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.

ARN: ED/10/19/16278

Disclaimer

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