{"id":2080,"date":"2020-02-03T18:53:00","date_gmt":"2020-02-03T18:53:00","guid":{"rendered":""},"modified":"2025-11-07T11:31:53","modified_gmt":"2025-11-07T06:01:53","slug":"changes-in-personal-income-tax-rates","status":"publish","type":"post","link":"https:\/\/www.equentis.com\/blog\/changes-in-personal-income-tax-rates\/","title":{"rendered":"Budget 2020: Changes in Personal Income Tax rates"},"content":{"rendered":"
<\/div>\n

In our previous article we took a look at key highlights of Budget<\/a> 2020. Now let\u2019s take a detailed look at the changes in personal income tax<\/a> rates.<\/p>\n\n\n\n

The Budget has proposed lower income tax rates for individuals as shown below:<\/strong><\/h2>\n\n\n\n
\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n
    Sr. No.<\/td>\nIncome Slab<\/td>\nExisting Regime<\/td>\nNew Regime
(without exemptions and deductions<\/td>\n<\/tr>\n
        1<\/td>\nLess than Rs. 2.5L<\/td>\nNIL<\/td>\n              NIL<\/td>\n<\/tr>\n
        2<\/td>\nRs. 2.5L – Rs. 5L<\/td>\n5%<\/td>\n              5%<\/td>\n<\/tr>\n
        3<\/td>\nRs. 5L – Rs. 7.5L<\/td>\n20%<\/td>\n              10%<\/td>\n<\/tr>\n
        4<\/td>\nRs. 7.5L – Rs. 10L<\/td>\n20%<\/td>\n             15%<\/td>\n<\/tr>\n
        5<\/td>\nRs. 10L – Rs. 12.5L<\/td>\n30%<\/td>\n             20%<\/td>\n<\/tr>\n
        6<\/td>\nRs. 12.5L – Rs. 15L<\/td>\n30%<\/td>\n             25%<\/td>\n<\/tr>\n
       7<\/td>\nMore than Rs. 15L<\/td>\n30%<\/td>\n             30%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

* This is for individuals below 60 years of age<\/em><\/p>\n\n\n\n

We take a look at two cases \u2013 one where taxable income<\/a> is same in new and old regime (Case A) and the other where Gross Salary is same in new and old regime<\/p>\n\n\n\n

Case A \u2013 Same taxable income in new and old regime<\/strong><\/h2>\n\n\n\n

Individuals can choose between either of the tax regimes. In case they choose the new regime with lower taxes, they will have to forego exemptions and deductions claimed in the old regime. The following is an example of tax implication in case of taxable income of Rs. 15L, assuming the person is not claiming any deductions. In this case, an individual will save Rs. 78,000 worth of tax.<\/p>\n\n\n\n

\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Income
Slabs<\/a><\/td>\n		Incremental
Income<\/td>\n		Tax rate in
Existing Regime<\/td>\n		Amount
(Rs.)<\/td>\n		 <\/td>\n\n
\n
Tax rate in
proposed Regime<\/div>\n<\/div>\n<\/td>\n
Amount
(Rs.)<\/td>\n		 <\/td>\nTax
Reduction<\/td>\n<\/tr>\n
Rs. 0L – Rs. 2.5L<\/td>\n250,000<\/td>\n0%<\/td>\n–<\/td>\n <\/td>\n0%<\/td>\n–<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Rs. 2.5L – Rs. 5L<\/td>\n250,000<\/td>\n5%<\/td>\n12,500<\/td>\n <\/td>\n5%<\/td>\n12,500<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Rs. 5L – Rs. 7.5L<\/td>\n250,000<\/td>\n20%<\/td>\n50,000<\/td>\n <\/td>\n10%<\/td>\n25,000<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Rs. 7.5L – Rs. 10L<\/td>\n250,000<\/td>\n20%<\/td>\n50,000<\/td>\n <\/td>\n15%<\/td>\n37,500<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Rs. 10L – Rs. 12.5L<\/td>\n250,000<\/td>\n30%<\/td>\n75,000<\/td>\n <\/td>\n20%<\/td>\n50,000<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
Rs. 12.5L – Rs. 15L<\/td>\n250,000<\/td>\n30%<\/td>\n75,000<\/td>\n <\/td>\n25%<\/td>\n62,500<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nTax implication (Rs.)<\/td>\n262,500<\/td>\n <\/td>\n <\/td>\n187,500<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nHealth & Education
Cess @ 4% (Rs.)<\/td>\n		10,500<\/td>\n <\/td>\nH&E Cess- @4%<\/td>\n7,500<\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nTotal Tax Implication (Rs.)<\/td>\n273,000<\/td>\n <\/td>\nTotal Tax<\/td>\n195,000<\/td>\n <\/td>\n78,000<\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nAvg Tax Rate<\/td>\n <\/td>\n18.20%<\/td>\n <\/td>\n <\/td>\n13.00%<\/td>\n <\/td>\n5.20%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

Summary of Income tax rates saving for different income brackets:<\/strong><\/h2>\n\n\n\n
\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\nTax Implication (Rs.)<\/td>\n <\/td>\n<\/tr>\n
Sr. No.<\/td>\nTaxable Income (Rs.)<\/td>\nEarlier Case<\/td>\nNew Case<\/td>\nSaving (Rs.)<\/td>\n<\/tr>\n
       1<\/td>\n0 – 2,50,000<\/td>\n–<\/td>\n–<\/td>\n–<\/td>\n<\/tr>\n
       2<\/td>\n2,50,000 – 5,00,000<\/td>\n–<\/td>\n–<\/td>\n–<\/td>\n<\/tr>\n
       3<\/td>\n5,00,000 – 7,50,000<\/td>\n13,000 – 65,000<\/td>\n13,000 – 39,000<\/td>\n0 – 26,000<\/td>\n<\/tr>\n
      4<\/td>\n7,50,000 – 10,00,000<\/td>\n65,000 – 1,17,000<\/td>\n39,000 – 78,000<\/td>\n26,000 – 39,000<\/td>\n<\/tr>\n
      5<\/td>\n10,00,000 – 12,50,000<\/td>\n1,17,000 – 1,95,000<\/td>\n78,000 – 1,30,000<\/td>\n39,000 – 65,000<\/td>\n<\/tr>\n
      6<\/td>\n12,50,000 – 15,00,000<\/td>\n1,95,000 – 2,73,000<\/td>\n1,30,000 – 1,95,000<\/td>\n65,000 – 78,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

Case B \u2013 <\/strong>Same gross salary in new and old regime<\/strong><\/h2>\n\n\n\n

The new tax regime has a catch. In case an individual chooses to use all deductions and exemptions (which most people WILL do), then he \/ she will end up saving tax in the old regime. There will be no incentive to switch to the new regime.<\/p>\n\n\n\n

\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
OLD Regime<\/td>\nNew Regime<\/td>\n<\/tr>\n
 <\/td>\nSalary Income<\/a><\/td>\n1,500,000<\/td>\n <\/td>\n <\/td>\nSalary Income<\/td>\n1,500,000<\/td>\n <\/td>\n<\/tr>\n
Deductions:<\/td>\n80C<\/td>\n150,000<\/td>\n <\/td>\nDeductions:<\/td>\n <\/td>\n–<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n80D – Medicliam<\/td>\n25,000<\/td>\n <\/td>\n <\/td>\n <\/td>\n–<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n80CCD – NPS<\/td>\n50,000<\/td>\n <\/td>\n <\/td>\n80CCD (2) – NPS<\/a><\/td>\n50,000<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nHsg Loan int<\/td>\n200,000<\/td>\n <\/td>\n <\/td>\n <\/td>\n–<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nStd Deduction<\/td>\n50,000<\/td>\n <\/td>\n <\/td>\n <\/td>\n–<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n80G – Donations<\/td>\n50,000<\/td>\n <\/td>\n <\/td>\n <\/td>\n–<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nTaxable Income<\/td>\n975,000<\/td>\n <\/td>\n <\/td>\nTaxable Income<\/td>\n1,450,000<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n<2.5L<\/td>\n–<\/td>\n250,000<\/td>\n <\/td>\n<2.5L<\/td>\n–<\/td>\n250,000<\/td>\n<\/tr>\n
 <\/td>\n2.5L – 5L @ 5%<\/td>\n12,500<\/td>\n250,000<\/td>\n <\/td>\n2.5L – 5L @ 5%<\/td>\n12,500<\/td>\n250,000<\/td>\n<\/tr>\n
 <\/td>\n5L – 10L @ 20%<\/td>\n95,000<\/td>\n475,000<\/td>\n <\/td>\n5L – 7.5L @ 10%<\/td>\n25,000<\/td>\n250,000<\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n7.5L – 10L @ 15%<\/td>\n37,500<\/td>\n250,000<\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n10L – 12.5L @ 20%<\/td>\n50,000<\/td>\n250,000<\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n12.5L – 15L @ 25%<\/td>\n62,500<\/td>\n250,000<\/td>\n<\/tr>\n
 <\/td>\nTax Payable<\/td>\n107,500<\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nCess @ 4%<\/td>\n4,300<\/td>\n <\/td>\n <\/td>\nTax Payable<\/td>\n187,500<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\nTotal Tax<\/td>\n111,800<\/td>\n <\/td>\n <\/td>\nCess @ 4%<\/td>\n7,500<\/td>\n <\/td>\n<\/tr>\n
 <\/td>\n <\/td>\n <\/td>\n <\/td>\n <\/td>\nTotal Tax<\/td>\n195,000<\/td>\n <\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

The below table summarizes tax loss incurred by adopting the new regime as against retaining old regime and availing all exemptions and deductions:<\/strong><\/h2>\n\n\n\n
\n<\/colgroup>\n\n\n\n\n\n\n\n\n\n
 <\/td>\n <\/td>\nTax Implication (Rs.)<\/td>\n <\/td>\n<\/tr>\n
Sr. No.<\/td>\nTaxable Income (Rs.)<\/td>\nEarlier Case<\/td>\nNew Case<\/td>\n\n
\n
Extra tax implication (Rs.)<\/div>\n<\/div>\n<\/td>\n<\/tr>\n
      1<\/td>\n0 – 2,50,000<\/td>\n–<\/td>\n–<\/td>\n–<\/td>\n<\/tr>\n
      2<\/td>\n2,50,000 – 5,00,000<\/td>\n–<\/td>\n–<\/td>\n–<\/td>\n<\/tr>\n
      3<\/td>\n5,00,000 – 7,50,000<\/td>\n–<\/td>\n0 – 33,800<\/td>\n0 – 33,800<\/td>\n<\/tr>\n
      4<\/td>\n7,50,000 – 10,00,000<\/td>\n–<\/td>\n33,800 – 70,200<\/td>\n33,800 – 70,200<\/td>\n<\/tr>\n
      5<\/td>\n10,00,000 – 12,50,000<\/td>\n0 – 59,800<\/td>\n70,200 – 1,19,600<\/td>\n10,400 – 59,800<\/td>\n<\/tr>\n
      6<\/td>\n12,50,000 – 15,00,000<\/td>\n59,800 – 1,11,800<\/td>\n1,19,600 – 1,95,000<\/td>\n59,800 – 83,200<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\n\t\t
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Related investing topics<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n How to Invest in Share Market? <\/h3>\n \t\t \t

Considering the volatility, investing in stock markets is both an art and science.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n 5 Best Places To Live After Retirement In India <\/h3>\n \t\t \t

While some retired people set sail on voyages worldwide, others look forward to spending their time in relaxation and comfort.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n 90% People Lose Money in Stocks? <\/h3>\n \t\t \t

Isn't it shocking? But it is a fact. There are countless reasons why investors lose money in stock markets.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n Is Long Term Investing Always Safe? <\/h3>\n \t\t \t

Let\u2019s understand what long-term means before we explain why Long Term Investing may not always be safe.<\/p>\n <\/div>\n \n \n <\/div>\n <\/a>\n <\/div>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t\n\n\n\n

Read more:  How Long-term investing helps create life-changing wealth \u2013 TOI<\/a>.<\/strong><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

In our previous article we took a look at key highlights of Budget 2020. Now let\u2019s take a detailed look […]<\/p>\n","protected":false},"author":5,"featured_media":2081,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[11],"tags":[],"class_list":["post-2080","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy"],"_links":{"self":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/2080","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/comments?post=2080"}],"version-history":[{"count":1,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/2080\/revisions"}],"predecessor-version":[{"id":61933,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/posts\/2080\/revisions\/61933"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/media\/2081"}],"wp:attachment":[{"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/media?parent=2080"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/categories?post=2080"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.equentis.com\/blog\/wp-json\/wp\/v2\/tags?post=2080"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}