New Tax Regime: The budget 2020 introduced a new tax regime u/s 115BAC giving individuals and HUF taxpayers an option to pay income tax at lower rates. The new system is applicable for income earned from 01st April,2020 (F.Y. 2020-21) i.e A.Y. 2021-2022.

Tax rates Under New Tax Regime:

Exemptions and Decuctions not allowed Under New tax Regime

1. Professional Tax and entertainment tax on salaries
2. Leave Travel Aallowance(LTA)
3. House Rent allowance(HRA)
4. Minor Child Income Allowance
5. Helper Allowance
6. Other Special allowance u/s 10(14)
7. Interest on Housing Loan on the self occupied Property u/s 24
8. Chapter VI A Deduction(Sec 80C, 80D etc) except Sec 80CCD(2) and u/s 80JJA
9. Exemption or deduction for any other prequisites or allowances including food allowance
10. Employees' own contribution to NPS
11. Donation to Political Party/trust etc.

Opt-In and Opt-Out From Tax new Regime:

Income From Salary and Other Sources(Not including Business Income)

Individuals earning from Salary and Other Sources Income but not including business Income can choose the New Tax Regime and inform the employer and it can be changed as per their convenience at the time of filing of ITR.

Individual earning from salary and other sources Income but not including business income can switch from old regime to new regime and vice-versa every year without any hassle.

House Property Income Under New Tax Regime:

• Self Occupied Property

         For a self occupied House Property, the taxpayer cannot claim a deduction on interest for housing loan under the new tax regime. The deduction of Rs. 2 lakhs is not available. Loss from HP cannot be set off against salary income.

• Letout Property

         For a Letout Property, interest on housing loan is allowed as deduction upto the amount of rent received. Any loss arising under the head HP from excess interest paid is not allowed as set off and the same cannot be carried forward to future years for set off.

Form to Opt in and opt out of New Tax Regime

CBDT has notified Form 10IE for choosing to opt in and opt out of new tax regime.