Income Tax Slabs

The Union Budget 2020 introduced a new concessional income tax regime with reduced tax rates
for those willing to forego 70 tax-exemptions and deductions under it. This new tax system has
been made optional and continues to co-exist with the old/existing one that comprises of three
tax rates and various tax exemptions and deductions available to a taxpayer. The new income tax
slabs and rates have come into effect from April 1, 2020 for FY 2020-21.

Income tax rates and slabs under  ..

The Union Budget 2020 introduced a new concessional income tax regime with reduced tax rates
for those willing to forego 70 tax-exemptions and deductions under it. This new tax system has
been made optional and continues to co-exist with the old/existing one that comprises of three
tax rates and various tax exemptions and deductions available to a taxpayer. The new income tax
slabs and rates have come into effect from April 1, 2020 for FY 2020-21.

Income tax rates and slabs

ndividuals with a net taxable income of up to Rs 5 lakh in a financial year will be able to avail
tax rebate of Rs 12,500 under section 87A in both the existing/old and new concessional tax
regimes. Effectively, this means that individual taxpayers with net taxable income of up to Rs 5
lakh will continue to pay zero tax in both the tax regimes.

However, individuals who have opted for the new tax regime would not be able to avail common
tax breaks such as deductions under section 80C for m ..

What is the Income Tax Slab?

In India, where individuals earn an income within a diverse range, levying a tax on all
individuals at a specific rate would not be a fair policy. The Act, therefore, segregates income
ranges and levies tax at different rates as per the segregation. These groups are thus known as tax
slabs.

The slabs also vary based on age if the taxpayer is an individual and as per the classification of
entities. Income tax slabs are amended and revised each year during the Central Government’s
Budget Session. These amendments and revisions once proposed are approved by the Parliament
and implemented as law.

Income Tax Slabs for Resident Individuals

An individual resident’s basic exemption limit is decided based on his/her income. There are
three categories of individual taxpayers that are categorized as:

 Individuals within the age of 60 years which includes residents as well as non-residents.
 Resident senior citizens with age above 60 years but below 80 years.
 Resident Super senior citizens with age above 80 years.

Income Tax Slabs for Individuals below 60 years of age in FY 2020-21 (AY 2021-
22)

Income Tax Slab Tax Applicable as per New Regime

Rs.0 – Rs.2,50,000
Rs.2,50,001 – Rs. 5,00,000
Rs.5,00,001 – Rs. 7,50,000
Rs.7,50,001 – Rs. 10,00,000
Rs.10,00,001 – Rs.12,50,000
Rs.12,50,001 – Rs.15,00,000
Above Rs. 15,00,000
Nil
5.00%
Rs.12500 + 10% of total income exceeding Rs.5,00,000
Rs.37500 + 15% of total income exceeding Rs.7,50,000
Rs.75000 + 20% of total income exceeding Rs.10,00,000
Rs.125000 + 25% of total income exceeding Rs.12,50,000
Rs.187500 + 30% of total income exceeding Rs.15,00,000

1. The tax calculated on the basis of mentioned rates will be subject to health and education
cess of 4%
2.  Any individual who wishes to go by the new slab rates FY 2020-21 onwards will not be
able to avail of certain exemptions and deductions/ tax benefits.
3.  List of exemptions and deductions that won’t be available are:

 Leave Travel Allowance (LTA)

 House Rent Allowance
 Conveyance
 Daily expenses in the course of employment
 Relocation allowance
 Helper allowance
 Children education allowance
 Other special allowance [Section 10(14)]
 Standard deduction
 Professional tax
 Housing loan interest (Section 24)
 Deduction under Chapter VI-A (80C, 80D, 80E, and so on) (Except section 80CCD(2) –
NPS contribution by the employer and 80JJA)

Important Things to Remember while Opting for the New Tax Regime

The options to be exercised on or before for every previous year where the individual or the HUF
has no business income.
In case a taxpayer having a business income, an option once exercised cannot be taken back.
Further, in case the taxpayer withdraws the option, it will be an irreversible option as he/she
won’t be able to opt-in for the option again.

Income Tax Amendments in FY 2019-20

In the budget speech of Financial Year (FY) 2019-20, the Finance Minister announced certain
revisions to the income tax rate structure. The income tax slab will thus be in force for the
Assessment Year (AY) 2020-21.

Here are a few highlights of the changes announced in the Budget Session 2019-20.

 An annual income of up to Rs. 5 lakh for resident individuals exem

 For individuals with annual income between Rs. 2 Crore to Rs. 5 Crore, the surcharge
had been increased to 25%. The surcharge had also been increased to 37% for individuals
with an annual income above Rs. 5 Crore.
 Annual turnover of up to Rs. 400 Crore brought under corporate income tax slab of 25%.
 TDS at the rate of 2% chargeable for cash withdrawals above Rs. 1 Crore in a year.

Income Tax Slabs for Individuals within 60 years of Age (FY – 2019-2020)

Slabs for Taxable Income Applicable Tax Rates & Cess

Within Rs. 2.5 Lakh Nil
Taxable income’s 5%
From Rs. 2.5 Lakh to 5 lakh
plus 4% cess on tax
5% for taxable income between Rs. 2.5 Lakh and 5 Lakh

From Rs. 5 Lakh to 10 Lakh + 20% on taxable income between Rs. 5 Lakh and 10 Lakh

plus 4% cess on tax

5% for taxable income between Rs. 2.5 Lakh and 5 Lakh

+ 20% on taxable income between Rs. 5 Lakh and 10 Lakh

Above Rs. 10 Lakh
+30% on taxable income above Rs. 10 Lakh

plus 4% cess on tax

Understand this taxation structure with the help of this example. Mr. X, aged 40 years, has an
annual income of Rs. 7 Lakh. The tax calculation for him will thus be as follows.

Income tax on Rs. 2.5 Lakh @ Nil = Rs. 0

Income tax on Rs. 2.5 Lakh (Rs. 5 Lakh – Rs. 2.5 Lakh) @ 5% = Rs. 12,500

Income tax on Rs. 2 Lakh (Rs. 7 Lakh – Rs. 5 Lakh) @ 20% = Rs. 40,000

Total Income tax = Rs. 0 + Rs. 12,500 + Rs. 40,000 = Rs. 52,500

Plus cess @ 4% on Rs. 52,500 = Rs. 2,100

Total income Tax payable = Rs. 52,500 + Rs. 2,100 = Rs. 54,600

The Income Tax Act, 1961 also allows for deductions under sections 80(C) and 80(U) as
applicable. In such cases, tax is calculated after taking into account such deductions, and cess
added to arrive at the total tax payable.

Now, with this understanding of what is income tax slab and how tax is calculated on this basis,
have a look at the tax applicability for resident individuals in other age brackets.

Income Tax Slabs for Individuals between 60 and 80 Years (Senior Citizens – FY
– 2019-20)

Slabs for Taxable Income Applicable Tax Rates & Cess

Within Rs. 3 Lakh Nil
5% on taxable income
From Rs. 3 Lakh to 5 lakh
plus 4% cess on tax
5% on taxable income between Rs. 3 Lakh and Rs. 5 Lakh

From Rs. 5 Lakh to 10 Lakh + 20% on taxable income between Rs. 5 Lakh and 10 Lakh

plus 4% cess on tax

5% for taxable income between Rs. 3 Lakh and Rs. 5 Lakh

+ 20% on taxable income between Rs. 5 Lakh and 10 Lakh

Above Rs. 10 Lakh
+30% on taxable income above Rs. 10 Lakh

plus 4% cess on tax

Income tax slabs for individuals above 80 years (Super senior citizens – FY –
2019-20)

Slabs for Taxable Income Applicable Tax Rates & Cess

Within Rs. 5 Lakh Nil
From Rs. 5 Lakh to 10 Lakh 20% on taxable income between Rs. 5 Lakh and 10 Lakh
 plus 4% cess on tax
20% on taxable income between Rs. 5 Lakh and 10 lakh

Above Rs. 10 Lakh +30% on taxable income above Rs. 10 Lakh

plus 4% cess on tax

Also, resident individuals with annual income below Rs. 5 Lakh are eligible for a rebate of Rs.
12,500 under section 87(A) of the Income Tax Act, 1961. Additionally, a standard deduction of
up to Rs. 50,000 is allowed for the FY 2019-20.

Note that these tax calculations are also applicable for Hindu Undivided Family (HUF).

Surcharges Applicable for Resident Individuals

For the FY 2019-20, new surcharge rates have also been introduced on the income of the rich.
Check the table below to know how it applies.

Annual Income (Taxable) Applicable Surcharge Rates

Between Rs. 50 Lakh and Rs. 1 Crore 10%
From Rs. 1 Crore to 2 Crore 15%
From Rs. 2 Crore to 5 Crore 25%
Rs. 5 Crore and above 37%

Income Tax Slabs for Other Entities

Now, take a look at the income tax slab applicable to other entities.

 Domestic Company

For a domestic company, tax applicability for a given FY depends on the gross annual turnover it
earned in the previous year.

Gross Turnover Limit (For Previous Year) Income Tax Rate

Up to Rs. 2.5 Crore 25%
Above Rs. 2.5 Crore 30%

As per the announcement in the latest budget session, the introduction of income tax slab
2019 takes the new gross turnover limit of Rs. 400 Crore for the purpose. Also, surcharge at the
rate of 7% is applicable if the income of a dome tic company is between Rs. 1 Crore and Rs. 10
Crore. For income above Rs. 10 Crore, a surcharge of 10% is applicable.

A health and education cess of 4% is also levied on the tax calculated.

  Partnership firm/LLP

For partnership firms and LLPs, there are no variable income tax slabs as the total income is
taxable at the rate of 30%. Surcharge levied on firms falls under two categories mentioned
below.

 7% of tax calculated if the total income is between Rs. 1 Crore and Rs. 10 Crore

 12% of tax calculated for total income above Rs. 10 Crore

Additionally, health and education cess at the rate of 4% is also levied on the total tax.

 Co-operative Society

The income tax slab rates for a co-operative society are given in the following table.

Income slabs Applicable Rates

10% on income
Income below Rs. 10,000
Plus 4% cess on tax
10% on Rs. 10,000

Between Rs. 10,000 and 20,000 +20% on income between Rs. 10,000 and Rs. 20,000

Plus 4% cess on tax

10% on Rs. 10,000

+20% on income between Rs. 10,000 and Rs. 20,000

Above Rs. 20,000
+30% on income above Rs. 20,000

Plus 4% cess on tax

Also, a surcharge of 12% is applicable on income above Rs. 1 Crore.

 Local authority

Income earned by a local authority is also taxable. However, there are no slab divisions and any
income generated by a local authority is taxed at a flat rate of 30%.

Additionally, health and education cess is also levied at the rate of 4% on the tax calculated. A
surcharge of 12% is also levied if the local authority’s annual income exceeds Rs. 1 Crore.

Income Tax Slabs for FY 2018-19 (AY 2019-20)

Income Tax Slabs
Income Up to Rs.2,50,000*
Rs.2,50,001 to Rs.5,00,000
Rs.5,00,001 to Rs.10,00,000
Above Rs.10,00,000
Tax Applicable for Individual & HUF Below 60 Years
Nil
5% of total income remaining after Rs.2,50,000
Rs.12,500 + 20% of total income remaining after Rs.5,00,000
Rs.1,12,500 + 30% of total income remaining after Rs.10,00,000

However, an additional 4% health and education tax will be applicable on the final tax amount as
per the calculations given above.

Income Tax Slabs for Senior Citizens (Age more than 60 years but less than 80
years) for FY 2018-19 

Income Tax Slabs Tax Applicable for Individual & HUF Below 60 Years
Up to Rs.3,00,000* Nil
Rs.3.000,00o to Rs.5,00,000 5%
Rs.5,00,000 to Rs.10,00,000 20%
Income above Rs.10,00,000 30%

Note: There is an additional 4% health and education cess on the tax amount under this tax slab
also

Income Tax Slabs for Super Senior Citizens(80 years or more) for FY 2018-19
(AY 2018-19)

Income Tax Slabs Tax Rate Applicable for Super Senior Citizens
Income up to Rs, 5,00,000 No Tax
From Rs.5,00,000 – Rs. 10,00,000 20%
More than Rs. 10,00,000 30%

Note: 4% Health and education cess applicable

Surcharges Applicable for Resident Individuals

Surcharge Rate on Income Tax

Income Limit
Amount
Net income more than Rs. 50 lakhs but doesn’t exceed Rs.
10%
1 crore
Net Income is more than Rs 1 crore 15%

Income Tax Slabs for Domestic Companies

Turnover Tax Rate

Gross turnover up to 250 Cr. In the FY 2016-17 25%
Gross turnover exceeding 250 Cr. In the FY 2016-17 30%

Income tax return filing is mandatory if the income falls under taxable slabs. So, make sure to
keep a check on the due dates and file your income tax returns to avoid penalty.