Rates of Income Tax

Rates of Income Tax

Assessment year : 2021-22
Previous year : 2020-21
1. For resident Senior Citizens. (Age above 60 Years)
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%
2. For resident Super Senior Citizens. (Age above 80 Years)
Up to Rs 5,00,000 Nil
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
3. Individuals, [other than those mentioned above, HUF, AOP/BOI (other than co-operative societies).
Upto Rs. 2,50,000 Nil
Rs. 2,50,001 to Rs. 5,00,000  5%
Rs. 5,00,001 to Rs 10,00,000 20%
Above Rs. 10,00,000 30%
Note: Rebate u/s 87A is added from Finance Act 2019, in which resident individuals are allowed rebate (if their taxable income does not exceed Rs. 5 lakh) equal to 100% of income tax or Rs. 12,500 whichever less. If income exceeded 5 lakh then there is no rebate

Silent features of Income-tax rebate under section 87A

Here are some of the salient features of Income-tax rebate under section 87a:

  1. All individual male-female including senior citizen is entitled to avail the benefit of section 87a.
  2. Other than individuals, HUFs, companies, partnership firms, etc are not eligible under section 87A.
  3. Income Tax rebate u/s 87a is available for resident individual or nonresident individual.
  4. The amount of tax rebate u/s 87A is restricted to a maximum of  12,500. In case the tax computed payable is less than  12,500, say  10,000 the tax rebate shall be limited to that lower amount i.e.  10,000 only.
Surcharge :
10% for Individual having taxable Income exceeding  50 Lacs upto 1 Crore
15% for Individual having taxable Income exceeding 1 CroreHealth and Education Cess: 4% on the amount of Tax plus surchargeShort-Term Capital Gains u/s 111A:15% on income-tax plus surcharge.
Firms
Income tax : 30%.

Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore.

Health and Education Cess: 4% on the amount of Tax plus surcharge.

Companies
(A) Domestic Companies

Income tax : 30% (25% if turnover or gross receipt does not exceed Rs.400 Crore )

Surcharge: 7% if the taxable income exceeds Rs. 1 crore & 12% if the taxable income exceeds 10 crores

Health and Education Cess: 4% on the amount of Tax plus surcharge 

(B) Foreign Companies
Income tax : 40% (in general )
Surcharge : 2% if the taxable income exceeds Rs. 1 crore & 5% if the taxable income exceeds 10 crores
Health and Education Cess: 4% on the amount of Tax plus surcharge
Cooperative Societies
Upto Rs. 10,000 10%
Rs. 10,001 to Rs. 20,000 20%
Rs. 20,001 to Above 30%
Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore.

Health and Education Cess: 4% on the amount of Tax 

Local Authorities
Income tax : 30%.

Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore

Health and Education Cess: 4% on the amount of Tax

Optional Tax scheme introduced from Finance act 2020

New Simple Tax Slab without exemption:

Income Slab Tax Rate
Income up to Rs 2,50,000 No Tax
Income from Rs 2,50,000 – 5,00,000 5%
Income from Rs 5,00,000 – 7,50,000 10%
Income from Rs 7,50,000 – 10,00,000 15%
Income from Rs 10,00,000 – 12,50,000 20%
Income from Rs 12,50,000 – 15,00,000 25%
Income more than Rs 15,00,000 30%

Tax Slab with exemption:

Income Slab Tax Rate
Income up to Rs 2,50,000 No Tax
Income from Rs 2,50,000 – 5,00,000 5%
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
  • Surcharge:
    • 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
    • 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
    • 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
    • 37% surcharge on income tax if the total income exceeds Rs 5 crore
  • Health and Education Cess: 4% cess on income tax including surcharge
  • Rebate under Section 87A: Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs

Income tax slab for senior citizens (60 years to less than 80 years old) (both men & women)

New Simple Tax Slab without exemption:

Income Slab Tax Rate
Income up to Rs 3,00,000 No Tax
Income from Rs 3,00,000 – 5,00,000 5%
Income from Rs 5,00,000 – 7,50,000 10%
Income from Rs 7,50,000 – 10,00,000 15%
Income from Rs 10,00,000 – 12,50,000 20%
Income from Rs 12,50,000 – 15,00,000 25%
Income more than Rs 15,00,000 30%

Tax Slab with exemption:

Income Slab Tax Rate
Income up to Rs 3,00,000 No Tax
Income from Rs 3,00,000 – 5,00,000 5%
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
  • Surcharge:
    • 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
    • 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
    • 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
    • 37% surcharge on income tax if the total income exceeds Rs 5 crore
  • Health and Education Cess: 4% cess on income tax including surcharge
  • Rebate under Section 87A: Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs

Income tax slab for Very senior citizens (80 years or more) (both men & women)

New Simple Tax Slab without exemption:

Income Slab Tax Rate
Income up to Rs 5,00,000 No Tax
Income from Rs 5,00,000 – 7,50,000 10%
Income from Rs 7,50,000 – 10,00,000 15%
Income from Rs 10,00,000 – 12,50,000 20%
Income from Rs 12,50,000 – 15,00,000 25%
Income more than Rs 15,00,000 30%

Tax Slab with exemption:

Income Slab Tax Rate
Income up to Rs 5,00,000 No Tax
Income from Rs 5,00,000 – 10,00,000 20%
Income more than Rs 10,00,000 30%
  • Surcharge:
    • 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
    • 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
    • 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
    • 37% surcharge on income tax if the total income exceeds Rs 5 crore
  • Health and Education Cess: 4% cess on income tax including surcharge

Deductions You Can’t Claim In New Tax Regime/Slab Option

  • Standard Deduction for Salaried Employees
  • Leave travel concession
  • House rent allowance
  • Children Education Allowance
  • Children Hostel Allowance
  • Transport allowance
  • Some of the other allowance in clause (14) of section 10
  • Allowances to MPs/MLAs as contained in clause (17) u/s 10
  • Allowance for income of minor as per clause (32) u/s 10
  • Exemption for SEZ unit u/s 10AA
  • Professional Tax
  • Entertainment Allowance
  • House Loan Interest u/s 24
  • Additional deprecation
  • Deductions under section 32AD, 33AB, 33ABA
  • Various deduction for donation for or expenditure on scientific research
  • Deduction under section 35AD or section 35CCC;
  • Any deduction under chapter VIA
  • Set off of any loss on account of depreciation or any other heads of income
  • No exemption or deduction for allowances or perquisite

Deductions Allowed As Per New Tax Slab/Regime

  • Transport Allowance granted to a divyang employee to cover expenditure on commuting between place of residence and office
  • Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office
  • Any Allowance granted to meet the cost of travel on tour
  • Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty
  • Deduction under section 80CCD – employer contribution on account of employee in notified pension scheme
  • Deduction under section 80JJAA for generating new employment.

Overall, the picture is not very attractive for individuals who are claiming deductions of more than 250,000 in their regular income tax returns. Especially for Salaried employees drawing salary upto Rs. 6,50,000 with deductions of at least Rs. 1,50,000

An Illustration to check the amount of deductions and decide whether you should opt for new income tax slab for FY 2020-21 or not:

Gross Total Income Deductions Not Allowed as per New Scheme Tax as per Old Scheme Tax as per New Scheme
600,000 50,000 22,500 22,500
700,000 100,000 32,500 32,500
750,000 125,000 37,500 37,500
800,000 137,500 45,000 45,000
900,000 162,500 60,000 60,000
1,000,000 187,500  75,000 75,000
1,100,000 187,500 95,000 95,000
1,250,000 208,335 125,000 125,000
1,300,000 216,666 137,500 137,500
1,400,000 233,335 162,500 162,500
1,500,000 250,000 187,500 187,500
1,600,000 250,000 217,500 217,500
1,700,000 250,000     247,500 247,500

For a salaried employee drawing salary more than Rs. 15,00,000, the benefit of reduced tax is Rs.75,000 but if the value of deductions foregone is more than Rs. 2,50,000 the new tax regime/slab is not worthy.

This Budget 2020 move is helpful only for those who do not go for any savings plan or special tax saving incentives.

 

Assessment year : 2020-21
Previous year : 2019-20
1. For resident Senior Citizens. (Age above 60 Years)
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%
2. For resident Super Senior Citizens. (Age above 80 Years)
Up to Rs 5,00,000 Nil
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
3. Individuals, [other than those mentioned above, HUF, AOP/BOI (other than co-operative societies).
Upto Rs. 2,50,000 Nil
Rs. 2,50,001 to Rs. 5,00,000 5%
Rs. 5,00,001 to Rs 10,00,000 20%
Above Rs. 10,00,000 30%
Note: Rebate u/s 87A is added from Finance Act 2019, in which resident individuals are allowed rebate (if their taxable income does not exceed Rs. 5 lakh) equal to 100% of income tax or Rs. 12500 whichever less.

The current Standard Deduction of Rs 40,000 for FY 2018-19 is proposed to be increased to Rs 50,000 for FY 2019-20.

Surcharge :

10% for Individual having taxable Income exceeding  50 Lacs upto 1 Crore

15% for Individual having taxable Income exceeding 1 Crore

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

Long-Term Capital Gains: 20% on income-tax plus surcharge.

Short-Term Capital Gains u/s 111A:15% on income-tax plus surcharge.

Firms
Income tax : 30%.

Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore.

Education Cess : 2% on income-tax plus surcharge

Secondary and Higher Education cess : 1% on income-tax plus surcharge

Companies
(A) Domestic Companies

Income tax : 30% (25% if turnover or gross receipt does not exceed Rs.400 Crore)

Surcharge: 7% if the taxable income exceeds Rs. 1 crore & 12% if the taxable income exceeds 10 crores

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

(B) Foreign Companies
Income tax : 40% (in general )
Surcharge : 2% if the taxable income exceeds Rs. 1 crore & 5% if the taxable income exceeds 10 crores
Cess for Health & Education: is at the rate of 4% – calculated on tax amount plus surcharge1% on income-tax plus surcharge
Cooperative Societies
Upto Rs. 10,000 10%
Rs. 10,001 to Rs. 20,000 20%
Rs. 20,001 to Above 30%
Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore.

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

Local Authorities
Income tax : 30%.

Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore

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

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