Income Tax Calculator 2020: This tool will tell if you should switch to new tax slabs

Income Tax Calculator 2020: After the Budget 2020 presentation, new income tax slabs 2020 have been on taxpayers' minds - they have to decide which option they should go to to save more money. According to the tax and investment experts, those who are in the higher income group should go with the old income tax slabs as it would help them save money by paying lower income tax outgo. They also said that if someone is in the lower-income group say Rs 8-10 lakh per annum, they should use the income tax calculator 2020 and asses their fund flow and investment. They said that if someone is paying house rent or home loan repayment then it would be advisable for them to go for the previous income tax slab instead of the new income tax slabs.

Speaking on the new income tax slabs, Manikaran Singhal, a SEBI registered tax and investment expert said, "After the new income tax slabs being introduced in the budget 2020, an earning individual needs to do a comparative study of the two options by simply using the income tax calculator. They need to asses their investments, income tax benefits they are getting and the gross money they are saving in the older income tax slabs option. Similarly, they need to do the same in the new one." 

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Singhal said that in new income tax slabs if someone has higher income, say over Rs 15 lakh and he or she is paying house loan EMI, tuition fee of the child and has enough of investments that meet the maximum limit, even then the new income tax slabs are better as in the old income tax slab, they will be paying 30 per cent income tax on income from Rs 10 lakh to Rs 15 lakh while in new norms, they will be paying Rs 20 per cent income tax on their income from Rs 10 lakh to Rs 12.5 lakh and 25 per cent on their income from Rs 12.5 lakh to Rs 15 lakh. So, in this income tax calculation, one will be able to save Rs 37,500 by opting for the second option of the income tax slabs.

Batting for the old income tax slabs for higher income group people, SEBI registered tax and investment expert Jitendra Solanki said, "If someone is earning over Rs 15 lakh, then one's mandatory Provident Fund (PF) contribution would be around 8 per cent of one's basic pay. In that case he or she would be reaching out around 50 per cent of the Section 80C annual limit already without any investment. If they have taken NPS and home loan then they can claim additional benefit on their income up to Rs 2.5 lakh more. Even when if we calculate their income tax outgo, their taxable income would be Rs 11,75,000 if they have savings of Rs 75,000 in Section 80C. In those circumstances, their income tax outgo will be 20 per cent on Rs 5 lakh to Rs 10 lakh and 30 per cent on Rs 10 lakh to Rs 11,75,000. So, the net income tax that a taxpayer would pay in new income tax slab is Rs 1,52,500."

Solanki said that in the case of Rs 15 lakh income in new income tax slabs tax liability will be 10 per cent on Rs 5 lakh to Rs 7.5 lakh, 15 per cent on Rs 7.5 lakh to Rs 10 lakh, 20 per cent on Rs 10 lakh to Rs 12.5 lakh and 25 per cent on Rs 12.5 lakh to Rs 15 lakh. So, one's net income tax outgo in the new income tax slab would be Rs 1,75,000, which is Rs 22,500 more.

Standing in sync with Manikaran Singhal; Solanki said that for those who are earning less than Rs 10 lakh, they need to asses their fund flow and net investment and the limit to which they can claim income tax benefits. Only then they should decide their income Tax slabs option.