Update: Easy Tax by Alrahiman is updated to Version 21.04. (Date 28-01-2021) There was an error in calculation of New Regime, whose total income is above 10 Lakhs. Such people please download new version and use import data from old version option in the software to update without losing data already entered
The Income Tax software tools for 2020-21 is to be released. Not like previous years, it can
be calculated in two different schemes and the suitable one can be selected this time. Hence
the software was with a few difficulties, it has been done with utmost care and correctness of
the calculations be examined and if any mistakes are noticed it be emailed.
The major changes
in the income tax in the financial budget presented by the Honorable Minister Smt Nirmala
Sitaraman are also considered in the software preparation.
There is no change in the rate of income tax of the previous year where as a new scheme called
New Regime was also presented.
As it is optional, those willing to change to this new scheme
can do so or they can follow the scheme of the previous years.
Old Regime
In the old scheme, there were different Tax slab for groups such as super senior citizen senior
citizen and an ordinary citizen. As per this scheme, taxable income (total income) is calculated
after various deduction from income and tax will be according to this. Here, there was chance
for tax deduction by focusing on the deposits and such.
Category
|
Taxable Income
|
Tax Rate
|
| Till the age of 60 | Taxable upto Rs.2.5 lakh | Nil |
| Above Rs 2.5 lakh to 5 lakh | 5% |
| Upto Rs.10 lakh | 20% |
| Above Rs.10 lakh | 30% |
| From the age of 60 | Taxable upto Rs.3 lakh | Nil |
| Above Rs 3 lakh to 5 lakh | 5% |
| Upto Rs.10 lakh | 20% |
| Above Rs.10 lakh | 30% |
| From the age of 80 | Taxable upto Rs.5 lakh | Nil |
| Above Rs 5 lakh to 10 lakh | 20% |
| Above Rs.10 lakh | 30% |
New Regime
The tax is calculated in the new scheme by classifying the income limits into 7 slabs each one
is that of Rs 2.5 lakh compared to the old scheme. Though the tax rate is lesser here, the
peculiarity of this scheme is that no deductions from the total income are not allowed here. The
deductions under professional tax, Entertainment allowance, HRA, Standard deduction, NPS
contribution Housing loan deductions, 80 C chapter VI A are not allowed here and the gross
income is the taxable income here.
If the taxable income is below 5 lakh, Rs 12,500/ as per
section 87(A) of old scheme is permitted here too and there is no such classification as ordinary
citizen, senior citizen and super senior citizen. A single tax rate slab only is there considering all
are equal.
Category
|
Taxable Income
|
Tax Rate
|
| New Income Tax Slab & Rate | Taxable upto Rs.2.5 lakh | Nil |
| Above Rs 2.5 lakh to 5 lakh | 5% |
| Above Rs.5 lakh to 7.5 lakh | 10% |
| Above Rs.7.5 lakh to 10 lakh | 15% |
| Above Rs.10 lakh to 12.5 lakh | 20% |
| Above Rs.12.5 lakh to 15 lakh | 25% |
| Above Rs.15 lakh | 30% |
Housing loan and New tax system
In the scheme that was followed in the previous years, the amount remitted towards principal
amount of the housing loan was considered to be deduction in 80 C up to an amount of rupees
one and half lakh and up to Rs 2 lakh towards interest as deduction in income from house
property whereas these two deductions are not available in the new scheme. Moreover, the
rent received from house that was let should be given as income, in income from House
property.
The advantage of the new scheme here is that the interest for the housing loan can be
reduced from this income and the maximum amount that can be deducted is limited to, in the
income from rent as such things can't be allowed to be deducted from other income. A
deduction of upto Rs 2 lakh was available in this in the old scheme.
Which is better?
For the question which scheme is better, a sudden and single answer is not possible. It may
vary and depend upon the individual's deduction scheme The fact is that, for those who have
availed of the deductions possibilities to the maximum, following the old scheme would be
better. Anyway, you need not think over this much. This job would be done by the software.
The software is prepared in such a way that both scheme statements can be
generated from a common single entry. Once the details are entered, two statements, Old
Regime and New Regime can be opened. The statement with lesser Tax amount can be printed
out and submitted in the office.
