Income | Tax Rate |
From Rs. 0 to Rs. 2,50,000 | 0% |
From Rs. 2,50,001 to Rs. 5,00,000 | 5% |
From Rs. 5,00,001 to Rs. 10,00,000 | 20% |
Above Rs. 10,00,000 | 30% |
Income |
Tax Rate |
From Rs. 0 to Rs. 3,00,000 |
0% |
From Rs. 3,00,001 to Rs. 5,00,000 |
5% |
From Rs. 5,00,001 to Rs. 10,00,000 |
20% |
Above Rs. 10,00,000 |
30% |
Income | Tax Rate |
From Rs. 0 to Rs. 5,00,000 | 0% |
From Rs. 5,00,001 to Rs. 10,00,000 | 20% |
Above Rs. 10,00,000 | 30% |
Net Taxable Income | Surcharge |
Less than Rs. 50 Lakhs | 0% of Income tax |
From Rs. 50 Lakhs to Rs. 1 Crore | 10% of Income tax |
From Rs. 1 Crore to Rs. 2 Crore | 15% of Income tax |
From Rs. 2 Crore to Rs. 5 Crore | 25% of Income tax |
Above Rs. 5 Crore | 37% of Income tax |
Tax relief under Section 89 is available on both old and new tax systems. As you know, the income tax is calculated on the total income earned during the financial year. Sometimes, you may receive the past dues (known as salary arrears) in the current financial year and it may increase the income tax you need to pay. For example, you may receive Rs. 1 lakh as salary arrears in the FY 2021-22 whereas those arrears should have been paid to you in the FY 2015-16.
This delay in receiving the payment may increase the tax you pay because of
So, to save from the burden of paying additional tax due to the delay in receiving the salary arrears, the Government allows an option called tax relief under Section 89. As per this section, any extra tax that has been paid due to the salary arrears, can be reduced subject to conditions.
Even though the new tax system doesn’t allow most of the exemptions and deductions, it still allows very few exemptions and deductions. They are given below.
Available Exemptions:
Available Deductions:
To calculate income tax, we need the following details.
Income from Salary should be considered for both old and new tax systems. Any amount that you receive from your Employer as a part of your salary or in addition to your salary will fall under this category. Various components of the Salary are given below:
The income tax benefits of “income from property” will depend upon whether you choose the old tax system or new tax system. Before jumping into the benefits of old and new tax systems, first let us see some details related to income from property.
Any income that you receive by renting out your property will fall under this category. The income from the property can be positive (gain) or negative (loss).
Gain:If the rent received is more than the expenses you paid to maintain the property, then it is a gain. Example: In a financial year, if the rent received is Rs. 60,000 and the expenses you incurred is Rs. 50,000, then you get a gain of Rs. 10,000.
Loss:If the rent received is lesser than the expenses you paid to maintain the property, then it is a loss. Example: In a financial year, if the rent received is Rs. 60,000 and the expenses you incurred is Rs. 1 Lakh, then you incur a loss of Rs. 40,000.
To calculate the income from the rental property, we need the following details.
There is no limit on the gain amount that can be shown under this category. You have to show the entire gain. But, there is a limit on the loss amount that can be shown under this category. The limit is Rs. 2 Lakhs for the financial year.
If you incur a loss from the property and the loss amount is more than Rs. 2 Lakhs, then any amount above Rs. 2 Lakhs will need to be carried forward for the next 8 financial years. Example: If you incur a loss of Rs. 4 Lakhs, then you can show only Rs. 2 Lakhs as “loss” under this category for the current financial year.
The remaining loss of Rs. 2 Lakh amount can be shown in the next financial year or during the next 8 financial years.
There is no limit on the gain amount that can be shown under this category. You have to show the entire gain. New tax system doesn’t allow any loss amount to be included. Also, it doesn’t allow the “loss” amount to be carried forward for the next financial year.
Income from Capital Gains should be considered for both old and new tax systems. Any income that you receive by selling your capital asset will fall under this category.
Examples of capital assets are given below.
The income that you receive by selling the capital asset can be positive (gain) or negative (loss). Depending upon the holding period of the capital asset, the gain or loss can be categorised as below.
Depending upon the capital asset, the tax charged on the capital gain will fall under one of the following categories.
Children education allowance exemption is available only in the old tax system. It is not available in the new tax system. If you receive Children Education Allowance from your salary, then you can claim this exemption for a maximum of 2 children.
The additional deduction benefits for investing Atal Pension Scheme are given below. This deduction is available only in the old tax system. It is not available in the new tax system. An additional tax deduction benefit of up to Rs. 50,000 is available every financial year under section 80CCD (1B) for APS investments.
This is in addition to Rs. 1.5 Lakhs deductions available under Section 80C.
The deductions available under various other sections are listed below.
The details of each deduction are given below
1) Medical Insurance Premium Paid for Family:
Medical insurance premium amount paid for the family can be deducted under this section. Family includes self, spouse and dependent children.
2) Medical Insurance Premium Paid for Parents:
Medical insurance premium amount paid for parents can be deducted under this section. Note this includes parents only. Parent-in-laws are not included. Parents may or may not be dependent.
3) Preventive Health Checkup Cost:
Preventive health checkup is carried out to identify any diseases and take appropriate measures to prevent it. Amount spent towards preventive health checkup of family members is allowed for deduction. A maximum deduction of Rs. 5,000 for the whole family is allowed. Family includes self, spouse, dependent children and parents. Parents may or may not be dependent. Preventive health checkup cost is inclusive of the above mentioned limits (not over and above).
One should produce the Medical Certificate provided by the concerned Medical Authority certifying the disability of your dependent.
Section 80DDB deduction is available only in the old tax system. It is not available in the new tax system. You can claim a deduction for the treatment of critical diseases. The treatment can be for either yourself or your dependents. Dependents include spouses, children, parents, brothers and sisters.
The deduction amount will be as per the following.
The list of critical diseases covered under this section is given below.
1) Neurological Diseases where the disability level has been certified to be of 40% and above
2) Malignant Cancers
3) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)
4) Chronic Renal failure
5) Hematological disorders
A.Hemophilia B.. Thalassaemia
Section 80EE deduction is available only in the old tax system. It is not available in the new tax system. First home buyers can get an additional deduction of Rs. 50,000 paid towards the interest amount of the home loan if they meet all the conditions listed below.
This deduction of Rs. 50,000 is in addition to Rs. 2 Lakh deduction available under Section 24B. This additional deduction amount can be claimed every financial year until the loan amount is fully repaid.
Section 80EEA deduction is available only in the old tax system. It is not available in the new tax system. This is a new Section and it was introduced in the budget of 2019. It has been effective from 01-Apr-2019. This section provides tax deduction of up to Rs. 1.5 Lakhs for affordable housing subject to the following conditions:
The interest amount of up to Rs. 1.5 Lakhs paid towards the home loan can be claimed under this section every financial year till the loan is fully repaid. This deduction of Rs. 1.5 Lakhs is in addition to Rs. 2 Lakhs deduction available under Section 24B. So, a total deduction of up to Rs. 3.5 Lakhs (that is Rs. 1.5 Lakhs plus Rs. 2 Lakhs) can be claimed by a first home buyer.
Section 80 EEB deduction is available only in the old tax system. It is not available in the new tax system. This is a new Section and it was introduced in the full budget of 2019. It has been effective since 01-Apr-2019. This section provides tax deduction of up to Rs. 1.5 Lakhs for the purchase of an electric vehicle subject to the following conditions.
he interest amount of up to Rs. 1.5 Lakhs paid towards the vehicle loan can be claimed under this section every financial year till the loan is fully repaid. This deduction benefit is available for both cars and bikes.
Section 80E deduction is available only in the old tax system. It is not available in the new tax system. The interest amount paid towards the education loan can be claimed as deduction under this section. Note that only interest amount can be claimed. The principal amount can’t be claimed. Any amount of interest payment can be claimed. There is no upper limit on the interest amount. The educational loan should be for a Graduate or Post Graduate course in India or Overseas. The education loan can be taken for yourself, spouse or children. This deduction facility is available for 8 financial years or till the time the loan is paid off, whichever is earlier. For example, you have taken an educational loan with a term of 7 years. If you choose to repay in 5 years, then you can claim deduction for 5 years only. The first financial year will be the year in which you started paying the loan.
Section 80G deduction is available only in the old tax system. It is not available in the new tax system. Donations made to approved Charities, Trusts and Funds can be claimed as deduction under this section. Donations can be made in the form of cash, cheque or demand draft. There is no limit on the donation amount made by cheque or demand draft. But, there is a limit of Rs. 2,000 if the donation is made by cash. That is, the maximum deduction allowed is Rs. 2,000 even if the amount is above Rs. 2,000.
Depending upon the Charity and Trust Fund, the deduction allowed can be categorised in the following four types.
For the calculation purpose, the “Adjusted Gross Total Income” is calculated as under:
Total Income (minus)
exemptions (minus)
deduction from all Sections of 80 except 80G (minus)
short term capital gain (minus)
long term capital gain
Before one donate, check the type of the Charity or Trust and then donate.
Section 80 TTB deduction is available only in the old tax system. It is not available in the new tax system. This section is exclusively for Senior citizens. This section was introduced in Budget 2018 and it has been effective since 01-Apr-2018. Senior citizens can use this section to claim deduction on the interest amount earned from Fixed Deposits (FD) and Recurring Deposits (RD) accounts. A maximum of Rs. 50,000 can be claimed as deduction.
For example, if the interest earned from FD and RD accounts in the financial year is Rs. 75,000, then Rs. 50,000 can be deducted and the remaining Rs. 25,000 will be the taxable amount. This section can’t be used to claim deduction for interest earned from Savings Banks (SB) accounts. Section 80 TTB and 80 TTA are mutually exclusive for senior citizens. It means that if a senior citizen is utilising Section 80 TTB, then they can’t utilise Section 80 TTA and vice versa
Section 80GG deduction is available only in the old tax system. It is not available in the new tax system. You can use this section to claim deduction if you are living in a rented house but you are not receiving HRA (House Rent Allowance) from your Employer. The deduction amount that you can claim is the lowest of the following 3 things.
To claim this deduction, you should meet the following conditions.
Section 10 deduction is available only in the old tax system. It is not available in the new tax system. Professional tax is from the State Government of the state in which you are working. So, this amount will vary from one state to another state. One can use this section to claim deduction on the professional tax paid. Any amount paid as a professional tax can be claimed as deduction.
For example, if one is paying Rs. 200 per month as professional tax, then can claim Rs. 2,400 (200 x 12) as deduction.
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