Budget 2020: Difference between Old & New Income Tax Regime; 70 Exemptions Removed


Income Tax Regime 2020: The annual document of Union Budget 2020-21 has been out in the public domain. Besides proposing several new schemes and policies to accelerate Economy of India, the Budget proposes the creation of new Income Tax Regime to help taxpayers enjoy more savings; however, by compromising on around 70 exemptions offered in Old Income Tax Regime. There is a vast difference between the old and new tax regime.

The Union Budget 2020 removes around 70 exemptions in the new income tax regime to simplify the Indian Taxation System and to lower the tax rates for taxpayers. 7 slabs have been introduced for personal income tax. The tax rates on income up to Rs 15 lakh have been reduced to benefit the Indian taxpayers.

If you are opting for new tax rates 2020 you will not be allowed to enjoy several exemptions including deductions under Section 80C/80D, housing rent allowance(HRA), LTC, Entertainment Allowance, self-occupied or vacant property interest and professional tax.

Have a look at the key difference between the old and new income tax rates along with the exemptions removed in new regime:

Tax Payable under Old & New Regime & Net Savings

Income (Rupees)

Old Tax Payable

(2019-20)

New Tax Payable

(2020-21)

Gains or Savings

Up to Rs 5 Lakh

5 Lakh to 7.5 lakh

117000

39000

Rs 78,000

7.5 lakh to 10 lakh

117000

78000

Rs 39,000

10 lakh to 12.5 lakh

1,95,000

1,30,000

Rs 65,000

12.5 lakh to 15 lakh

2,73,000

1,95,000

Rs 78,000

20 lakh

4,29,000

3,51,000

Rs 78,000

Exemptions removed in New Income Tax Regime

– Exemption of up to Rs 1,50,000 lakh under Section 80C for ELSS, NPS, PPF

– Exemption of up to Rs 25,000 under Section 80D for medical insurance premium

– Tax benefits for disability under Section 80DD/80DDB

– Leave travel allowance exemption to salaried employees which could be availed twice in 4 years

– House Rent Allowance to salaried individuals

– Standard deduction of Rs 50,000 to salaried taxpayers

– Entertainment allowance and Professional Tax under Section 16

– Tax benefit on interest on housing loan for a self-occupied or vacant house under Section 24

– Rs 15000 deduction from family pension under Section 57

– Tax rebate of up to Rs 12,500 on income up to Rs 5 lakh under Section 87A

– Deduction of up to Rs 2 lakh on Home Loan interest

– Tax break on interest on education loan under Section 80E

– Tax break on donations to NGOs under section 80G

– Additional deduction of up to Rs 1.5 lakh on Home Loan interest on affordable houses under section 80EEA  

– Deduction of up to Rs 1.5 lakh for on Auto Loan interest on the electric vehicle under section 80EEB

Claims under these sections will not be entertained under the new tax regime:

80C, 80CCC, 80CCD

80D, 80DD, 80DDB

80E, 80EE, 80EEA, 80EEB

80G, 80GG, 80GGA, 80GGC

80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA





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