From FY 2020-21, taxpayers can choose between two income tax regimes – the existing/old tax regime and the new, concessional one. By opting for the existing tax regime, the taxpayer can continue to avail existing deductions such as section 80C, section 80D etc. of the Income-tax Act, 1961 and tax exemptions like house rent allowance, LTC Cash Voucher Scheme etc. Although the new, concessional tax regime offers lower tax rates as compared to the old tax regime, by opting for the new regime the taxpayer will have to forgo most tax deductions and exemptions that are available under the existing regime.Here are the latest income tax rates and slabs under the new tax regime for FY 2020-21 Income tax slabs (Rs) Income tax rates (%) Up to 2,50,000 Nil From 2,50,001 to 5,00,000 5 5,00,001 to 7,50,000 10 7,50,001 to 10,00,000 15 10,00,001 to 12,50,000 20 12,50,001 to 15,00,000 25 Above 15,00,000 30 As it can be seen from the table above, unlike in the old tax regime where the highest tax rate of 30% is levied on individuals having income starting from Rs 10,00,001, the highest tax rate in the new tax regime is levied on individuals having income starting from Rs 15,00,001.Do keep in mind that commonly availed deductions such as investments in Employees’ Provident Fund (EPF), Public Provident Fund (PPF) etc or tax exemption on rent paid or food coupons received etc will not be available under the new tax regime. Only deduction under section 80CCD (2) of the Income-tax Act, i.e., deduction on the employer’s contribution to the Tier-I NPS account is available in the new tax regime. The maximum deduction that can be claimed is 10% of basic salary plus dearness allowance (DA) in a financial year by an individual (14% is applicable for a central government employee).Effective from FY 2020-21, aggregate contribution to PF, NPS and superannuation funds exceeding Rs 7.5 lakh in a financial year will be taxable in the hands of an employee. Further, any interest, dividend etc. earned on excess contribution will be taxable in the hands of an employee.How to know which tax regime is beneficial for you?If you are confused about which tax regime will be beneficial for you, then you need to calculate the income tax liability inclusive of cess at 4% under both tax regimes. Once you have calculated the income tax liability in both tax regimes, you can choose the one where your tax liability is lower.You can use ET Wealth’s income tax calculator to know in which tax regime your tax liability will be lower. Click here to use the income tax calculator.As per chartered accountants and tax experts, anyone claiming more than Rs 2.5 lakh in deductions in a financial year will not gain from switching to the new tax structure.Also Read: Which tax regime is beneficial for you – old or new?Things to keep in mind while choosing new income tax regimeAs per income tax laws, salaried individuals and pensioners not having business income are eligible to choose between the new and old tax regimes every financial year. This would mean that if you have opted for the new tax regime in FY 2020-21 (on-going financial year), then you can choose the old tax regime in the next financial year, i.e., FY 2021-22.However, if an individual has business income and opts for the new tax regime in FY 2020-21, then the taxpayer will continue to pay tax as per the new tax regime for all future financial years. Such individuals do not have the option to choose between the two tax regimes in every financial year. However, individuals with business income who have opted for the new tax regime have once in a lifetime option to switch back to the old tax regime. Once this option of switching back is exercised, then the individual cannot opt for the new tax regime again.Under both the tax regimes, if an individual’s income does not exceed Rs 5 lakh in financial year, then a rebate of Rs 12,500 is available. Thus, irrespective of which tax regime is chosen, no tax will be payable by an individual if his/her income does not exceed Rs 5 lakh in financial year.There is no increased basic exemption limit available for senior citizens and super senior citizens under the new tax regime. Individual irrespective of his/her age will have basic exemption limit of Rs 2.5 lakh in a financial year, if new tax regime is opted.As per the Central Board of Direct Taxes (CBDT) circular dated April 13, 2020, for TDS on salary, once the choice of tax regime is communicated to the employer, then the employee cannot change the choice of tax regime during the financial year. However, at the time of filing income tax return, an individual will have an option to switch to any tax regime of his/her choice, irrespective of what has been communicated to the employer.