Income tax As per new sceme

[Sukumaran Ramaraj]

Assesment year 2021-22

Income : 7Lakhs 

Income Tax :

3Lakhs to 5Laks: @ 5%  = Rs10000/- 

5 to 7Lakhs :         @10% =Rs 20000/-

Total=                                = Rs 30000/- 

Am I Correct?.

If not how to calculate tax. 

Please advise.

Sukumaran R

BOI Retiree.

[PM]

Dear Mr Sukumar Ramraj,

                                                            The tax shown by you for Assessment.year 2021-22 is correct under new regime.

 It may be noted  that, a tax payer  can choose between the new tax regime or old tax regime at the beginning of FY 2020-21 and intimate their employer accordingly.  The change can be done also at the time of filing the income tax return in July 2021, the due date for above.The option depends on tax savings of each.

Under new regime the deductions allowed under old one, such as standard deduction of Rs 50,000,and deductions  under VI-A (80C,80D, 80E and so on) cannot be claimed 

[saradindu basu]

Dear Sir, 

               Please provide information as to how I have to submit my option to my Bank. I want to continue  availing deductions allowed -such as  standard deduction and other deductions under VI A.

--SARADINDU BASU.

---

From: bankpe...@googlegroups.com <bankpe...@googlegroups.com> on behalf of PM <moha...@gmail.com>
Sent: Thursday, July 2, 2020 11:39 AM
To: bankpensioner <bankpe...@googlegroups.com>
Subject: bankpensioner Re: Income tax As per new sceme

 

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[S.S.Vasan]

Dear Sukumar,

Kindly use the link given below for working out IT.

Fill in the figures.IT will be calculated.

https://www.taxmann.com/tools/tax-calculator/income-and-tax-calculator

Kindly call me for clarifications.

Vasan

97890 97450

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[Gopabandhu Mohapatra]

*Tax Regime – New or Old ?*

FAQ on option to be exercised  - TDS on pension - FY 2020-21

 (Courtesy - R Vijayaraghavan)

There are lot of queries from Senior Citizens on the above subject, as most of the Banks have called for the option to be exercised before July 2020.

Some FAQ on this , which may  be helpful and beneficial to Senior Citizens.

1. Why in  this year  such option is called for ? What for is this ?

Finance Act  2020 has  introduced a New Tax Regime , with a lower Tax structure withdrawing major  exemptions and deductions .Option has been given to the tax payers to remain in the old regime .Tax payers have to decide and opt.

2. Whether this option  once exercised can it be changed next year?

Individual Tax payer  having no business income  can exercise this option before filing IT returns every year .Hence option can be changed during filing returns.

3.  If the option can be exercised during the time of filing returns, then why this option has to be given to the employer at the beginning of each FY ? If the person chooses old tax regime for TDs purpose and found that new tax regime is beneficial at the time of filing returns, whether he can opt for new tax regime for that FY?

For effecting TDS on Pension , ex employer has to call for the option . This option is exclusively for TDS purpose alone  and this can be changed by the tax payer while fling IT returns. But for TDs purpose once the option is exercised , employer wont allow  to change it and will start deducting TDS based on the declaration

4. My ex employer is calling for option of tax regime and along with that investment particulars made and to be made? Health Insurance Premium would be known only during  Oct 2020. How can I furnish the declaration?

Members opting for Old Tax Regime have to furnish their investment particulars made or to be made.  Their proposed investments can be tentative and even if they have declared different instruments , one can change the nature of investments eg  from NSC to SCSS or from ELSS to PPF etc. Like wise Medical insurance premium one may not be knowing the exact amount. They can furnish the last year amount as approximation. However pensioners have to furnish their proof of investments before Jan 2021 end . If not the ex employer may deduct TDS from Pension based on the figures available.

5. For the purpose of TDS on Pension  whether other income ( Interest income) will be reckoned?

No. Ex employer will reckon the aggregate Pension amount only. It is the responsibility of Pensioner to calculate his total income and arrange to pay advance Tax or Self assessment tax after reckoning Pension and TDS on pension, Deposit etc.

6. Senior Citizens receiving Pension and interest income need not pay advance Tax as per Income Tax rules. Then why TDS on pension is being insisted/ recovered?

Though Senior Citizens are exempted from Advance Tax provisions , for TDs purpose Pension is treated like Salary Income and there is a responsibility cast on the  ex employer to recover TDS on pension as applicable to Salaries. But for this only pension income will be reckoned.

If the aggregate annual pension income is less than Rs 5 lakh , income Tax liability would be Nil and there is no need for such pensioners to exercise any option or submit any proof for savings.

7. What is the due dates for exercising option and to submit proof for Savings?

It depends upon the individual Banks . In IOB for exercising option the cut off date is 31/07/2020. Proof of savings to be submitted before 25.01.2021.

8. What will be the consequences if a. Option is not exercised b. Declaration of Savings not done c. Proof of Savings not given before the due date.?

a. If no option is exercised then it is deemed that the pensioner is opted for New Tax Regime and TDS effected accordingly. ( For those who have not exercised any option – it will not affect their right to exercise the option at the time of filing returns and claim refunds if any TDS is made)

b. If no declaration is furnished , savings will be treated as Nil and TDs effected accordingly.

c. If the pensioner failed to submit the proof before 25th Jan , then such declarations already made will be ignored and TDs effected from Jan and Feb Pension where ever applicable.

9. What is the Tax Slab for New Tax Regime ? Whether Standard deduction,  ,80 C, 80 D 80 TTB benefits will be available in the New Tax Regime?

New Tax Regime Rates ( Optional)

Up to Rs 2.5 Lakh-Nil

2.50 lakh to Rs 5 Lakh-5%

5 lakh-7.50 Lakh- 12500+10%

7.50 lakh to 10 Lakh- Rs 37,500+15%

10 lakh-12.50 Lakh-Rs 75000+20%

12.50Lakh-15 Lakh-Rs125000+25%

Above 15 Lakh-Rs187500+30%

There is no change in Cess and Surcharge.

Standard Deduction, Housing Loan Interest, Sec 80 C,80 D, 80 TTA, 80 TTB ( Bank Interest exemption for Sr Citizens) are not available in New regime.

10. Whether in New Tax Regime , Rebate under Sec 87 A is available? Whether higher Tax exemption limit for Senior Citizens and Very Senior Citizens would be available in New Tax regime?

Yes. That is  for Taxable income below Rs 5 Lakh-income tax liability would be Nil in new Tax regime too.

No. The Tax structure is uniform for all categories in New Tax regime and there is no concession in exemption limit for Senior Citizens and Very Senior Citizens.

11. How to decide which regime is better and suitable for me?

I have developed a simple ready reckoner to help a tax payer , to choose which Tax regime is most suitable to him/her, based on one’s annual income and total deductions.

PL click the following  secured link.

https://rviju.github.io

To arrive at the decision please follow the simple steps.

Step 1 - Arrive at Estimated Total annual income for FY 2020-21. (Salary/ Pension + Other Income)

Step 2 - Arrive at the Total Estimated total deductions-

a. HRA, Housing Loan interest if any, Professional Tax

b. Standard Deductions

c. Bank Interest –Sec 80 TTB for Sr citizens, SB Interest for others –Sec 80 TTA

d. Deductions under Sec 80 C , 80 D already committed or existing

e. Proposed Investment Under Sec 80 C( Max Limit Rs150,000), 80 D (Self and Spouse - Sr Citizens Max Rs50,000, Others-Max Rs25,000 (In both cases where parents are involved it can go up to Rs100000/ 50,000)

f. Sec 87 A one can exclude from deductions. It is available in both regimes. New retirees can exclude DCRG, Commuted Value and exempted Leave encashment while arriving at estimated income .

Step 3 -A ready reckoner is developed by me for this purpose to select the tax regime. So far  more than one lakh individuals, from India and abroad, visited  and found the site to be useful.

Click on the following link.

https://rviju.github.io

Key in the estimated total income , Deductions and age group. You will get the instant result.

Tax liability can be arrived at for both New as well old regime for the individual income and one can decide instantly which regime suits him better.

The link would be useful to cross verify IT calculations and arrive at exact Tax Liability for the last FY 2019-20.

My inference : For those who are in the lower tax bracket , with small savings if they can bring the Net Income below Rs 500,000/- old regime is preferable. For those in 30% tax slab in the old regime and those who don’t want to save for Tax new regime may be preferable. For Senior Citizens, with Standard Deductions and Sec 87 A, 80 C, 80 D, 80 TTB concessions . if a person brings the Net Income below Rs 5 Lakh old Regime is beneficial.

In some cases for those in 30% tax slab in the old regime and those who don’t want to save for Tax , new regime may be preferable.

12.  What are the popular  Savings options available under Sec 80 C?

Maximum- Rs 1.50 Lakh.

PPF- For those who are in high Tax bracket PPF account is best. Those who are already having PPF accounts on maturity of 15 Years can  go on extending  it for further block of 5 years.

Senior Citizen Savings Scheme-SCSS- Max Rs 1.50 Lakh per year ( aggregate should not exceed Rs15 lakh per person) Maturity period -5 Years-current ROI-7.40% -Quarterly.

Tax Saver Deposits- Max –Rs1.50 Lakh- Period -5 Years- Quarterly . With  Senior Citizen and Staff rate it is found attractive than NSC.

Reproduced by

Gopabandhu Mohapatra 

eAndhra Bank 

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[PM]

Dear Sri.Saradindu Basu,

                                                    In nutshell it is simple. You may submit a letter to your Bank specifying your option on continuing under  Old Scheme, with allowed deductions( under Sec 192)  or New Scheme without such deductions( under Sec.115BAC).Once it is submitted same cannot be modified during the Financial Year.

                                                   Some bank have found issued circular in this respect , attaching a format, with details of your PPO No. etc and options to be exercised under any two of above.This is done to calculate exactly the TDS to be made ,if any from pension payment.You may also check up with your bank on communication if any on the matter. 

                                                                                                             

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[kushal mukhoti]

The income-tax calculator (for old and new regime) provided by you is very helpful. But the calculator is useful only for the persons whose total taxable income is up to 50 lakh. Because the surcharge applicable above the taxable income of 50 lakh has not been taken into account in this calculator. 

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[saradindu basu]

Thank you Sir .

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From: bankpe...@googlegroups.com <bankpe...@googlegroups.com> on behalf of PM <moha...@gmail.com>

Sent: Friday, July 3, 2020 11:00 AM
To: bankpensioner <bankpe...@googlegroups.com>
Subject: Re: bankpensioner Re: Income tax As per new sceme

 

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[Sudhakar Nambiar]

As far as my understanding is that the interest earned on the Senior Citizen savings scheme -2004 is taxable under income tax.

I  earn over 50000/- interest on fixed deposit in one bank and not given 15H. Still that bank is not deducting TDS on SCSS-2004.

Whereas they deduct TDS from interest paid on other term deposits held by them.

Therefore please let me know whether interest income on SCSDep 2004 is taxable income or not. 

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[Narayanan Kasthurirengan]

dear Mr

Sudhakar Nambiar        The interest earned on SCSS deposit  is taxable.  Put together all interest income including Savings a/c interest, senior citizens can claim Rs.50000/- deduction

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[Mohan Revathi]

Interest income on SCSS is definitely taxable.  Here my bankers deduct TDS if 15H is not given.

Thanks & Regards

R. Mohan

CB Retiree

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[Suranjan Kanjilal]

All staff pensioners has to exercise the option for income tax calculation Either u/s 192 ( i.e. existing Old Tax Regime ) Or u/s 115 BAC ( New Tax Regime ) before 15. 07. 2020. But                               Those Who Do Not OPT Any OPTION, Will be CONSIDERED u/s 192 ( Existing OLD TAX REGIME ).                                       Source: Bank Of India, H.O. Circular No.635 dtd: 22.06.2020.                               It is evidently clear that, if any pensioner wants to continue in Old Tax Regime, there is no need for him to submit any Option Form to his/her pension paying branch/bank at all.

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