Quick Answer: Which Tax Regime Is Better For 20 Lakhs?

What is the maximum limit of tax free personal income?

2.5 lakhThe income tax exemption limit for all citizens below 60 years still remains at Rs 2.5 lakh and for senior citizens Rs 3 lakh.

Therefore, if you are earning anything above these exemption limits annually then you are mandatorily required to file your ITR..

Which income tax regime is better?

If your tax-saving investments/deductions are Rs 2 lakh, the New Regime will be beneficial for you for income above Rs 12,25,000. The New Regime would be beneficial only up to income level of Rs 15 lakh, if you fail to match the tax-saving investments/deductions up to Rs 2.5 lakh.

How can I save tax on 20 lakhs?

Tax DeductionsSection 80C Exemption – 1,50,000.NPS 80CCD(1B) Tax Exemption – 50,000.Medical Insurance (Self & Parents) – 60,000.Interest on Education Loan – 50,000.

How do I choose a tax regime?

If you opt for the new tax regime for the purpose of TDS from salary but switch to old regime when filing ITR then you may be unable to claim certain tax exemptions which are otherwise allowed in the old regime. These tax exemptions are: tax benefits on food coupons and tax exemption on leave travel allowance (LTA).

What income is tax free?

As per the current income tax slabs, taxation of income of resident individuals below 60 years is as follows: Income up to Rs 2.5 lakh is exempt from tax, 5 per cent tax on income between Rs 250,001 to Rs 5 lakh; 20 per cent tax on income between Rs 500,001 and Rs 10 lakh; and 30 per cent tax on income above Rs 10 lakh …

How much tax do I pay on 15 lakhs?

As per the new tax slabs, individuals earning Rs 5 lakh to Rs 7.5 lakh will be taxed at 10 per cent and those from Rs 7.5 lakh to Rs 10 lakh would be levied 15 per cent. Those earning above Rs 15 lakh would need to pay 30 per cent tax.

Is new tax regime mandatory?

A new optional tax regime was announced by the government in the Finance Act, 2020. … Under the newly inserted section 115BAC of the Income-tax Act, 1961, an individual is required to exercise the option of choosing new tax regime at the time of filing income tax return.

What is the new tax regime 2020?

The Budget 2020 introduces a new regime under section 115BAC giving an option to individuals and HUF taxpayers to pay income tax at lower rates. The new system is applicable for income earned from 1 April 2020 (FY 2020-21), which relates to AY 2021-22.

What tax will I pay on 20 lakhs?

Income between Rs 10 lakh and Rs 12.5 lakh will be taxed at 20 per cent. Income earning between Rs 12.5 lakh and Rs 15 lakh will be taxed at 25 per cent….New Income Tax Slabs 2020-21 (Optional)Rs 7.5 to 10 lakh15%20%Rs 10 lakh to Rs 12.5 lakh20%30%Rs 12.5 lakh to Rs 15 lakh25%30%Above Rs 15 lakh30%30%3 more rows•Feb 1, 2020

What deductions are not allowed in new tax regime?

The important tax breaks that will not be available under the new tax regime include Section 80C (Investments in PF, NPS, Life insurance premium, home loan principal repayment etc.), Section 80D (medical insurance premium), tax breaks on HRA (House Rent Allowance) and on interest paid on housing loan.

Is new tax regime better or old?

The pros of the new regime are as follows: Reduced tax rates and compliance: The new regime provides for concessional tax rates vis-à-vis tax rates in the existing or old regime. Further, as most of the exemptions and deductions are not available, the documentation required is lesser and tax filing is simpler.

Is NPS exempted in new tax regime?

The tax break on contribution to National Pension System (NPS) made by the employer is still available under the new tax regime. The tax-benefit is available under section 80CCD (2). Further, Budget 2020 has proposed a monetary limit on the tax-exempt contribution from the employer to NPS account.

What income is not taxable in India?

Taxpayers and Income Tax SlabsIncome RangeTax rateTax to be paidUp to Rs.2,50,0000No taxBetween Rs 2.5 lakhs and Rs 5 lakhs5%5% of your taxable incomeBetween Rs 5 lakhs and Rs 10 lakhs20%Rs 12,500+ 20% of income above Rs 5 lakhsAbove 10 lakhs30%Rs 1,12,500+ 30% of income above Rs 10 lakhsJan 7, 2021

Is 20 LPA a good salary?

But 20 LPA is decent salary in India. Only problem can be in Mumbai if you do not have accomdation and have a family to look after . Rents are high and you will need to live far away in subarb . 20 LPA earning is great in India it’s equipment to earning 100000 dollars in San Francisco USA.

How can I save my tax in 2020 21?

Let’s dive in!Ways to save on your income taxes. … Contribute to the National Pension System (NPS) … Get deduction on interest paid on your home loan. … Secure some amount for future. … National Saving Certificate. … Pay for health insurance. … Contribute a bit into charitable institutions. … Public Provident Fund (PPF)

Can I change tax regime every year?

As per budget proposals, an individual has an option to switch between new and old tax regime every year. In order to be eligible to opt for the tax structure as per an individual’s convenience, there is one condition that must be satisfied.

What is taxable income for ladies?

As announced in the 2019 Union Budget, women taxpayers in India with a total income of up to Rs. 5 Lakh can avail a rebate of up to Rs. 12,500 on their taxes. Thus, those with a total tax payable below Rs. 12,500 will be exempt from tax payment for FY 2019-20.

How can I save tax if I earn 15 lakh?

If you invest up to 1.5 lakh: If you have invested in Public Provident Fund, Employees Provident Fund, Sukanya Samriddhi Scheme, life insurance or health insurance premium, tax-saving fixed deposits from banks or post offices or any other provisions that allow tax exemption to the tune of Rs 1.5 lakh, you would still …