New Income Tax Slabs for Assessment Year 2021-22 are announced in the Finance Bill 2020 on the month of 1st February, with the following features:

  • The Tax Slabs are simplified and completely optional for individuals and HUFs who are earning in India to select it as their Income Tax calculation parameter. Anyone, who wishes to continue with the existing (old) Tax Slabs are permitted for it.
  • Individuals/HUFs having no business income can choose between old and new regime tax slab every year. For those, who are having business income get one time chance to choose their option. Once done, they are to follow the rule every year, unless they cease this source of income.
  • The new tax slab disallows 70 tax exemptions and deductions, such as, Leave Travel concession, Standard Deduction, HRA, School Fees, Deductions of 80C/80D, Allowances of MPs/MLAs, and others that were exercised with the tax slabs of old regime. Deductions employer?s contribution to NPS u/s 80CCD(2) and section 80JJAA for new employment are allowed.

New Regime for Individual and HUF Income Tax Slab Rates for AY 2021-22 (FY 2020-2021)

Income Tax Rate
Up to 2.50 lakh Nil
2.50 lakh to 5.00 lakh 5% of the amount exceeding 2.50 lakh
5.00 lakh to 7.50 lakh Rs.12,500 + 10% of the amount exceeding 5.00 lakh
7.50 lakh to 10.00 lakh Rs.37,500 + 15% of the amount exceeding 7.50 lakh
10.00 lakh to 12.50 lakh Rs.75,000 + 20% of the amount exceeding 10.00 lakh
12.50 lakh to 15.00 lakh Rs.12.5 lakh + 25% of the amount exceeding 12.50 lakh
15.00 lakh & above Rs.1,87,500 + 30% of the amount exceeding 15.00 lakh
  • 4% Health and Education Cess is applicable on all the above taxes.
  • Rebate of Rs. 12,500 u/s 87A is applicable for tax slabs of both old and new regimes, for taxes on annual income not exceeding Rs. 5.00 lakh.

Surcharges on New Regime Income Tax of AY 2021-22

Additional surcharges are levied for super rich with income as given below:

Income Surcharge
Total income including STCG u/s 111A and LTCG u/s 112A more than Rs.50 lakh but not exceeding Rs.1 crore 10%
Total income including STCG u/s 111A and LTCG u/s 112A more than Rs.1 crore but not exceeding Rs.2 crore 15%
Total income excluding STCG u/s 111A and LTCG u/s 112A more than Rs.2 crore but not exceeding Rs.5 crore 25%
Total income excluding STCG u/s 111A and LTCG u/s 112A more than Rs.5 crore 37%

Tax rates for domestic companies

Income Surcharge
Company opting for section 115BA 25%
Company having turnover or gross receipt of up to Rs. 400 crore in the previous year 2017-18 30%
Company opting for section 115BAA 22%
Company opting for section 115BAB 15%
Any other company 30%
MAT 15%
Foreign company 40%

Surcharges on New Regime Income Tax of AY 2021-22

Additional surcharges are levied for Net income is between Rs. 1Cr. ? 10 Cr. as given below:

Income Surcharge
Domestic company 7%
Foreign company 2%

Additional surcharges are levied for Net income is exceeds Rs. 10Cr.. as given below:

Income Surcharge
Domestic company 12%
Foreign company 5%