Income Tax Slab Rates for the FY 2020-2021

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Income Tax Slab Rates (FY 2020-2021)
Income Tax Slab Rates (FY 2020-2021)

Union budget 2020 initiated a new concessional income tax regime with reduce tax rates and changed income tax slabs. The new income tax slabs and rates have come into effect from April 1, 2020, for FY 20-21. In this new regime, taxpayers have the OPTION to choose either:

  1. To pay income tax at lower rates as per New Tax regime on the condition that they forgo certain permissible exemptions and deductions available under income tax, Or
  2. To continue to pay taxes under the existing tax rates. The assessed can avail rebates and exemptions by staying in the old regime and paying tax at the existing higher rate.

Now, what do you understand by income tax slab?

Income Tax Act provides power to the Finance Ministry to levy tax based on slab rates. A slab system means different tax rates are prescribed for various ranges of income. It means the tax rates keep increasing with a rise within the income of the taxpayer. This sort of taxation enables progressive and fair tax systems within the country. Such tax slabs tend to change every budget. These slab rates are different for various categories of taxpayers. The tax has classified three categories of “individual taxpayer” such as:

  1. Individual (aged but of 60 years) including residents and non-residents
  2. Resident senior citizens (60 to 80 of age)
  3. Resident super senior citizens (aged quite 80 years)
IncomeTax

New Income tax rates and slabs under tax regime for FY 20-21:

Total income Income tax  
Up to RS 2.5 lakhs   NILL
RS 2.5 lakhs – RS 5 lakhs   5% *
RS 5 lakhs – RS 7.5 lakhs   10%
RS 7.5 lakhs – RS 10 lakhs   15%
RS 10 lakhs – RS 12.5 lakhs   20%
RS 12.5 lakhs – RS 15 lakhs   25%
>RS 15 lakhs   30%

*Max. rebate of RS 12,500 is available u/s 87A if your income is up to RS 5 lakhs after claiming all deduction under chapter VI

Old Income tax rates and slabs under tax regime was divides into three categories:

  • Below 60 years of age
  • 60-80 years of age
  • Above 80 years of age

 Income tax slabs for resident individuals below 60years of age for FY 19-20:

Income tax slab Individuals below the age of 60 years  
Up to RS 2.5 lakhs   NILL
RS 2.5 lakhs – RS 5 lakhs   5%
RS 5 lakhs – RS 10 lakhs   20%
>RS 10 lakhs   30%

Income tax slabs for resident individuals 60-80 years of age for FY 19-20:

Income tax slab  Individuals between the age of 60-80 years
Rs 0-.00- Rs. 3.00 lakhs   NIL
Rs 3.00 lakhs – Rs 5.00 Lakhs 5%
Rs 5.00 lakhs – Rs 10 lakhs   20%
> Rs 10 lakhs   30%

Income tax slabs for resident individuals below 80 years of age for FY 19-20:

Income tax slab   Individuals below the age of 80 years
Rs 0.00 – Rs 5.00 Lakhs No Tax
Rs 5.00 lakhs – Rs 10 Lakhs 20%
>RS 10 lakhs 30%

Individuals with Net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A i.e., tax liability will be nil of such individual in both new and old/existing tax regimes.

Surcharge:

Income Surcharge %
Total income exceeds RS 50 lakhs 10%
Total income exceeds RS 1 crore 15%
Total income exceeds RS 2 crore 25%
Total income exceeds RS 5 crore 37%

However, there are few changes as per the budget 2021 which will be applicable for financial year 2021-2022.

For more information, please visit to the website of the All India ITR.

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