Effective from FY 2020-21, an individual has the option to continue with the existing/old income tax regime and avail existing tax deductions and exemptions, or choose the new tax regime and forgo 70 tax deductions and exemptions such as sections 80C, 80D, tax exemption on HRA, LTA etc.
Further, individuals who do not have business incomes (i.e., salaried individuals) will be required to choose between the two tax regimes every financial year. Individuals having business income, too, can
too, can opt for the new tax regime. However, once opted, they can switch to the old tax regime only once in their lifetime.
Thus, if you are planning to opt for the new tax regime in the current FY 2021-22, then it is important to know the income tax slabs and rates in the new tax regime and how to calculate your income tax liability.
Surcharge is levied on incomes above Rs 50 lakh. Health and Education cess at the rate of 4 per cent will be added to the income tax liability in all cases. Individuals having taxable income of up to Rs 5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.