Home Income Tax Income Tax Slabs 2021 & Tax Rates For FY 2020-21/ FY 2019-20/ FY 2018-19
Income Tax Slabs 2021 & Tax Rates For FY 2020-21/ FY 2019-20/ FY 2018-19

Income Tax Slabs 2021 & Tax Rates For FY 2020-21/ FY 2019-20/ FY 2018-19

by Sourish Samanta

What Is Income Tax In India? 

Income tax is a direct tax charged by a government on the income earned. The Income Tax Act, 1961, provides for this tax to be collected by the central government. In its Union budget, the government can annually change the income slabs or limits and tax rates. Income tax is progressive in nature as higher taxes are charged on higher income. 

Income does not just mean money that is earned through salaries or wages. It also includes house property income, business profits, business income, income for capital gains and income from other sources. The Government often provides some reliefs to make different deductions from the income of a person prior to the calculation of the tax to be charged.

What Does Income Tax Slab Mean? 

The government taxes all income earned by persons and companies in accordance with their income. The Taxpayers income is taxed by multiple levels. Generally the higher you earn the higher income tax you pay. In accordance with the Income Tax Act 1961, these tax brackets will change year after year and will be divided by age, income and gender. Hence tax shall be imposed on the earnings of an individual on the basis of such Income tax slabs.

Also Read: Challan 280 : How To Pay Your Income Tax Online With Challan 280

Different Heads Of Income 

Income From Salary: Salary or pension income includes basic salary and earnings, as well as pensions received by those who have retired. Salary and pension incomes are therefore included in the taxable income calculation.

Income From House Property Income: A person may let out their house on rent and this is called income from house property. They may own one or more house properties and rent them out. 

Income From Business Or Profession: This includes real and presumptive business income and professional income which an individual makes and is added to taxable income after the adjustment of expenses and available deductions.

Income From Capital Gains: Capital gains occur when gold, house, stocks, securities, mutual fund, etc., are sold. Capital gains on the sale of such assets are categorised as short-term and long-term capital gains, depending on the type of capital assets and the holding period.

Income From Other Sources: Other sources include taxable income from savings accounts interest, fixed deposits (FD), family pensions, etc. They also include  winnings from lottery, betting, horse racing etc. Any income not exempted by the government and not covered in above heads fall in this category. 

Importance Of Income Tax Slabs In India 

In India we have a progressive taxation method, i.e. higher the income higher the tax. Income tax rates are set by the tax department based on the income tax slab. The income tax slab also depends on different factors, such as  residential status, income,  assessee type and age.

Income tax slabs, rates and other related limits are subject to changes and is revised yearly during the Central Government’s Annual Budget as required.

Also Read: GST Rates in India – List of Goods and Service Tax Rates, Slab

Individual To Have Two Options To Choose From His Tax Calculations 

Each individual taxpayer is able to select from the financial year 2020-21 between two tax regimes: either the current or and the new one.. With the old tax system, existing exemptions from income taxation, such as House Rent Allowance, Leave Travel Allowance and deductions, can be continued under various provisions of the Income Tax Law of 1961. While those who choose to enter into the new regime are not allowed to claim majority of tax exemptions and deductions available under the old regime.

The old regime has higher tax rates and three income tax slabs, while the new system has lower tax rates and six income tax slabs.

Income Tax Slab Rate For FY 2020-21 onwards (New Regime)

INCOME TAX SLAB TAX RATES FOR INDIVIDUAL AND HUF BELOW AGE OF 60 YEARS   NRI’S
Upto Rs 2.5 lakhs NIL
2.5 lakhs to 5 lakhs  5%
Rs 5 lakhs to 7.5 lakhs  10%
Rs 7.5 lakhs to Rs 10 lakhs  15%
Rs  10 lakhs to Rs 12.5 lakhs  20%
Rs 12.5 lakhs to Rs 15 lakhs  25%
Rs 15 lakhs and above  30%

For all categories of individuals, i.e. persons up to the age of 60 year olds, seniors from 60 to the age of 80 year olds, and superior residents over the age of 80 year olds, the tax rates under the New tax regime are identical. Therefore, in the New Tax Regime the senior and senior citizens will not be able to benefit from an increased basic exemption limit.

Individuals with net taxable income below or equal to Rs 5 lakh are eligible for tax rebate u/s 87A, i.e. in both new and old/existing tax schemes and tax liability shall be nil for such individuals.

In all such cases an additional cess of health and education at a rate of 4%. (3% since FY 18-19 increased) is added to the income tax liability.

Also Read: Salary Calculator 2020-21 – Take Home Salary Calculator India

Surcharge applicable in all categories mentioned above in accordance with the following tax rates:

Total income > Rs.50 lakh 10% of income tax
Total income > Rs.1 crore 15% of income tax
Total income > Rs.2 crore 25% of income tax
Total revenue > Rs.5 crore 37% of income tax

Income Tax Slab Rate For FY 2020-21 (Old Regime)

Applicable rates for old regime                                     

INCOME TAX SLAB TAX RATES FOR INDIVIDUAL AND HUF BELOW AGE OF 60 YEARS       NON RESIDENT INDIANS
Upto Rs 2.5 lakhs NIL
2.5 lakhs to 5 lakhs  5%
5 lakhs to 10 lakhs 20%
Above Rs 10 lakhs  30%

For individuals HUF under 60 years and NRI under AY 2020-21 the tax exemption limit is up to Rs.2,50,000.

The tax amount as calculated above will be subject to a 4 percent health & education  cess.

Surcharge Applicable

1)Total income exceeding Rs.50 lakh up to Rs.1 crore surcharge is 10 percent tax.

2)Surcharge is 15% where total income exceeds Rs.1 crore.

Exemptions Allowed Under New Tax Regime 

List of allowances under the New Tax Rate System: 

  1. Contribution for specially qualified persons.
  2. Transportation allowance.
  3. Investment under section 80CCD in the notified pension scheme.
  4. Deduction under section 80JJAA for new employees.
  5. 32 of the Income Tax Act depreciation except for additional depreciation.
  6. Any allowance for work or transfer travel.

Partnership or LLP income tax rate as defined in the old/new system.

  • A partnership company/LLP is taxed at 30 per cent.
  • An % additional 12 is charged on income over Rs 1 crore with Education and health cessation at 4% 

Note:  Concession rates for companies / LLPs are not introduced into the New Tax System.

Income Tax Slab Rates For FY 2019-20 ( AY 2020-21 ) 

FOR INDIVIDUALS & HUF BELOW 60 YEARS AND NRI’S FY 2019-20

INCOME TAX SLAB TAX RATES FOR INDIVIDUAL AND HUF BELOW AGE OF 60 YEARS       NON RESIDENT INDIANS
Upto Rs 2.5 lakhs NIL
2.5 lakhs to 5 lakhs  5%
5 lakhs to 10 lakhs 20%
Above Rs 10 lakhs  30%

Income Tax Slab Rates For FY 2018-19 

FOR INDIVIDUALS & HUF BELOW 60 YEARS AND NRI’S FY 2018-19

INCOME TAX SLAB TAX RATES FOR INDIVIDUAL AND HUF BELOW AGE OF 60 YEARS       N
Upto Rs 2.5 lakhs NIL
2.5 lakhs to 5 lakhs  5%
5 lakhs to 10 lakhs 20%
Above Rs 10 lakhs  30%

Income Tax Slab Rate For FY 2017-18 

FOR INDIVIDUALS & HUF BELOW 60 YEARS AND NRI’S FY 2017-18

INCOME TAX SLAB TAX RATES FOR INDIVIDUAL AND HUF BELOW AGE OF 60 YEARS       NRI’S
Upto Rs 2.5 lakhs NIL
2.5 lakhs to 5 lakhs  5%
5 lakhs to 10 lakhs 20%
Above Rs 10 lakhs  30%

An additional 4 percent health & education cess of the tax amount calculated as above shall apply.

Application of the surcharge 

  1. 10 percent, with total income exceeds Rs.50 lakh to Rs.1 crore.
  2. 15% percent , with total income over Rs.1 crore. – 15%.

Also Read: Income tax Calculator – Calculate Your Taxes For FY 2021-22 Use Tax Calculator Online 

Conclusion  

The government has given different ways for paying income tax, depending on whether a person is an employee, a HUF, a corporation, or an ordinary citizen.This kind of taxation makes the tax system in the country progressive and fair. During every budget, these tax slabs tend to change. For different types of taxpayers, these tax rates are different. Every year in the month of February our finance minister presents our budget which includes new amendments in our tax system and any changes in slab rates. Hope you loved reading this article. Thanks for sharing your valuable time. 

FREQUENTLY ASKED QUESTIONS –

Do I have to file ITR if my income is within the Rs. 2.5 lakh income tax slab on my annual income?

No, if your income is below the 2.5 lakh, then you are not required to file income tax. However filing an income tax return might be beneficial to you, especially when you need to show a proof of income.

How can I submit an online income tax return?

Log onto the income tax portal, register as a user and login. Follow the onscreen  instructions to file your income tax return.

How can I calculate income tax surcharge ?

The surcharge is calculated on the tax payable rather than on the income earned. For example, if you have Rs 1000 income with 30 percent tax, your income tax will be Rs. 300. The surcharge on the tax, ie 10 % on Rs.300 is Rs. 30. 

What does the IT Act mean by relief pursuant to Section 87 A?

Section 87 A provides for the claim of a rebate to anyone resident in India with income that is not greater than Rs 5,00,000. Therefore, a full tax rebate is available to persons who have a total taxable income of less than Rs 5 lac. This rebate is only valid for individuals, not for companies etc. and is considered before adding 4 percent  health and education cess.

How can the senior citizen’s income tax age be calculated?

Persons over the age of sixty are considered as senior citizens, whilst persons over eighty years are considered to be superior citizens for income tax purposes. 

How much income in India is tax-free or exempt ? 

For various categories of taxpayers, the limit is different. No individual  taxpayer with income up to Rs 2.5 Lakh, and are under 60 years of age are required to pay income tax. Individuals over the age of 60 but under the age of 80 need not pay taxes for income upto Rs. 3 lakhs. No tax up to income of Rs. 5 lakhs is required for individuals over 80 years.

Do I have to opt for a new tax scheme when submitting AY 20-21 returns?

No, the new tax regime is an optional and has been introduced to simplify tax filing. The taxpayer may choose a New Tax Scheme or maintain the Old Tax Scheme. If you are an employee, the choice should be made at the beginning of the year. 

How can I know the details of my tax payment?

Once you or any other person deposits the tax on the government and you have it deposited on your behalf, the total amount of tax that you deposit in relation to your PAN is reflected in Form 26AS. You can download the statement on the income tax e-filing website.

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