The Indian Finance Minister has tabled today, the Union General Budget 2021-22 in the Parliament. Kindly note that there have been no changes made to the personal Income tax structure.

Below are the latest Income Tax Slab Rates for FY 2021-22 or AY 2022-23. (FY is Financial Year and AY is Assessment Year)

Latest Income Tax Slab Rates for FY 2021-22 / AY 2022-23

Effective from FY 2020-21, the individual tax assessee has an option to go for new Tax Slab Rates by forgoing the existing Income Tax Deductions and Exemptions, like HRA, Section 80C, Home loan tax benefits, etc.,

So, to avail of the below new tax regime, which is optional, taxpayers will have to let go of income tax exemptions.

• Income below Rs 2.5 lakh will continue to remain tax-exempt.
• Income between Rs 2.5 to Rs 5 lakh will be taxed at 5% but will continue to get hence no tax liability.
• Under the new regime, taxpayers will pay 10%, 15%, 20%, and 25% for incomes between Rs 5 to Rs 7.5 lakh, Rs 7.5 to Rs 10 lakh, Rs 10 to Rs 12.5 lakh, and Rs 12.5 to Rs 15 lakh, respectively.

Income Tax Slab Rates FY 2021-22 (New Tax Regime structure) | Budget 2021

Individuals opting to pay tax under the new lower personal income tax regime will have to forgo almost all tax breaks that you have been claiming in the old tax structure.

  Income Tax Rates FY 2021-22 (if tax deductions / exemptions are to be claimed)

Budget 2021-22 & Personal Finance: Key Highlights

Below are the latest personal finance-related proposals that have been made in Budget 2021-22 ;

• Senior Citizens of age 75 years and above who have only Pension and Interest income from Banks/Post office need not file their Income Tax Returns. The banks will deduct the applicable taxes though. The conditions for exemption from filing ITR from 1st April 2021 are:
  • The senior citizen should be a resident and should be 75 years of age or more during the financial year for which tax has to be paid
  • She must receive a pension and interest income from the same bank.
  • Only certain specified banks are allowed for this purpose.
  • A declaration should be given to the bank in this regard.
• The Rs 1.5 lakh Additional Income Tax deduction on affordable home loans will be extended for one more year, u/s 80EEA. The Interest deduction (Sec 80EEA) of Rs.1.5 lakhs to be extended for loans taken till 31st March 2022. This deduction can not be claimed if you opt for new tax slabs.
• The details of Capital Gains (Long term & Short Term), Dividend Income, and Interest income will be pre-filled in the Income Tax Return Forms.
• The Employee contributions (like EPF/Superannuation) not paid by the employer will not be allowed as a tax deduction to the Employers.

Read: How to check if my Employer is depositing EPF amount with EPFO / Trust?

• Income Tax Appellate Tribunal to become Faceless – Only electronic communication will be done.
• The Income Tax Audit Limit to be increased to Rs.10 crores from Rs.5 crores for those having less than 5% cash transactions.
• Advance tax liability on dividend income will arise only after declaration or payment of dividend by the Companies.
• No TDS will be levied on dividend payouts by REITs & InvITs. But, such income is still a taxable income.
• Alteration in double taxation rules and taxation for NRIs, especially those who return to India. Certain rules and guidelines will be implemented in order to remove the hardship of Double Taxation wrt NRI’s income.
• For investor protection, the Investor Charter is a right of all financial investors across all financial products to be introduced.
• No more tax-free interest on more than Rs 2.5 lakh a year contribution towards EPF/VPF (only employee contribution).
  • If employee contribution is more than Rs 2.5 lakh, the interest earned on the excess amount is taxable for contribution from 1st April 2021 onwards.
  • Example – If employee share EPF + VPF is Rs 4.5 lakh in FY 2021-22. The interest earned on excess Rs 2 lakh (Rs 4.5 L – Rs 2.5 L) will now be taxable.
• If ULIP yearly premium is more than Rs 2.5 lakh, the maturity is no more tax-free. (New ULIPs purchased wef 01 Feb 2021. However, the death benefit is tax-free.)

Other Important Proposals :

• A Voluntary vehicle scrapping policy has been announced. Vehicles to undergo fitness test – which is 20 years for passenger vehicles and 15 years for commercial vehicles.
• Rs 35,000 crore to be allocated for further funds for COVID-19 vaccines. The govt will provide more for COVID-19 vaccines if required.
• The LIC IPO will happen in FY 2021-22.