In India, income tax is levied based on a slab system on an individual. Now, different slabs have different tax rates, where the tax rates keep increasing with the increase in the income slab.
Income Tax Slab for FY 2020-21 (AY 2021-22)
With every new budget, such tax slabs tend to change. Moreover, a new income tax regime was announced in Budget 2020, according to which individuals will have the option to pay taxes as per new tax slabs from FY 2020-2021 Here the taxpayers are divided into three categories:
Below the age of 60 years: ‘Individuals’ (residents as well as non-residents). Above 60 years but below 80 years: Resident Senior Citizens Above 80 years of age: Resident Super Senior Citizens
What is the new regime of income tax?
In Budget 2020, with the new tax regime, the tax department has introduced a new section 115BAC. From FY 2020-21 onwards, the individual/HUF can choose from the two tax regimes – the old and the new. Both the tax regimes have their own tax slabs, rates, exemptions, and deductions. Any individual who chooses the new tax regime from FY 2020-21 onwards will have to give up certain deductions and exemptions. Below are the deductions and exemptions that a taxpayer will have to give up if they choose the new tax regime. Also Read: Section 80EEA – Income Tax Deduction for Interest on Home Loan
Allowances Allowed under the new tax regime
The following under Section 10(14) are allowed to the individual and HUF.
Transport Allowance granted to a ‘divyang’ employee (physically disabled employees) to support their commute between the place of residence and place of duty. Conveyance Allowance to meet the expenditure on conveyance in performance of duties of an office; Any Allowance granted to help individuals meet the cost of travel on tour or on transfer; Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
Here is the comparison of the Old Tax Regime and the New Tax Regime
Income Tax Slab for Resident Individuals aged less than 60 Years (Both Male & Female)
This year individuals and HUFs have the option to choose whether to opt for the same tax slab or the new tax regime.
Health & Education Cess @4% Rates of Surcharge Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)
Income Tax Slab for Senior Citizens (Individuals more than or equal to 60 years but less than 80 years) (Both Male & Female)
Health & Education Cess @4% Rates of Surcharge Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)
Income Tax Slab for Super Senior Citizens (Individuals more than or equal to 80 years) (Both Male and Female)
Health & Education Cess @4% Rates of Surcharge Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)
Also Read: How to Pay Income Tax Online: Steps to File Your Income Tax
Income Tax Slab for Hindu Undivided Family (HUF)
Health & Education Cess @4% Rates of Surcharge Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)
Income Tax Slab for AOP, BOI, Artificial Juridical Person
Government has made no changes in the income tax slab limits for FY 2020-2021 in the case of BOI, AOP, Artificial Juridical Person, as compared to last year’s tax regime. Rebate u/s 87A is not applicable Health & Education Cess will be applicable @4% The surcharge rate will be:
Income Tax Slab for Co-operative Society
The Co-operative society also has the option to choose an income tax slab for the FY 2020-21 (AY 2021-22)
Income Tax Slab for Indian Company
Companies with gross receipts up to Rs. 400 crore The tax would be levied @25% +Surcharge + Cess @4% Companies with gross receipts more than Rs. 400 crore Tax would be levied @30%% + Surcharge + Cess@4 Please Note: Domestic companies can also choose to pay tax under the following reduced rates:
Domestic Companies(Section 115BAA): Tax would be levied @22% + Cess @4% + Surcharge of 10% Manufacturing Companies (Section 115BAB): Tax would be levied @15% + Cess @4% + Surcharge of 10% A manufacturing company can now opt for Section 115BAB as proposed in the new tax regime. Specific exemptions and deductions+ (Minimum Alternate Tax) will not be applicable in case of these reduced taxes.
Income Tax Slab (Foreign Company)
Royalty received from govt/Indian concern/ technical fees as per agreement approved by the Central Government The tax would be levied @50% + Cess @4% + Surcharge (applicable rates) Any other Income Tax would be levied @40% + Cess @4% + Surcharge (applicable rates) Clear your doubts: After Budget 2020, people got confused about whether there will be any tax deduction on an income up to Rs. 5 lakh? However, it is partially true. The basic exemption limit has not been changed, which means there will be no tax up to Rs 2.5 lakhs for an individual/HUF. Moreover, if the income of such a taxpayer does not exceed Rs 2.5 lakhs, then you will not be applicable to pay tax after availing the benefit of rebate u/s 87A. But as your taxable income crosses the threshold of 5 lakhs, then you will not be eligible for availing the tax benefits of rebate u/s 87A. However, the tax payable will be 5% for the income above 2.5 lakhs but up to Rs 5 lakhs. Let’s use an example to understand this:
