Page 100 - mutual-fund-insight - Mar 2021_Neat

REVISITING TAX SLABS

Which tax slabs are

better for you?

he Union Budget for FY21 had slabs they should choose. Take a look at
introduced new tax slabs, both the old and new tax slabs (see the
though the old ones also table ‘Tax slabs: Old and new’).
remain. You have to choose The salaried can choose between the
Tbetween the two. While the original and the new tax structures every
older ones allow you to avail many year. But businesspersons don’t have this
exemptions and deductions, which can flexibility. They have to follow the same
bring down your overall taxable income, taxation system in the future after they
the new tax slabs have lower rates of have chosen between the two options.
taxation but you will have to forgo your
exemptions and deductions. In such a Which should you choose?
scenario, many are wondering which tax The new tax slabs are indeed simpler.
Tax slabs: Old and new You don’t have to worry about docu-
mentation or last-minute tax planning.
While the new slabs have lower tax rates, they For those who want more money in
don’t have any deductions or exemptions hand, such as those in lower income
Slab (`) Existing tax rates New tax rates brackets or those who want to take con-
0-2.5 lakh Exempt Exempt trol of their finances rather than let the
2.5-5 lakh 5% 5% government decide where to invest,
5-7.5 lakh 20% 10% these could be useful. However, this
simplicity comes at a cost.
7.5-10 lakh 20% 15%
The first cost is that you don’t really
10-12.5 lakh 30% 20%
pay less tax with the new tax structure.
12.5-15 lakh 30% 25%
The table ‘New vs old: Which is more
Above 15 lakh 30% 30%
beneficial?’ shows that if you claim the
8 BUDGET & YOU

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