Income Tax Slab 2020-21 (AY 2021-22)

What You Need to Know About the proposed Income Tax Slabs for FY 2020-21

Income Tax Slab for Individuals

In the new budget, the Finance Minister outlined the fact that income tax rates would be lowered and the tax slabs broken down further. The new income tax rates are as follows:

Income Tax Slab

Tax Rate for Individuals and HUF’s

Up to Rs. 2,50,000

Nil

From Rs. 2,50,001 to Rs. 5,00,000

5%

From Rs. 5,00,001 to Rs. 7,50,000

10%

From Rs. 7,50,001 to Rs. 10,00,000

15%

From Rs. 10,00,001 to Rs. 12,50,000

20%

From Rs. 12,50,001 to Rs. 15,00,000

25%

Above Rs. 15,00,000

30%

 

Income Tax Slabs & Rates for Different Financial Years

On Saturday, 1st February 2020, India’s Finance Minister, Ms Nirmala Sitharaman, presented India’s Union Budget  in the parliament. Among other things, the Finance Minister made a few changes to the income tax slabs for the upcoming financial year, 2020-2021. The Budget proposals will be effective once it receives the assent of the President of India. If you’re wondering how proposed change in the income tax slabs impacts you and how much tax you will have to pay under the new regime, here’s everything you need to know.

What is Income Tax Slab?

The amount of income tax an individual is required to pay will depend on how much they earn. Essentially, taxpayers are broken down into groups based on how much annual income they earn. Based on this, the different income groups are taxed at different rates. This is done keeping in mind the fact that those who earn a lower income will find it more difficult to pay their taxes.

Up until the financial year 2019-2020, there were 4 basic tax groups or slabs:

1. Individuals earning up to Rs. 2,50,000

2. Individuals earning between Rs. 2,50,001 and Rs. 5,00,000

3. Individuals earning between Rs. 5,00,001 and Rs. 10,00,000

4. Individuals earning over Rs. 10,00,0001

The four income tax slabs were then applied to 3 different age groups – individuals below the age of 60, senior citizens between the ages of 60 and 79, and super senior citizens above of the age 80 or more.

 

 

It’s important to note that these new tax rates are only applicable to those individuals who do not wish to avail specified exemptions or deductions. It means that these lower tax rates will be applied to their total income directly without allowing any benefit of deductions and exemptions. The deductions and exemptions that will not be allowed under this regime include:

1.) Standard deduction from salary and profession tax

2.) House Rent Allowance

3.) Housing Loan Interest

4.) Leave Travel Allowance

5.) Deductions under Chapter VIA of the Income tax Act, 1961 such  section 80C (life insurance premium), section 80CCC (pension premium), 80D (health insurance premium), 80TTA (bank interest), etc.

Income Tax Slabs for Individuals FY 2020 21

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.

However, individuals who would like to continue to claim applicable exclusions and deductions may do so, but they will have to follow the existing tax rates, which are as follows:

Income Tax Slab

Tax Rate for Individuals Below the Age of 60

Up to Rs. 2,50,000

No tax

From Rs. 2,50,001 to Rs. 5,00,000

5%

From Rs. 5,00,001 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

 

As per the current income tax slabs, taxation of income of resident individuals below 60 years is as follows:

Income up to Rs 2.5 lakh is exempt from tax 

5 per cent tax on income between Rs 250,001 to Rs 5 lakh

20 per cent tax on income between Rs 500,001 and Rs 10 lakh 

30 per cent tax on income above Rs 10 lakh.

As per the Budget proposals, under the existing regime, tax rates for senior citizens and super senior citizens remain unchanged. Here’s a look at what the current tax rates are for these two age groups:

Income Tax Slab

Tax Rate for Individuals Above the Age of 60

Up to Rs. 3,00,000

Nil

Rs. 3,00,001 to Rs. 5,00,000

5%

Rs. 5,00,001 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

 

As per the current income tax slabs, taxation of income of resident individuals above 60 years is as follows:

Income up to Rs 3 lakh is exempt from tax 

5 per cent tax on income between Rs 300,001 to Rs 5 lakh

20 per cent tax on income between Rs 500,001 and Rs 10 lakh 

30 per cent tax on income above Rs 10 lakh.

Income Tax Slab

Tax Rate for Individuals Above the Age of 80

Up to Rs. 5,00,000

Nil

Rs. 5,00,001 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

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

Surcharges to be levied for FY 2020-21

While calculating the tax payable, it’s important to remember the following points:

Surcharge and Cess

The income tax rates mentioned above are for the total income earned in a year. Following this, surcharge and cess are added to the total tax payable. The surcharge is applicable on the basis of income thresholds as follows:

For income above Rs. 50 lakh and up to Rs. 1 crore10% surcharge
For income above Rs. 1 crore and up to Rs. 2 crore15% surcharge
For income above Rs. 2 crore and up to Rs. 5 crore25% surcharge
For income above Rs. 5 crore37% surcharge

Additionally, a health and education cess of 4% is applicable on the income tax payable, including surcharge.

Exempted Income Categories FY 2020 21

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 FY 2020 21

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 FY 2020 21

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 FY 2020 21

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 FY 2020 21

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 FY 2020 21

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 FY 2020 21

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.

In light of the new tax regime being introduced, it’s important for individuals to calculate their income, their deductions and the amount of tax they’re currently paying. Then, they should calculate their tax payable under the new regime, which excludes deductions and exclusions, in order to better understand which regime suits them and their personal finances better

Important Things To Remember While Opting for the New Tax Regime FY 2020 21

You can choose between the new and old income tax regime and calculate your tax liability, provided you don’t have business income.

If you opt for the old regime, you can avail of the applicable exemptions and deductions. If you choose to opt for the new tax regime, 70 of the commonly used deductions and exemptions are not available. If your income is above Rs 15 lakh, the new tax regime may not be very beneficial as you will have to forgo the exemptions and dedcution, like house rent allowance, mediclaim insurance premium, Life Insurance premium and travel allowance etc.

For all tax payers, rebate of Rs 12,500 under section 87(A) is available under the old tax regime, whereas the same rebate is available in the new tax regime if annual taxable income is within Rs 5 lakh.

4 per cent of health and education cess , based on your income, is applicable in the new tax regime as well as old tax regime.

Example for Old Tax regime Vs New Tax regime & which is better

Tax payers should conduct a comparative evaluation of tax liability under old tax regime and new tax regime and then choose the one most beneficial to them.

Let us consider the example of Sameer Merchant who is a corporate executive earning Rs 10 lakh per annum.

His annual investments are

  • ELSS, PF, LIC Premium, home loan principal instalment (u/s 80C) - Rs 1.7 lakh
  • Medical insurance for self and wife - Rs 28000.

Sameer can claim these as deductions under old regime, but not under the new regime. Considering his home loan interest as Rs 75000 in FY 20-21, this is his tax liability under both regimes.

 

Old Tax Regime (in rupees)

New Tax Regime (in rupees)

Gross Income

10,00,000

10,00,000

Deductions

 

 

u/Sec: 80C

150,000

-

u/Sec: 80D

25,000

-

u/Sec: 24(b)

75,000

-

Taxable Income

750,000

10,00,000

Old Tax Slab

 

 

0 to 2.5 Lakh

-

-

2.5 to 5 Lakh @ 5%

12,500

-

5 Lakh to 10 Lakh @ 20%

50,000

 

-

> 10 Lakh @ 30%

-

-

New Tax Slab

 

 

0 to 5 Lakh

 

 

2.5 to 5 Lakh @ 5%

-

12,500

5 to 7.5 Lakh @ 10%

-

25,000

7.5 Lakh to 10 Lakh @ 15%

-

37,500

10 Lakh to 12.5 Lakh @ 20%

-

 

12.5 Lakh to 15 Lakh @ 25%

-

 

> 15 Lakh @ 30%

-

 

Income Tax

62,500

75,000

Cess @ 4%

2,500

3,000

Total Tax payable

65,000

78,000

 

From a tax planning standpoint, the old tax regime is beneficial if gross income is over Rs 10 lakh and deductions can be availed. .

Timelines for choosing New tax regime

Salaried persons and those whose income attracts TDS can choose the new tax regime and inform employers at the beginning of FY 2020-21. They have the option to change the selection of tax regime every financial year.

You cannot change the selection midway through the year if you have opted for new regime at the beginning of the year for TDS purpose. The option can be changed during the time of filing of Income-tax return.

If you have a business or professional income, you can opt to choose between the old and new tax regimes only once, for a particular business.

While the budget proposals provide for a new regime of taxation for Individuals and HUFs to opt for lower tax brackets without claiming any exemptions/deductions, it would certainly be imperative for the working age group to continue to focus on savings for their future needs, namely children’s future and maintaining standards of living post retirement, among others. Also, they will need to ensure they protect their families against any health or life eventualities, especially as our household borrowings increase and the shield of joint family system is no longer available. Such savings can be achieved along with tax benefits which are available under various sections of the Income-tax law under the existing tax regime.

 

Calculate Income Tax Now

 

Frequently Asked Questions (FAQ)

✅  What is the meaning of Income Tax Slab?

Governments need money to fund education, welfare systems, and keep infrastructure projects like airports, railways, etc running. Governments do this by earning revenue from tax imposed on the income of its citizens.

Not everyone pays the same rate of tax on the income they earn, which is why there are different IT slabs. An income tax slab is simply a rate of tax individuals pay depending on the amount of income they earn. These tax slabs can change according to government budgets.

According India’s Budget for FY 2020-21, the new tax regime has the following slabs irrespective of age-

Upto Rs 2.5 lakh incomeYou pay no tax
Rs 2.5 lakh to 5 lakh incomeYou pay 5% tax ( Less Rs 12,500 under Section 87 A)
Rs 5 lakh to 7 .5 lakh incomeYou pay 10% tax
Rs 7.5 lakh to 10 lakh incomeYou pay 15% tax
Rs 10 lakh to 12.5 lakh incomeYou pay 20% tax
Rs 12.5 lakh to 15 lakh incomeYou pay 25% tax
Rs 15 lakh and aboveYou pay 30% tax

 

There may be additional surcharges you need to pay, depending on the central government budget provisions. These new income tax slabs which forego the taxpayers’ right to any deductions coexist with the old income tax rates with deductions and the individual has the right to choose between the two.

✅ How much income tax do I need to pay on Rs 10 lakh income as per the tax slab 2020-21?

Income tax is imposed not only on income from salary but also from other sources like business profits, capital gains, house rents etc. Tax slabs vary according to the income and age of the taxpayer.

From this year, taxpayers have the option to pay income tax under the old regime by availing the requisite deductions or going for the new tax regime by waiving any applicable deductions. Accordingly, the new tax slabs (FY 2020-21) for those aged below 60 are-

Income Earned

Tax Rate You Pay

Upto Rs 2, 50,000

NIL

Above Rs 2,50,000 to 500,000

5% (Less Rs 12,500 u/s 87A)

Above Rs 500,000 to 750,000

10%

Above Rs 750,000 to 10,00,000

15%

Above Rs 10,00,000 to 12,50,000

20%

Above Rs 12,50,000 to 15,00,000

25%

More than Rs 15,00,000

30%

 

The old tax regime had the following slabs for those aged below 60:

Income Earned

Tax Rate You Pay

Upto Rs 2, 50,000

NIL

Above Rs 2,50,000 to 500,000

5% (Less Rs 12,500 u/s 87A)

Above Rs 500,000 to 750,000

20%

Above Rs 750,000 to 10,00,000

20%

Above Rs 10,00,000 to 12,50,000

30%

Above Rs 12,50,000 to 15,00,000

30%

More than Rs 15,00,000

30%

The new tax regime is more simplified. However, you have to give up exemptions such as 80C, leave, conveyance and travel allowances, standard deduction, etc. The total tax payable on taxable income of Rs 10 lakh, not factoring deductions in both cases, is Rs 78,000 in the new regime and about Rs 1,06,000 under the old slab rates. Rebate u/s 87 is available only if your net taxable income is less than 5 lakhs.

✅  What are the different slab rates 2020-21 for different age group?

The government of India imposes tax on essentially three broad categories of individuals. The first being those aged below 60 years of age, the second group including those aged above 60 but below 80 years known as senior citizens and the third category comprising those above 80 years of age, known as super senior citizens. Tax slab rates for the three categories of individuals as per Financial Year 2019-20 are tabulated below.

For those aged below 60:

Income Earned

Tax Rate You Pay

Upto Rs 2, 50,000

NIL

Above Rs 2,50,000 to 500,000

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

Above Rs 500,000 to 10,00,000

Rs 12,500 + 20% of total income more than Rs 500,000

More than Rs 10,00,000

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

 

For those aged between 60 to 80:

Income Earned

Tax Rate You Pay

Upto Rs 300,000

NIL

Above Rs 300,000 to 500,000

5%

Above Rs 500,000 to 10,00,000

20%

More than Rs 10,00,000

30%

 

For those aged above 80

Income Earned

Tax Rate You Pay

Upto Rs 500,000

NIL

Above Rs 500,000 to 10,00,000

20%

More than Rs 10,00,000

30%

 

To all taxable incomes calculated in any of the categories mentioned above, a 4 per cent health and education cess has to be added. Further, if the taxable income crosses Rs 50 lakh but is within Rs 1 crore, there is a surcharge of 10 per cent on it. However, if it is more than Rs 1 crore, the surcharge is 15 per cent. Both surcharges are applicable irrespective of which age group one belongs to.

✅  Is TDS mandatory for salary as per the Income Tax Slab 2020-21?

Yes, if it exceeds a certain threshold. Section 192 requires that every employer who pays his workers their salaries is required to deduct tax at source (TDS) if their salaries cross the basic exemption limit.

There is no fixed way in which employers deduct tax at source from their employees’ salaries. The tax liability will depend on which tax slab the employee falls under and also what the average rate of income tax is. Average income tax rate is the total tax liability divided by the total income of the employee. If the employee has invested in tax saving instruments, his total tax liability will reduce. Therefore, there is no uniform TDS applicable for all employees.

What the employee receives after deducting the TDS from his / her salary is the net salary. The average income tax rate can remain constant if the salary as well as the tax saving instruments he invests in remain the same. The rate at which TDS is deducted can also be revised from time to time and is also dependent on such factors as the employee receiving an increment or bonus or the employee showing tax-saving investments not disclosed earlier. In case of lower deduction, the additional TDS can be deducted in the future months. Likewise, if a higher than required TDS has been deducted, he can lower the TDS deducted and thus average out the TDS he/she is paying.

✅  Where can I calculate my income tax?

You can calculate your income tax manually if you are a numbers buff and know the prevailing tax slabs and rates and how they work. The manual offline method can be a bit tricky. Alternatively, if you are not comfortable with this method, there are a number of online calculators that do the number crunching for you and let you know how much your tax liability is.

You can also skip the manual hassle of estimating your income tax by calculating your taxable income in a jiffy by using the HDFC Life tax calculator . All you need to is enter your details like age and annual income, fill in details of investments in insurance plans, insurance premia paid during the year, interest paid on loans etc, in clearly defined columns. Once you have entered these details, your income tax summary along with your taxable income is generated for you. It shows you the next tax payable, as also the amounts you can save under section 80 D and 80 C.

✅ How is income tax calculated on new slabs for FY 2020-21?

Income Tax Slab

Tax Rate for Individuals and HUF’s

Upto Rs 2, 50,000

NIL

From Rs. 2,50,001 to Rs. 5,00,000

5%

From Rs. 5,00,001 to Rs. 7,50,000

10%

From Rs. 7,50,001 to Rs. 10,00,000

15%

From Rs. 10,00,001 to Rs. 12,50,000

20%

From Rs. 12,50,001 to Rs. 15,00,000

25%

Above Rs. 15,00,000

30%

 

✅ How to file an income tax return online?

To file your ITR online you must either register or log into the e-filing website of the income tax department, then follow these steps:

●      Calculate your income tax liability.

●      PAN will be auto-populated, choose Assessment Year, ITR form number, filing type as ‘original/revised’ return and submission mode as ‘prepare and submit online’. 

●      Now fill the applicable and mandatory fields of ITR form (Click on ‘Save Draft’ every time to avoid loss of data)

●      Click on the ‘validate’ button on the form.

●      Then click the ‘generate XML’ button to convert into an XML file.

●      Navigate to the ‘Income Tax Return’ option under the ‘e-file’ option.

●      Fill up the fields with information like your PAN, Assessment Year, ITR form number, etc. Use the drop-down menu to select ‘Upload XML’ under the ‘Submission Mode’ field and upload the XML file from your computer and submit.

You can track your ITR return online.

✅ How to pay income tax online?

The following steps will help you to pay your income tax online:

●      Log on to the official website of the Income-tax department.

●      Proceed under Challan 280 option followed by (0021) Income-tax (other than companies).

●      Fill in details like PAN card, name, residential address, email address and mobile number.

●      Select the year of assessment that you will be making the payment for.

●      Select the 'type of payment', in this case, it will be '(300) Self-Assessment Tax'.

●      Choose the mode of your payment.

●      Enter the tax payable amount.

●      Enter Captcha in the space then click proceed.

●      After making the payment, check receipt (Challan 280) and this will include CIN and payment details.

●      Notes:

-        Do ensure to enter your details correctly in the form.

-        Save a copy of the tax receipt or take a screenshot of it.

-        You’ll need to enter the BSR code and challan number to enter in your tax return.

✅ Can I claim 80C deductions and opt for a new income tax slab regime?

No, the new tax regime does not allow up to 70 deductions and exemptions allowed in the old/ existing tax rate regime. If the taxpayer is opting for concessional rates in the New Tax regime then they will have to forgo certain exemptions and deductions available in the existing old tax regime.

If considering the new income tax regime for the concessional tax rate, then taxpayers may do so by comparing and then choosing the most beneficial one for them.

Let’s take an example of comparing the Old & New tax regime with Rhea whose salary income is Rs 20 lakh. Her total investments under 80c are 1 lakh. She also pays Medical insurance of Rs 30,000. If she opts for the old tax regime, then she can claim the above deductions, however, if she wishes to go for a new tax regime then these deductions will not be available. 

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

The tax calculation for salaried and self-employed individuals for financial year 2020-2021 will be based on the income tax slabs for the given assessment year. To understand how to go about calculating your tax liability, you need to calculate your total income from all the sources. You then need to account for any deductions, savings or tax-saving investments you have, this will then reduce your taxable income. Then, identify the income tax slab and then apply the relevant rate of tax on your income. This will depend on the age of the individual taxpayer. Do deduct TDS, TCS, and advance taxes, if any to arrive at the balance tax payable (or refundable).

These simple steps will help you perform your income tax calculation. However, it is important that you pay your taxes and file your IT returns on time, so you can avoid any additional charges or facing penalties. 

✅ How does the government collect taxes?

Income tax is a percentage of your income as per the tax slabs that you are required to pay to the government every year. These taxes are collected by the Government in three different ways:

a) TDS or Tax Deducted at Source - If you are a salaried employee, it is the amount deducted from your income. This is calculated as per your income tax slab by your employer.

b) TCS or Taxes Collected at Source - The sellers collect TCS at source from the buyers and pass the same to the government.  TCS rates vary based on the product sold.

c) Online or offline tax payments- Taxpayers make a voluntary payment of taxes such as Self-Assessment Tax, Regular Assessment Tax, and Advance Tax that might be required to pay to the government.

It is the constitutional obligation of every person who is earning income to calculate and pay taxes correctly.​

✅ What is the time period considered for the purpose of levy of income tax?

The income statements are prepared from 1st April and end on 31st March for the financial year in India, which starts from 1st April and ends on 31st March. The year in which the income earned is called the Financial Year or Fiscal Year. The income tax returns are then filed and taxes are usually paid in the next year after the end of the Financial Year. This next year in which the income is assessed to tax is called the Assessment Year. If my income is accounted for from 1st April 2019 to 31st March 2020, this period would be called Financial Year or Fiscal Year 2019-20. This income would be assessed to tax in the next year and this period would be called Assessment Year 2020-21.

The income tax rules and slab rates for individuals, HUF, partnership firms, LLPs and Corporates will be based as per the Income-tax Act of India

✅ On the Challan, what do income tax on companies and income tax other than companies mean?

Challan 280 is meant for paying either self-assessment tax, advance tax, your regular assessment tax, taxes on distributed income & profits, and paying any other additional charges. You can submit it either online which is more convenient however you can also choose to pay it offline by downloading the challan from the income tax website and submit it via your bank.

 If a company pays tax on their income then it will be called as corporate tax, and for payment of the same in the challan is mentioned as Income-tax on Companies (0020). If you are an Individual taxpayer then you must choose the option (0021) which is meant for paying income tax other than companies.

Once you have made the payment successfully, you will receive an acknowledgement towards the payment that will also contain the BSR code, the serial number of the challan, the amount paid, and date of payment. 

✅ Is the due date for filing an Income tax Return the same for all the taxpayers?

The due date for filing income tax returns is the date by which the returns have been filed. The taxpayers filing their return beyond the set due date will have to pay interest under section 234A and penalty under section 234F. It is important for all the taxpayers to remember the due date of filing income tax returns to avoid any late fee or penalty.

The due date to file an income tax return (ITR) varies for different categories of taxpayers (unless extended by the government, like this assessment year due to pandemic) are mentioned below for the Financial Year 2019-20:

Category of Taxpayer

Due Date for Tax Filing – FY 2019-20

Individual

10th January 2021

Body of Individuals (BOI)

10th January 2021

Hindu Undivided Family (HUF)

10th January 2021

Association of Persons (AOP)

10th January 2021

Businesses (Requiring Audit)

15th February 2021

Businesses (Requiring TP Report)

15th February 2021

 

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

This rebate is only allowed for resident individuals which means HUF and firms will not be entitled to claim this rebate. Under section 87A, if the individual's income is less than Rs 5 lakh after claiming deductions under Chapter VI-A, then they are allowed to rebate income tax up to Rs  12500.

You can check your eligibility and determine your taxable income by calculating your gross total income minus the deductions under section 80C to 80U. If it is below Rs 5 lakh then you are eligible for tax rebate i.e full tax up to Rs 12500 can be claimed as per section 87A but if your taxable income is more than Rs 5 lakh, then you are not entitled to claim this rebate.

Note:Senior Citizens (above the age of 60 but less than 80 years) are also entitled to take benefit for a rebate under Section 87A. 

✅ Who decides the IT slab rates and can they change?

All individuals, HUF, partnership firms, LLPs and Corporates are required to pay income tax on income earned by them as per the Income-tax Act of India. But for individuals, the tax is levied as per the slab system if their income is above the minimum limit.

The income tax slab rates for the financial year are notified by the Finance Act and passed by the parliament every year. The Finance Minister has introduced the new tax slab in Union Budget 2020 with an option to pay taxes at lower rates without claiming deductions under various sections.

The IT slab rates can be changed by the government of India. If any changes are made in the IT slab rates then they are introduced in the budget and presented in Parliament for that financial year. The slab rates are subject to periodic change and are notified every year through the Finance Act. 

✅ How much income is tax-free in India?

Taxable income is the income of an individual or organization, minus any allowable deductions. The tax levied will differ depending on the income earned. There are currently two different tax regimes which are used in India. However, the tax-free income remains the same on the basis of both the old regime and the new regime.

Income tax laws have a pre-decided limit for individuals up to which the taxpayers are not required to pay any taxes, this income is referred to as tax-free.

If an Individual is below 60 years of age, he is not required to pay tax up to the income limit of Rs 2.5 lakh. Individuals above 60 years but less than 80 years of age are not required to pay tax up to Rs 3 lakh of income. Individuals above 80 years are not required to pay tax up to Rs 5 lakh of income.

✅ How to calculate surcharge on income tax?

A surcharge is a tax charged on the tax payable. It is calculated on tax payable and not on the income earned by the rich. Our government ensures that with the surcharge provision, the rich will contribute to the income tax more than the poor. There are different tax rates and categories for the same.

To simplify, let's take an example, Deepika has an income of Rs 2000 with 30% tax of Rs. 600, if the income is subject to surcharge then assume 10% surcharge would be levied on a tax of Rs. 600 i.e Rs 60.

The surcharge is levied at different rates i.e 10% is levied is total income is more than 50 lakh, 15% is levied if total income is more than Rs 1 crore, 25% of income if total income is more than Rs 2 crore and 37% of total income is more than Rs 5 crore.

✅ What are the Income tax slab rates for FY 2021-22?

The income tax slabs and rates remained unchanged in the Union Budget 2021 and taxpayers will continue to follow the same rates applicable in financial year 2020-21. The Budget announcement highlighted that individuals have the option to either opt for the old income tax regime or the new tax regime.

First, let’s look at the tax structure as per old regime 

(Source: https://www.incometaxindia.gov.in/)

Individuals

(Other than senior and super senior citizen)

Net Income Range

Rate of Income-tax

Assessment Year 2021-22

   Assessment Year 2020-21

Up to Rs. 2,50,000

-

-

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

5%

5%

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

20%

20%

Above Rs. 10,00,000

30%

30%

Senior Citizen

(who is 60 years or more at any time during the previous year)

Net Income Range

Rate of Income-tax

Assessment Year 2021-22

Assessment Year 2020-21

Up to Rs. 3,00,000

-

-

Rs. 3,00,000 to Rs. 5,00,000

5%

5%

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

20%

20%

Above Rs. 10,00,000

30%

30%

 

Now, let’s look at the tax structure as per new regime 

(Source: https://www.incometaxindia.gov.in/)

Total Income (Rs)

Rate

Up to 2,50,000

Nil

From 2,50,001 to 5,00,000

5%

From 5,00,001 to 7,50,000

10%

From 7,50,001 to 10,00,000

15%

From 10,00,001 to 12,50,000

20%

From 12,50,001 to 15,00,000

25%

Above 15,00,000

30%

✅ What are the Opting for new tax regime? Know the conditions

Taxpayers choosing to file tax under the new tax regime will have to give away few exemptions and deductions, which were available in the existing old tax regime. Although there are 70 deductions and exemptions that taxpayers need to forgo, below are the most common ones:

What's not allowed under new tax rate regime:

  • Leave Travel Allowance (LTA) for salaried employees
  • Daily expenses
  • Relocation allowance
  • House Rent Allowance (HRA)
  • Children education allowance
  • Conveyance allowance
  • Helper allowance
  • Interest on housing loan (Section 24)
  • Other special allowances [Section 10(14)]
  • Professional tax
  • Standard deduction on salary

What's retained under new tax rate regime:

  • Retirement benefits, gratuity etc.
  • Conveyance allowance for expenditure incurred for travelling for duties of an office
  • Transport allowance for specially-abled people
  • Education scholarships
  • Retrenchment compensation
  • Investment in Notified Pension Scheme under section 80CCD(2)
  • Depreciation u/s 32 of the Income-tax act except additional depreciation.

✅ What is the Income tax slab for women?

In the budget 2021-22, no specific tax exemptions were announced for women. A tax rebate of up to Rs 12,500 will be paid to those with a total income of up to Rs 5 lakh.

Provisions under Section 80 of the Income Tax Act allow citizens to claim deductions and save taxes under various sections. For instance, woman can claim income tax exemption on the premium paid for a health insurance policy under Section 80D of the act. The limit has been set at Rs 25,000 for a policy covering self, spouse and dependent children. Additional deductions are available if senior citizens are covered in the policy – a deduction of Rs 25,000 is available if parents below 60 years of age are covered in the policy and Rs 50,000 for parents above 60 years.

✅ Is income tax compulsory?

Filing income tax returns is compulsory and not filing returns will attract penalties. Additionally, it will act as a deterrent for procuring a loan, property registration or getting a travel visa.

As per the Income Tax Act, it is mandatory to file ITRs for these entities in India:

  1. Irrespective of whether individuals/firms made income or loss during the financial year
  2. Individuals who want to claim an income tax refund
  3. Those who want to set off and carry forward losses under a head of income
  4. Individuals with asset or financial interest located outside of India
  5. Individuals gaining income from property held under a trust for religious, charitable, or political purposes.
  6. NRIs whose income accrued in India exceeds Rs 2.5 lakh.

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/10/19/16121

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