Income Tax Slabs and Tax Rates in India (FY 2020-21 budget, Revised IT slabs AY 2021-22)

New Income Tax Slabs and Tax Rates in India Financial Year 2020-2021 budget, Revised IT slabs AY 2021-2022) https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia.gov.in/charts++tables/tax+rates.htm&k&IsDlg=0

Income Tax Slabs

Indian Income Tax department uses the slab system to levy a tax on individual taxpayers. The system provided different tax rates for each taxpayer and corporates. The tax rates fluctuate with every increase in the income slab. The slabs change during every financial year.

However, the income tax slabs vary according to the age and entities of the individual. Today (2020) budget has introduced a new tax slab, which gives individual taxpayers the option for paying taxes according to the tax slab. There are different tax benefits available for every taxpayer. However, it would help if you learned about the income slab and new rates to enjoy the benefits.

income tax slabs for fy 2021-22

Income Tax slabs for residents

For individual residents, the income slab is decided according to his/her income. The income tax law provides three categories of the individual taxpayer.

  1. Individual within the age of 60 years (residents and non-residents)
  2. The resident senior citizens at the age of 60 years but below 80 years. 
  3. A resident who is super senior citizens age above 80 years.

Individual Tax slabs for individual residents (below age 60 residents and non-residents)

  • Tax calculated in the above rates is subjected to health and education cess of 4%.
  • Anyone wishing to go beyond the new income slabs cannot get some exemptions and deductions benefits.

Exemptions and deductions which are not available

  • House allowance
  • Leave travel allowance
  • Conveyance.
  • Daily expense during employment.
  • Relocation allowance
  • Helper allowance
  • Children allowance
  • Special allowance
  • Standard deduction
  • Professional tax
  • Housing loan interest

Changes in the new income tax slabs in Budget session 2019-20

  • The annual income of up Rs. 5 lakh for resident individuals is exempted from tax.
  • An increase in the surcharge(2.5%) for individuals with an annual income of Rs.2 Crore to Rs. 5 Crore. Individuals with Rs. 5 Crore income get a 37% surcharge increase. 
  •  The yearly turnover for up to Rs. 400 Crore for corporate income tax slab of 25%.
  • There a TDS of 2% for any chargeable cash withdrawal above Rs. 1 Crore annually.

Income tax slabs for individuals within 60 years

Here is an example of an individual aged 40 years with Rs. 7 lakh’s annual income. Taxation calculation is:

Income tax on Rs. 2.5 Lakh @ NilRs.0/-
Incometax on Rs. 2.5 Lakh (Rs. 5 Lakh – Rs. 2.5 Lakh) @ 5%Rs.12,500/-
Income tax on Rupees. 2 Lakh (Rs. 7 Lakh – Rs. 5 Lakh) @ 20%Rs.40,000/-
Total Incometax = Rs. 0 + Rs. 12,500 + Rs. 40,000Rs.52,500/-
Plus cess @ 4% on Rs. 52,500Rs.2,100/-
Total income Tax payable = Rs. 52,500 + Rs. 2,100Rs.54,600/-

Income tax slabs for individuals between 60-80 years (senior citizens)

Income tax for individuals above 80 years (super senior citizens FY2019-20)

Taxpayers with an income of below Rs.5 lakh can get a rebate of Rs.12,500/- (section 87(A) income tax Act 1961). There will be a standard deduction of up to Rs.50,000/- in the FY2019-20 budget.  The same calculation above applies even to the Hindu Undivided Family HUF. 

Income tax slabs for other entities

Domestic company

The domestic company’s tax calculation depends on the annual turnover earned from the last/previous year.

Gross Turnover Limit (For Previous Year)Income Tax Rate
Upto Rupees 2.5 Crore (INR)25%
Above Rupees 2.5 Crore (INR)30%

The new budget takes a turnover limit of Rs. 400 Crore and surcharges of 7% for a domestic company. For income between Rs. 1 Crore and Rs. 10 Crore, the surcharge is 10%.  The law also levies 4%Cess for health and education.

Partnerships firm/LLP

There are no variable income tax slabs for partnership firms and LLP.  The total income is taxable at the rate of 30%. The surcharges are divided into two categories:

  • 7% tax calculated if the total income tax is between Rs. 1 Crore and Rs.10 Crore.
  • 12% tax for the calculated income tax above Rs. 10 Crore.

The health and education Cess of 4% is levied on the total income.

Co-operative society

The co-operative society gets a surcharge of 12% for income tax above Rs. 1Crore.

Note: Please refer the official website https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia.gov.in/charts++tables/tax+rates.htm&k&IsDlg=0 page for more information

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