FY 2020-21 (AY 2021-22) was a landmark year: Finance Act 2020 introduced the new tax regime with 7 slabs and lower rates but no deductions. Taxpayers could choose between the new regime (0% up to ₹2.5L, rising in ₹2.5L bands to 30% above ₹15L) and the old regime with all deductions and the Section 87A rebate. The old regime was the default and, for most salaried taxpayers, the cheaper option.
The slabs on this page apply only to income earned in FY 2020-21. They are not the current rates. For the live financial year (FY 2025-26 / AY 2026-27), where the new regime is default and rebate makes tax nil up to ₹12 lakh, see the current income tax slabs.
FY 2020-21 Income Tax Slabs — New vs Old
For Assessment Year 2021-22 (income earned in FY 2020-21), taxpayers had two options for the first time. The comparison below shows exactly how the two regimes differed:
| Income Slab | New Regime FY 2020-21 | Old Regime FY 2020-21 |
|---|---|---|
| Up to ₹2,50,000 | Nil | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% | 5% |
| ₹5,00,001 – ₹7,50,000 | 10% | 20% |
| ₹7,50,001 – ₹10,00,000 | 15% | 20% |
| ₹10,00,001 – ₹12,50,000 | 20% | 30% |
| ₹12,50,001 – ₹15,00,000 | 25% | 30% |
| Above ₹15,00,000 | 30% | 30% |
Surcharge: 10% (₹50L–₹1Cr), 15% (₹1Cr–₹2Cr), 25% (₹2Cr–₹5Cr), 37% (above ₹5Cr). Health & Education Cess: 4% on tax + surcharge. Applied identically to both regimes in FY 2020-21.
New Regime vs Old Regime in FY 2020-21
The new regime's lower rates came at the cost of nearly every deduction and exemption. The old regime kept them all — including the ₹50,000 standard deduction and the Section 87A rebate.
Old regime — deductions kept
- Standard deduction ₹50,000
- Section 80C up to ₹1.5L (PPF, ELSS, LIC)
- HRA & LTA exemptions
- Section 24(b) home-loan interest up to ₹2L
- Section 87A rebate up to ₹5L income
- Default regime for FY 2020-21
New regime — lower rates, no deductions
- 7 granular slabs at lower rates
- No 80C, HRA, LTA or standard deduction
- No Section 87A rebate
- Only 80CCD(2) employer NPS allowed
- Must opt in each year
- Rarely beneficial for salaried in 2020-21
| Feature | New Regime (FY 2020-21) | Old Regime (FY 2020-21) |
|---|---|---|
| Standard deduction (₹50,000) | No | Yes |
| Section 80C (up to ₹1.5L) | No | Yes |
| HRA exemption | No | Yes |
| LTA exemption | No | Yes |
| Section 24(b) home-loan interest (₹2L) | No | Yes |
| Section 80D (health insurance) | No | ₹25K–₹75K |
| Section 87A rebate (income up to ₹5L) | No | ₹12,500 |
| NPS employer contribution 80CCD(2) | Yes | Yes |
| Number of tax slabs | 7 slabs | 4 slabs |
Comparing regimes for a current year? Use our up-to-date calculator.
Old vs New Calculator →₹15 Lakh Income — New vs Old (FY 2020-21)
For a ₹15 lakh salary in FY 2020-21, the two regimes produced very different bills. If deductions in the old regime exceeded roughly ₹3.75 lakh, the old regime won — a threshold most urban salaried employees with a home loan and 80C investments crossed easily.
New regime · ₹15L (no deductions)
Old regime · ₹15L (with ~₹3.75L deductions)
The gap widened further for anyone claiming HRA or higher 80C/80D/home-loan deductions, which is why the vast majority of salaried taxpayers stayed on the old regime in FY 2020-21.
✓New regime made sense if
- You claimed few or no deductions
- You had no home loan or 80C investments
- You wanted simpler filing without proofs
!Old regime was better if
- You had a home loan (Section 24(b))
- You invested ₹1.5L under 80C
- You paid rent and claimed HRA
- Total deductions crossed ~₹3.75L
How the New Regime Evolved Since FY 2020-21
The new regime launched in FY 2020-21 was heavily enhanced in later budgets to make it the default and genuinely attractive. Here is the arc from launch to the current year:
| Feature | FY 2020-21 (Launch) | FY 2023-24 (Revised) | FY 2025-26 (Current) |
|---|---|---|---|
| Basic exemption limit | ₹2.5 lakh | ₹3 lakh | ₹4 lakh |
| Zero-tax income (with rebate) | None (no 87A) | Up to ₹7 lakh | Up to ₹12 lakh |
| Standard deduction | Not allowed | ₹50,000 | ₹75,000 |
| 87A rebate | Not available | ₹25,000 (up to ₹7L) | ₹60,000 (up to ₹12L) |
| Default regime | Old regime | New regime | New regime |
| Number of slabs | 7 slabs | 6 slabs | 6 slabs (revised) |
For the exact live-year figures, always check the current income tax slabs page.
Want the current FY 2025-26 slabs where tax is nil up to ₹12 lakh?
See current slabs →Other Key FY 2020-21 Tax Changes
- Dividend taxation overhauled: the Dividend Distribution Tax (DDT) was abolished. From FY 2020-21, dividends became taxable in the investor's hands at slab rate, with 10% TDS on dividends above ₹5,000 per company per year.
- Employer retirement contributions capped: employer contributions above ₹7.5 lakh a year in aggregate across EPF, NPS and superannuation became taxable as a perquisite in the employee's hands.
- TDS on rent: the Section 194-IB threshold for TDS on rent by individuals/HUFs stayed at ₹50,000 per month.
FY 2020-21 introduced the choice, but the new regime only became compelling from FY 2023-24 onward, when the standard deduction and a bigger 87A rebate were added. If you are filing for a recent year, the maths is now the opposite of 2020-21 — the new regime is usually the cheaper default.
- Slabs & rebate: Finance Act 2020, incometax.gov.in
- New regime section: Section 115BAC, Income-tax Act (as introduced by Finance Act 2020)
- Current-year rates: income tax slabs (FY 2025-26 / AY 2026-27)
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.