Income Tax Slabs in India - FY 2019-20
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How much Income Tax is payable is a question for which most people consult their chartered accountants or take help from their tax consultants. It is helpful to have a basic idea about the rules impacting your finances and in this article, you will get to know about Income Tax Slabs, what it means for you and what the Income Tax Slab is for the year 2019-2020.

What is an income tax slab?

Under the Income Tax Act, 1961 – the percentage of income that is payable as tax to the Government is based on the amount of income that a person has earned during a year.

Keeping in mind, the fact that the outgoing of tax is tougher for people earning lower income –in India the rate of tax gets higher for people earning higher amounts in a financial year. This is done by applying a different tax rate for different amounts of annual income. These slabs are tweaked by the government in the annual budget announcements.

For the financial year 2019-20, which means the year from April 1, 2019 – March 31, 2020 – the tax rate slabs have been fixed as below.

Income Tax Slabs for Individuals

Individuals have been categorized into three categories of taxpayers:


1. Individuals who are below the age of 60 years

2. Senior citizens who are between 60 years and 80 years old.

3. Super senior citizens who are above 80 years old.

 

Tax Rates for Individuals as per budget 2019-2020

Income Tax Slab

(in Rupees)

Tax Rate for Individual Below the Age Of 60 Years

0 to 2,50,000*

Nil

2,50,001 to 5,00,000

5% of total income exceeding 2,50,000

5,00,001 to 10,00,000

Tax Amount of 12,500 for the income up to 5,00,000

+ 20% of total income exceeding 5,00,000

Above 10,00,000

Tax Amount of 1,12,500 for the income up to 10,00,000

+ 30% of total income exceeding 10,00,000

 

Tax Rates for Senior Tax Payers between the age of 60 years to 80 years old

Income Tax Slab

Senior Citizens (between 60 years – 80 years)

Up to 3,00,000

Nil

 3,00,001 to 5,00,000

5% of income exceeding 3,00,000

 5,00,001 to 10,00,000

Tax Amount of 10,000 for the income up to 5,00,000

+ 20% of total income exceeding 5,00,000

Above 10,00,000

Tax Amount of 1,10,000for the income up to 10,00,000

+ 30% of total income exceeding 10,00,000

 

Tax Rates for Super Senior Tax payers above the age of 80 years

Income Tax Slab

Very Senior Citizens of and above 80 years of age

Up to 5,00,000

Nil

 5,00,001 to 10,00,000

20% of income exceeding 5,00,000

Above 10,00,000

Tax Amount of 1,00,000for the income up to 10,00,000

+ 30% of total income exceeding 10,00,000

SOME IMPORTANT POINTS:

  • The income tax rates are applied to the annual income calculated. Thereafter Surcharge and Cess is added to the tax payable.
    • A surcharge is also applicable slab wise. The surcharge is calculated on the Tax amount. If the income is:
  1. Above Rs.50,00,000 and up to Rs.1 crore – then 10% surcharge is applicable
  2. Above Rs.1 crore and up to Rs.2 crore – then 15% surcharge is applicable.

In the Union Budget 2019-20, a new surcharge on income tax for super-rich individuals has been levied. So, individuals earning:

  1. Between Rs.2 crores and up to Rs.5 crore –then 25% surcharge is applicable;
  2. For Above Rs. 5 crore – then 37% surcharge is applicable.
  • An additional Cess of 4% for Health & Education is applicable to the income tax plus surcharge.

Investments under Section 80C can be made up to the tune of Rs.1,50,000 in different investments such as PPF, NSC, etc. and an additional Rs.50,000/- under Section 80 CCD(1B) in NPS can be made.

  • Section 87A allows tax rebate to Individuals whose total annual income falls below Rs.5,00,000. This rebate is limited to Rs.12,500/- and essentially acquits people from having to pay taxes under Rs.5,00,000/-, However, the return of income has to be filed if income is over Rs.2,50,000/-. Individuals with income exceeding Rs.5,00,000/- do not get the benefit of any rebate under section 87A

Exempted Income Categories

Income which is exempt from Tax is stated under Section 10 of the Income Tax Act. These include among others income from agriculture, special allowances etc.

Income Tax Slabs for HUF

The Income Tax Slab for Hindu Undivided Family (HUF) is the same as the Tax slabs for Individuals under the age of 60 years in the year 2019 – 2020.

Income Tax Slabs for Partnership Firms

There is a flat tax rate for Partnership Firms and LLPs (Limited Liability Partnerships) and they are to pay Income Tax at the rate of 30%.

Added to the tax amount is:

  1. Surcharge on tax: 12% in cases where the annual income is more than Rs.1 Crore
  2. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Local Authorities

Local Authorities too are to be taxed at a flat tax rate of 30%.

Added to the tax amount is:

  1. Surcharge on tax: 12% in cases where annual income is more than Rs.1 Crore
  2. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Domestic Companies

Domestic Companies have received a boost. With the turnover raised from 250 crores to 400 crores for a tax rate of 25%. The turnover slab wise tax calculation is:

Turnover Particulars

 

Gross turnover up to 400 Cr. in the previous year

25% (subject to conditions as set out in the Taxation Laws Amendment Ordinance, 2019)

Gross turnover exceeding 400 Cr. in the previous year

30% (subject to conditions as set out in the Taxation Laws Amendment Ordinance, 2019)

 Added to the tax amount is:

Surcharge on tax:

  1. 7% in cases where annual income is between Rs.1 Crore to Rs.10 Crore
  2.  12% in cases where annual income is more than Rs.10 Crore

Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Foreign Companies

Foreign Companies are taxed at a rate of 40%.

Added to the tax amount is:

  1. Surcharge on tax: 2% in cases where annual income is between Rs.1 Crore to Rs.10 Crore
  2. 5% in cases where annual income is more than Rs.10 Crore
  3. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Co-operative Societies

Income Tax Slab

Income Tax Slab Rate

Up to Rs.10,000

10% of Income

Rs.10,000 to Rs.20,000

20% of Income exceeding Rs.10,000

Over Rs.20,000

30% of Income exceeding Rs.20,000

Added to the tax amount is:

  1. Surcharge on tax: 12% in cases where annual income is more than Rs.1 Crore
  2. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge
  3. So, to calculate your tax liability for the year, you should keep a track of your annual income to know what Income slab you will be falling under for the year 2019 – 2020.

Disclaimer: The above-mentioned tax rates and tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.

Frequently Asked Questions

⭐  What are the Income Tax slab rates for AY 2019-20?

The Income Tax slab rates for those below 60 years of age for Assessment Year 2019-20 (Financial Year 2018-19) are as follows:

Table 1

Income

Tax

Up to Rs 2,50,000

No tax

Rs 2,50,000 to Rs 5,00,000

5% on income more than Rs 2.5 lakh subject to a maximum of Rs 12,500

Rs 500,000 to Rs 10,00, 000

20% on income exceeding Rs 500,000 subject to a maximum of Rs 1 lakh plus Rs 12,500

Above Rs 10,00,000

30% on income exceeding Rs 10,00,000 plus Rs 1 lakh plus Rs 12,500

Table 2

Senior citizens (above 60 years of age) are to follow the following tax rates

Income

Tax

Up to Rs 3,00,000

No tax

Rs 3, 00,000 to Rs 500,000

5% on income more than Rs 3,00,000 subject to a maximum of Rs 10,000

Rs 500,000 to Rs 10,00, 000

20% on income exceeding Rs 500,000 subject to a maximum of Rs 1 lakh plus Rs 10,000

Above Rs 10,00,000

30% of total income more than 10,00,000 plus Rs 1,10,000

These rates also had an additional health and education cess levied on the overall computable tax in addition to the surcharge. For those earning more than Rs 50 lakh and less than Rs 1 crore, the surcharge was 10%. Those earning more than Rs 1 crore attracted 15% surcharge.

⭐  What are the Income Tax slab rates for AY 2020-21?

The Income Tax slab rates for those below 60 years of age for Assessment Year 2020-21 (Financial Year 2019-20) are as follows -

Table 1

Income

Tax

Up to Rs 2,50,000

No tax

Rs 2,50,000 to R 5,00,00

5% of total income more than Rs 2,50,000

Rs 5,00,000 to Rs 10,00,000

20% of total income more than Rs

10,00,00 plus Rs 12,500

Above Rs 10,00,000

30% of total income more than 10,00,000 plus Rs 1,12,500

The Income Tax slab rates for those aged 60 to 80 years for Assessment Year 2020-are as follows –

Table 2

Income

Tax

Up to Rs 3,00,000

No tax

Rs 3,50,000 to R 5,00,00

5%

Rs 5,00,000 to Rs 10,00,000

20% of total income more than Rs 10,00,00 plus Rs 10,000

Above Rs 10,00,000

30% of total income more than 10,00,000 plus Rs 1,10,000

⭐  How can I save tax for Assessment Year 2020-21?

You can reduce your tax liabilities to a considerable extent by adopting certain strategies.

  1. Get health insurance: Section 80D of the Income Tax Act allows exemption of Rs 25,000 for health insurance of individuals and an additional Rs 25,000 for health insurance of parents. 50000 in case of mediclaim premium paid for parents who are senior c itizens

  2. Invest in Public Provident Fund: Interest on PPF is free.

  3. Contribute to NPS: Not only will you be building a pension corpus but by contributing to National Pension Scheme, you will also save taxes. NPS contributions qualify for up to Rs 50,000 deduction under Sec 80 CCD.

  4. Be charitable: Donations to charitable institutions are deductible under Section 80 G. However not all deductions are covered here, so it’s best to confirm with your CA or tax consultant.

⭐  Is it possible to file ATR for AY 2020-21 now?

Yes, you can pay your advance tax and file your advance tax returns (ATR) as the Income Tax Department has already notified the IT returns for high value transactions. These transactions include paying power bills amounting to Rs 1 lakh and foreign travel worth Rs 2 lakh.

You can download the ITR 1 from the Income Tax department’s website. You can file the ITR either by uploading an XML file or via online submission. ITR 1 is to be filed by those whose income is Rs 50 lakh and more, coming from such sources as salary/pension, and house property. The last date of filing ITR-1 for FY 2019-20 is 30 November, 2020.

⭐  What is the standard deduction for AY 2020-21?

With an additional Rs 10,000, the standard deduction allowed for Financial Year 2019-20 was taken up to Rs 50,000 following the provisions of the Interim Budget 2019. This brought much relief to the salaried and middle class, thereby also softening the impact of inflation. The standard deduction in the previous assessment years was Rs 40,000. With this, the taxable income of a person earning an annual salary of Rs 8 lakh is reduced from Rs 7,60,000 to Rs 7,50,000.

⭐  What is the meaning of section 87 A under the IT Act?

Section 87A is a legal provision which allows for tax rebate under the Income Tax Act of 1961. The section which was inserted through the Finance Act of 2013 provides tax relief for individuals earning below a specified limit. Section 87 A provides that anyone who is residing in India and whose income does not exceed Rs 3,50,000 is eligible to claim a rebate. This rebate is applicable only to individuals and not companies, etc and is calculated before adding the health and educational cess of 4 %.

⭐  How should I calculate Income Tax for F.Y 2020-21?

Financial Year 2020-21 allows an individual tax payer to pay his taxes by opting for either of two tax regimes. The old tax regime and the new one. The new income tax regime gives the individual the freedom to continue with the old tax regime if he/she so wishes. The old or existing tax regime will still have its relevant tax deductions and exemptions. The new tax structure has only one deduction which is the one under Section 80CCD(2). This means the employer’s contribution to the employee’s National Pension Scheme is deducted from the annual salary. Under both old and new regimes, you can deduct Rs 2,50,000 from your gross salary to arrive at your net taxable income since the exemption is applicable to both regimes.

⭐  How are the new IT slabs calculated?

Here’s how to calculate the tax payable by you for both the existing and new regimes. Remember some things remain basic or common irrespective of which regime you choose. For instance income from salary is the sum of your basic salary, housing rent allowance and any other allowances included.

Under the old tax regime, a standard deduction of Rs 50,000 is allowed. Neither the standard deduction nor any exemptions can be availed of in the new tax regime.

Let’s understand the impact of both regimes on your tax liability. Say you have total income of Rs 16,70,000 combined from salary and other sources. If you make investments under Sections 80C, 80TTA and 80D, you qualify for a deduction of about Rs 1,70,000 from your taxable income. Thus your taxable income is now Rs 15 lakh. This however does not mean that you have to pay 30% tax on Rs 15,00,000. Since tax rules change regularly in India, it is best to consult your CA or your tax advisor for any clarifications.

ARN: ED/10/19/16278

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