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Saturday, December 5, 2020

Income Tax Slab 2020 & Tax Rates in India for FY 2020-21 – Budget 2020 Revised IT Slabs (AY 2021-22)

Budget 2020 has announced a new tax regime giving taxpayers an option to pay taxes as per the new tax slabs from FY 2020-21 onwards.

Income tax slabs under the new tax regime for all individuals for FY 2020-21 (AY 2021-22)

Income Tax SlabTax Rate
Up to Rs 2.5 lakhNIL
Rs 2.5 lakh to Rs 5 lakh5% (Tax rebate of Rs 12,500 available under section 87A)
Rs 5 lakh to Rs 7.5 lakh10%
Rs 7.5 lakh to Rs 10 lakh15%
Rs 10 lakh to Rs 12.5 lakh20%
Rs 12.5 lakh to Rs 15 lakh25%
Rs 15 lakh and above30%
  • The tax calculated on the basis of such rates will be subject to health and education cess of 4%.

  • Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will have to give up certain exemptions and deductions.

  • Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.

    1. Leave Travel Allowance (LTA)

    2. House Rent Allowance (HRA)

    3. Conveyance

    4. Daily expenses in the course of employment

    5. Relocation allowance

    6. Helper allowance

    7. Children education allowance

    8. Other special allowances [Section 10(14)]

    9. Standard deduction

    10. Professional tax

    11. Interest on housing loan (Section 24)

    12. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)

  • Points to remember while opting for the new tax regime:

    1. Option to be exercised on or before the due date of filing return of income for AY 2021-22

    2. In case a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once. A business taxpayer withdrawing from the optional tax regime has to follow the regular income tax slabs.

According to the current income tax laws in India, the income tax rate on resident individuals varies based on their age. There are different tax slabs applicable to the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual, aged below 60 years, with an income less than Rs 2.5 lacs is exempt from paying income tax.

Given below are the tables for the latest income tax slabs for FY 2018-19 and FY 2019-20.

Income Tax Slabs & Rates for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2019-20 – Part I

Income Tax SlabTax Rate for Individual & HUF Below the Age Of 60 Years
Up to ₹2,50,000*Nil
₹2,50,001 to ₹5,00,0005% of total income exceeding ₹2,50,000
₹5,00,001 to ₹10,00,000₹12,500 + 20% of total income exceeding ₹5,00,000
Above ₹10,00,000₹1,12,500 + 30% of total income exceeding ₹10,00,000

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Let’s understand the tax calculation for rebate with the help of an example:

Source of income (FY 2019-20)Income (Rs)
Salary (6,50,000)
Less: Standard deduction ( 50,000)6,00,000
Interest on fixed deposit50,000
Gross total income6,50,000
Less: Deduction under section 80C1,50,000
Total income5,00,000
Income-tax (@ 5% from Rs 2.5 to 5 lakh)12,500
Less: Rebate u/s 87A12,500
NIL

Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2019-20 – Part II

Income Tax SlabsTax Rate for Senior cetizens aged 60 Years But Less than 80 Years
Income up to Rs 3,00,000*No tax
Income from Rs 3,00,000 – Rs 5,00,0005%
Income from Rs 5,00,000 – 10,00,00020%
Income more than Rs 10,00,00030%

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Let’s understand the tax calculation for rebate with the help of an example:

Source of income (FY 2019-20)Income (Rs)
Salary (4,00,000)
Less: Standard deduction ( 50,000)3,50,000
Income from house property2,50,000
Interest on fixed deposit50,000
Gross total income6,50,000
Less: Deduction under section 80C1,50,000
Total income5,00,000
Income-tax (@ 5% from Rs 3 to 5 lakh)10,000
Less: Rebate u/s 87A10,000
NIL

Income Tax Slabs for Super Senior Citizens(80 Years Old Or More) for FY 2019-20 – Part III

Income Tax SlabsTax Rate for Super Senior Citizens (Aged 80 Years And Above)
Income up to Rs 5,00,000*No tax
Income from Rs 5,00,000 – 10,00,00020%
Income more than Rs 10,00,00030%

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Let’s understand the tax calculation for a rebate with the help of an example:

Source of income (FY 2019-20)Income (Rs)
Salary (3,50,000)
Less: Standard deduction ( 50,000)3,00,000
Income from house property2,50,000
Interest on fixed deposit1,00,000
Gross total income6,50,000
Less: Deduction under section 80C1,50,000
Total income5,00,000
Income-tax (nil below Rs 5 lakh)NIL
Less: Rebate u/s 87ANIL
NIL

Surcharge applicable to the individuals covered in Part I, II and III:

Income limitSurcharge Rate on the amount of income tax
Net income exceeds Rs 50 lakh but doesn’t exceed Rs 1 crore10%
Net income above Rs 1 crore but doesn’t exceed Rs 2 crore15%
Net income exceeds Rs 2 crore but doesn’t exceed Rs 5 crore25%
Net income exceeds Rs 5 crore37%

Income Tax Slabs for Domestic Companies for FY 2019-20 – Part IV

Turnover ParticularsTax Rate
Gross turnover upto 400 Cr. in the FY 2017-1825%
Gross turnover exceeding 400 Cr. in the FY 2017-1830%
Where the company opted for Section 115BA25%
GWhere the company opted for Section 115BAA22%
Where the company opted for Section 115BAB15%

In addition cess and surcharge is levied as follows:

Cess: 4% of corporate tax

Surcharge applicable:

Income LimitSurcharge Rate on the amount of income tax
Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Crore7%
Net income exceeds Rs.10 Crore12%

However, the rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be 10% irrespective of amount of total income.

(FY 2018-19):

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2018-19 – Part I

Income Tax SlabsTax Rate for Individual & HUF Below the Age Of 60 Years
Up to ₹2,50,000*Nil
₹2,50,001 to ₹5,00,0005% of total income exceeding ₹2,50,000
₹5,00,001 to ₹10,00,000₹12,500 + 20% of total income exceeding ₹5,00,000
Above ₹10,00,000₹1,12,500 + 30% of total income exceeding ₹10,00,000

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2018-19 – Part II

Income Tax SlabsTax Rate for 60 Years Old Or More but Less than 80 Years Old
Income up to Rs 3,00,000*No tax
Income from Rs 3,00,000 – Rs 5,00,0005%
Income from Rs 5,00,000 – 10,00,00020%
Income more than Rs 10,00,00030%

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Income Tax Slabs for Super Senior Citizens(80 Years Old Or More) for FY 2018-19 – Part III

Income Tax SlabsTax Rate for Super Senior Citizens (Aged 80 Years And Above)
Income up to Rs 5,00,000*No tax
Income from Rs 5,00,000 – 10,00,00020%
Income more than Rs 10,00,00030%

Note: An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Surcharge applicable to the individuals covered in Part I, II and III:

Income limitSurcharge Rate on the amount of income tax
Net income exceeds Rs.50 Lakhs but doesn’t exceed Rs. 1 Crore10%
Net income exceeds Rs.1 Crore 15%

Income Tax Slabs for Domestic Companies for FY 2018-19 – Part IV

Turnover ParticularsTax Rate
Gross turnover upto 250 Cr. in the FY 2016-1725%
Gross turnover exceeding 250 Cr. in the FY 2016-1730%

In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax

Surcharge applicable:

Income LimitSurcharge Rate on the amount of income tax
Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Crore7%
Net income exceeds Rs.10 Crore12%

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