes depending on their requirements.

If all this has got you confused, here’s a very simple income tax calculator that will tell you whether the old tax regime will benefit you or if the new tax regime is better. The Income-Tax Department has launched an e-calculator for individuals to estimate their tax liability if they opt for the new tax slabs, without claiming deductions and exemptions.

This income tax calculator has been launched by the government itself, so it’s as official as it gets. The calculator, with a comparative table to compare taxes in the old and the new tax regime, for resident individuals (financial year 2020-21) has been hosted on the official e-filing website of the department.

In the new personal income tax regime, as proposed by Union Finance Minister Nirmala Sitharaman in her Budget speech on 1 February, 2000, Tax of only 10 percent will be charged to Rs 5 lakh-7.5 lakh income as against prevailing 20 percent rate. For those with income of Rs 7.5 lakh-10 lakh, a tax rate of 15 percent against 20 percent prevailing rate was announced. For income Rs 10-12.5 lakh, a rate of 20 percent will be charged as against 30 percent earlier. For income between Rs 12.5 lakh-15 lakh will be taxed at 25 percent as against 30 percent. For those at Rs 15 lakh plus income, tax will be 30 percent. No income tax will be charged for income upto Rs. 5 lakh.

Income Tax Calculator 2020: New Tax Regime Vs Existing Tax Regime: 

1. Open the Income Tax India E-Filing website’s tax calculator 2020.
2. Enter your Estimated Annual Income.
3. Fill in all your estimated deductions in the field labelled ‘Less: Exemptions/ Deductions’. Add all of your expected reimbursements, insurance payments, EPF deductions, house rent allowance, etc.
4. Click ‘Compare Tax under Existing & New Regime’.
   So, tax payers need not be confused anymore. With the help of this easy to use calculator, now you can either opt in to the new tax regime and stop claiming any deductions to taxable income, or you can continue to pay as per the existing tax slab with several deductions. Budget 2020 is applicable to the financial year that begins on 1 April, 2020 and ends on 31 March, 2021, so you should input your income based on what you expect to earn during that time.

Also Read: What will one lose if he/she opt for new tax rate… click to know