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What is the key highlight of Budget Changes 2020-2021? 

The most important highlight of Budget Changes 2020-2021 is the introduction of the New Tax Regime. As per the Budget Changes 2020-2021, an employee can choose between the old tax regime and the new tax regime.

What are the income tax rates defined for old and new tax regime?

The income tax rates and surcharge rates as per the old and new regime are as follows:

Income Tax SlabsOld RegimeNew RegimeSurcharge Rate
₹0 - ₹2.5 lakhexemptedexempted0
₹2.5 lakh - ₹5 lakh5%5%0
₹5 lakh - ₹7.5 lakh20%10%


₹7.5 lakh - ₹10 lakh20%15%0
₹10 lakh - ₹12.5 lakh30%20%0
₹12.5 lakh - ₹15 lakh30%25%0
₹15 lakh - ₹50 lakh30%30%0
₹50 lakh - ₹1 crore30%30%10
₹1 crore - ₹2 crore30%30%15
₹2 crore - ₹5 crore30%30%25
₹5 crores and Above30%30%37

What is the difference between old and new regime?

The key difference between the old regime and new regime is in tax rates and the number of available exemptions. The new regime has lower tax rates and fewer exemptions available than last financial year’s i.e. old regime.

Which are the unavailable exemptions under the new regime?

The new regime includes lower taxation rates than last financial year. However, under the new regime following exemptions are unavailable:

  • Under section 16 - Standard Deductions, Entertainment Allowances, Employment/ Professional tax. 
  • House Rent Allowance (HRA).
  • All chapter VIA section - 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EEA, 80EEB, 80G etc {Excluding Section 80CCD(2)}.
  • Leave Travel Concession (LTA).
  • Under section 10(14) - Special Allowance such as Children Education Allowance, Hostel Allowance, Transport Allowance, Uniform Allowance, etc.
  • Under section 24 - Interest on borrowed loan for a self-occupied property.
  • Set off of any loss, under the head “Income from house property” with any other head of income.

What are the similarities between old and new regime?

The following calculations are common for both the old and new regime: 

  • Rebate under section 87A: Taxpayers with an annual income of up to Rs 5 lakh will continue to get the tax rebate of Rs 12,500 on the calculated tax.
  • Health, Education Cess, and Surcharge Rates remain the same.

What is the default regime setting in the application?

The old tax regime is selected by default in the application for employees who have not declared IT.

As an admin, how can I configure the default regime option in the greytHR application?

As an admin, you can configure the default regime option in either of the following pages: 
Navigate to Payroll > Payroll Inputs > Salary or Payroll > Process Payroll.

You can view the Salary page. On the Salary page, you will be able to view Budget updates information box. In the Budget updates information box, you can view an option of changing the default regime settings. Click Click here to change the default regime settings.

Let us consider an employee who has not selected a regime while declaring IT. Which regime will be taken into consideration for processing his/her income tax?

If an employee does not select a regime for declaring IT, the default regime setting will be assigned to him/her. The default regime setting is configured by admin in the system.

Does the new budget have an impact on the payroll for March 2020?

No. The latest budget changes are effective from April 2020 payroll. All the payroll previous to the month of April 2020 remains unaffected.

How can an employee select a regime? 

An employee can select a regime during the process of IT declaration. The employee’s tax will be calculated as per his/her regime selection. 

How can employees decide which regime is best for them?

The greytHR application makes it easier for employees to choose between the two regimes. During IT declaration, employees will be able to compare both old and new regimes based on their declared investments. greytHR will also highlight the Maximum Benefit tag on the regime which has a lower net tax amount.

How can an admin modify the regime details of employees?

As an admin, you can modify your employee’s regime details.
To modify/update regime details for individual employees, navigate to Payroll > Payroll inputs > Income tax page. Click Regime tab. Search employee. Select the income tax regime from the Regime drop-down menu. Click Save.
To update regime information for employees in bulk, you can use IT declaration excel importer. Update the tax regime field as Old/New and upload the same.

Does the default regime settings override employee’s regime selection?

Default regime is for employees who do not declare their IT. If the employee chooses a regime, then the employee’s choice will override the default regime settings.

Will the Reports include regime information of employees? 

Yes. We have included regime information in all the tax-related reports. As an admin, the updated tax reports will help you to validate the employee’s regime information.

Can employees change their regime choices in the same financial year?

Yes. Employees can change their regime choices multiple times whenever income tax declaration window is open.

Does the new budget affect contract employees?

No. The new budget does not offer any changes in tax calculation for contract employees.

Can an employee choose regime during Proof of Investment?

Yes. The employee can also choose a regime during Proof of Investment. Here, the employee will get an option to change the regime for the last time.

How is the tax calculated for employees without PAN in the new budget?

The income tax calculation for the employees without PAN is similar to the previous budget. This calculation is also the same for old and new regimes. If the income of employees falls under the tax rate of 20%, then the employees will be charged 20% tax irrespective of the tax rates. For the employees falling under the tax rate higher than 20%, the tax will be deducted according to the actual tax calculation. Let us understand the tax calculation for employees without PAN with the help of the following table: 

Old Regime Income Tax RatesNew Regime Income Tax RatesTax Rates for employees without PAN
0% - 20%0% - 20%20%

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