Income Tax Calculator FY 2020-21
Calculate your income tax liability for Financial Year 2020-21 (Assessment Year 2021-22) under both old and new tax regimes
Comprehensive Guide to Income Tax Calculator for FY 2020-21 (AY 2021-22)
The Financial Year 2020-21 (Assessment Year 2021-22) introduced significant changes to India’s income tax structure with the introduction of a new optional tax regime alongside the existing old regime. This comprehensive guide will help you understand both tax regimes, calculate your tax liability accurately, and make informed decisions about which regime suits you better.
Understanding the Two Tax Regimes for FY 2020-21
For FY 2020-21, taxpayers had the option to choose between:
- Old Tax Regime: Continues with existing tax slabs and allows various deductions and exemptions under Sections 80C, 80D, HRA, etc.
- New Tax Regime: Introduces lower tax rates but removes most deductions and exemptions (except standard deduction of ₹50,000)
Key Differences Between Old and New Regime
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
| Tax Slabs | 3 slabs (5%, 20%, 30%) | 6 slabs (0%, 5%, 10%, 15%, 20%, 25%, 30%) |
| Standard Deduction | ₹50,000 | ₹50,000 |
| Section 80C Deductions | Allowed (₹1.5 lakh) | Not allowed |
| HRA Exemption | Allowed | Not allowed |
| Home Loan Interest | Allowed (₹2 lakh) | Not allowed |
| Medical Insurance (80D) | Allowed (₹25,000-₹50,000) | Not allowed |
| Rebate under 87A | ₹12,500 (Income ≤ ₹5 lakh) | Full tax rebate (Income ≤ ₹5 lakh) |
Income Tax Slabs for FY 2020-21
Old Tax Regime Slabs (With Deductions)
| Income Range (₹) | Below 60 years | 60-80 years | Above 80 years |
|---|---|---|---|
| Up to 2,50,000 | Nil | Nil | Nil |
| 2,50,001 – 5,00,000 | 5% | 5% | Nil |
| 5,00,001 – 10,00,000 | 20% | 20% | 20% |
| Above 10,00,000 | 30% | 30% | 30% |
New Tax Regime Slabs (Lower Rates, No Deductions)
| Income Range (₹) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 7,50,000 | 10% |
| 7,50,001 – 10,00,000 | 15% |
| 10,00,001 – 12,50,000 | 20% |
| 12,50,001 – 15,00,000 | 25% |
| Above 15,00,000 | 30% |
How to Calculate Your Income Tax for FY 2020-21
Calculating your income tax involves several steps. Here’s a step-by-step guide:
- Determine Your Gross Total Income: Sum up all your income from salary, house property, business/profession, capital gains, and other sources.
- Claim Deductions (Old Regime Only):
- Standard deduction of ₹50,000
- Section 80C investments (PPF, ELSS, NSC, etc.) up to ₹1.5 lakh
- Section 80D for medical insurance premiums
- HRA exemption (if applicable)
- Home loan interest under Section 24
- Calculate Taxable Income: Gross Total Income minus deductions/exemptions
- Apply Tax Slabs: Use the appropriate tax slabs based on your age and chosen regime
- Add Surcharge (if applicable):
- 10% surcharge if income > ₹50 lakh
- 15% surcharge if income > ₹1 crore
- 25% surcharge if income > ₹2 crore
- 37% surcharge if income > ₹5 crore
- Add Health & Education Cess: 4% of (Income Tax + Surcharge)
- Apply Rebate (if eligible): Under Section 87A, full rebate if income ≤ ₹5 lakh (new regime) or tax ≤ ₹12,500 (old regime)
Common Deductions and Exemptions Available in FY 2020-21
Section 80C Deductions (Old Regime Only)
Maximum deduction of ₹1.5 lakh available for:
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF)
- Equity Linked Savings Scheme (ELSS)
- National Savings Certificate (NSC)
- Life Insurance Premiums
- Home Loan Principal Repayment
- Tuition Fees for children
- Sukanya Samriddhi Yojana
House Rent Allowance (HRA) Exemption
The least of the following is exempt:
- Actual HRA received
- 50% of salary (metro cities) or 40% (non-metro)
- Rent paid minus 10% of salary
Section 80D – Medical Insurance Premium
Deduction available for:
- ₹25,000 for self, spouse and children
- Additional ₹25,000 for parents (₹50,000 if parents are senior citizens)
- ₹5,000 for preventive health check-up
Home Loan Interest Deduction (Section 24)
Maximum deduction of ₹2 lakh for interest on home loan for self-occupied property. For let-out property, entire interest is deductible without any limit.
When to Choose the New Tax Regime?
The new tax regime might be beneficial if:
- Your total deductions and exemptions are less than ₹2.5 lakh
- You don’t have significant investments under Section 80C
- You don’t claim HRA exemption
- Your income is below ₹15 lakh (where new regime rates are significantly lower)
- You prefer simpler tax filing without tracking various deductions
However, the old regime might be better if:
- You have significant investments (₹1.5 lakh+ in 80C)
- You claim HRA exemption (especially in high-rent cities)
- You have home loan with substantial interest payment
- You have medical insurance premiums for family
- Your income is above ₹15 lakh (where old regime rates become competitive)
Surcharge and Cess Calculations
For incomes above certain thresholds, additional surcharge is applicable:
| Income Range (₹) | Surcharge Rate |
|---|---|
| Above 50,00,000 | 10% |
| Above 1,00,00,000 | 15% |
| Above 2,00,00,000 | 25% |
| Above 5,00,00,000 | 37% |
Note: The surcharge is calculated on the income tax amount (before cess).
After calculating the income tax and surcharge, a Health & Education Cess of 4% is added to the total.
Rebate Under Section 87A
Section 87A provides tax rebate to resident individuals with income below certain limits:
- Old Regime: Full rebate if tax payable ≤ ₹12,500 (effectively for income up to ₹5 lakh)
- New Regime: Full rebate if income ≤ ₹5 lakh (no tax payable)
This means individuals with income up to ₹5 lakh don’t pay any tax in either regime.
Capital Gains Tax in FY 2020-21
Capital gains tax remains the same in both regimes:
Short-Term Capital Gains (STCG)
- Equity shares/MF: 15% if STT paid
- Other assets: Added to income and taxed at slab rates
Long-Term Capital Gains (LTCG)
- Equity shares/MF: 10% on gains > ₹1 lakh (without indexation)
- Other assets: 20% with indexation
Frequently Asked Questions
Can I switch between regimes every year?
For FY 2020-21, you could choose the regime every year. However, from FY 2023-24 onwards, the option to switch annually has been restricted for certain taxpayers.
Is the new regime mandatory?
No, the new regime is completely optional. You can continue with the old regime if it’s more beneficial for you.
Can I claim both HRA and home loan benefits?
Yes, you can claim both if you’re living in a rented house (not the one for which you’ve taken the home loan) and have proper documentation.
What is the last date for filing ITR for FY 2020-21?
The original due date was 31st July 2021, but it was extended to 31st December 2021 for most taxpayers.
Expert Tips to Save Tax in FY 2020-21
- Compare Both Regimes: Use our calculator to compare tax liability under both regimes before making a decision.
- Maximize 80C Investments: If opting for old regime, fully utilize the ₹1.5 lakh limit with tax-saving instruments.
- Optimize HRA: If you pay rent, ensure you claim HRA exemption with proper rent receipts.
- Medical Insurance: Buy health insurance for family and parents to claim Section 80D benefits.
- Home Loan Planning: If you have a home loan, the interest component can significantly reduce your taxable income.
- Capital Gains Planning: Time your investments to optimize between STCG and LTCG tax rates.
- Donations: Donations to approved funds/charities (Section 80G) can provide additional deductions.
- NPS Contributions: Additional ₹50,000 deduction under Section 80CCD(1B).
Important Changes from Previous Years
FY 2020-21 introduced several important changes:
- New Tax Regime Option: The biggest change was the introduction of the optional new tax regime with lower rates but fewer deductions.
- Dividend Taxation: Dividends became taxable in the hands of recipients at applicable slab rates (previously companies paid DDT).
- ESOP Taxation: Deferred taxation for ESOPs of eligible startups.
- Affordable Housing: Additional deduction of ₹1.5 lakh on home loans for affordable housing (extended to March 2022).
- NPS Withdrawal: Partial withdrawal from NPS made tax-free up to 25% of contributions.
Authoritative Resources
For official information and updates, refer to these authoritative sources:
- Income Tax Department – Government of India
- Department of Revenue – Ministry of Finance
- Reserve Bank of India – Economic Data
Conclusion
The introduction of the new tax regime in FY 2020-21 provided taxpayers with more flexibility but also added complexity to tax planning. The choice between old and new regimes depends on your income level, investment pattern, and ability to claim various deductions.
For most salaried individuals with significant investments in tax-saving instruments and those claiming HRA, the old regime continues to be more beneficial. However, the new regime can be advantageous for those with lower deductions or simpler financial situations.
We recommend using our income tax calculator to compare both regimes with your specific financial details. For complex situations, consider consulting a tax professional to optimize your tax liability.
Remember that tax planning should be done throughout the year, not just at the end of the financial year. Proper planning can help you legally minimize your tax outgo while building wealth through smart investments.