Income Tax Rates 2020-21 (Assessment Year 2021-22)

Income Tax Rate for the financial year 2021-22 in New Tax Regime (Optional) and Old Tax Regime

In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab.

Existing tax regime:

There are three categories of individual taxpayers:

• Individuals (below the age of 60 years), which includes residents as well as non-residents
• Resident senior citizens (60 years and above but below the age of 80 years)
• Resident super senior citizens (above 80 years of age)

There are different slabs for each category of taxpayers. The latest income tax slabs for AY 2019-20, AY 2020-21 and AY 2021-22 are discussed in this article. Such tax slabs tend to undergo a change during every budget.

Income Tax Slabs for different financial years

New tax regime:

Budget 2020 has announced a new tax regime giving taxpayers an option to pay taxes as per the new tax slabs from FY 2020-21 onwards.

Income tax slabs under the new tax regime for all individuals for FY 2020-21 (AY 2021-22)

Income Tax Slab	Tax Rate
Up to Rs 2.5 lakh	NIL
Rs 2.5 lakh to Rs 5 lakh	5% (Tax rebate of Rs 12,500 available under section 87A)
Rs 5 lakh to Rs 7.5 lakh	10%
Rs 7.5 lakh to Rs 10 lakh	15%
Rs 10 lakh to Rs 12.5 lakh	20%
Rs 12.5 lakh to Rs 15 lakh	25%
Rs 15 lakh and above	30%

 

• The tax calculated on the basis of such rates will be subject to health and education cess of 4%.
• Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will have to give up certain exemptions and deductions.
• Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.

• 1. Leave Travel Allowance (LTA)
  2. House Rent Allowance (HRA)
  3. Conveyance
  4. Daily expenses in the course of employment
  5. Relocation allowance
  6. Helper allowance
  7. Children education allowance
  8. Other special allowances [Section 10(14)]
  9. Standard deduction
  10. Professional tax
  11. Interest on housing loan (Section 24)
  12. Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)

• Points to remember while opting for the new tax regime:

1. 1. Option to be exercised on or before the due date of filing return of income for AY 2021-22
   2. In case a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once. A business taxpayer withdrawing from the optional tax regime has to follow the regular income tax slabs.

According to the current income tax laws in India, the income tax rate on resident individuals varies based on their age. There are different tax slabs applicable to the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual, aged below 60 years, with an income less than Rs 2.5 lacs is exempt from paying income tax.

Given below are the tables for the latest income tax slabs for FY 2018-19 and FY 2019-20.

Income Tax Slabs & Rates for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2019-20 – Part I

Income Tax Slab	Tax Rate for Individual & HUF Below the Age Of 60 Years
Up 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	₹12,500 + 20% of total income exceeding ₹5,00,000
Above ₹10,00,000	₹1,12,500 + 30% of total income exceeding ₹10,00,000

• No tax for individuals with income less than ₹ 2,50,000
• 0%-5% tax with income ₹ 2.5 lacs to 5 lacs for different age groups
• 20% tax with income ₹ 5 lacs to 10 lacs
• 30% tax with income above ₹ 10 lacs
• A tax rebate under section 87A is allowed to individual taxpayers a maximum amount of:– Rs 2,500 for total income up to Rs 3.5 lakh for FY 2018-19– Rs 12,500 for total income up to Rs 5 lakh for FY 2019-20
• Investments upto ₹ 1.5 lacs under Sec 80C can save ₹ 46,800 in taxes. 

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Let’s understand the tax calculation for rebate with the help of an example:

Source of income (FY 2019-20)	Income (Rs)
Salary (6,50,000)
Less: Standard deduction ( 50,000)	6,00,000
Interest on fixed deposit	50,000
Gross total income	6,50,000
Less: Deduction under section 80C	1,50,000
Total income	5,00,000
Income-tax (@ 5% from Rs 2.5 to 5 lakh)	12,500
Less: Rebate u/s 87A	12,500
	NIL

 

Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2019-20 – Part II

Income Tax Slabs	Tax Rate for Senior citizens aged 60 Years But Less than 80 Years
Income up to Rs 3,00,000*	No tax
Income from Rs 3,00,000 – Rs 5,00,000	5%
Income from Rs 5,00,000 – 10,00,000	20%
Income more than Rs 10,00,000	30%

 

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Let’s understand the tax calculation for rebate with the help of an example:

Source of income (FY 2019-20)	Income (Rs)
Salary (4,00,000)
Less: Standard deduction ( 50,000)	3,50,000
Income from house property	2,50,000
Interest on fixed deposit	50,000
Gross total income	6,50,000
Less: Deduction under section 80C	1,50,000
Total income	5,00,000
Income-tax (@ 5% from Rs 3 to 5 lakh)	10,000
Less: Rebate u/s 87A	10,000
	NIL

 

Income Tax Slabs for Super Senior Citizens(80 Years Old Or More) for FY 2019-20 – Part III

Income Tax Slabs	Tax Rate for Super Senior Citizens (Aged 80 Years And Above)
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%

 

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Let’s understand the tax calculation for a rebate with the help of an example:

Source of income (FY 2019-20)	Income (Rs)
Salary (3,50,000)
Less: Standard deduction ( 50,000)	3,00,000
Income from house property	2,50,000
Interest on fixed deposit	1,00,000
Gross total income	6,50,000
Less: Deduction under section 80C	1,50,000
Total income	5,00,000
Income-tax (nil below Rs 5 lakh)	NIL
Less: Rebate u/s 87A	NIL
	NIL

 

Surcharge applicable to the individuals covered in Part I, II and III:

Income limit	Surcharge Rate on the amount of income tax
Net income exceeds Rs 50 lakh but doesn’t exceed Rs 1 crore	10%
Net income above Rs 1 crore but doesn’t exceed Rs 2 crore	15%
Net income exceeds Rs 2 crore but doesn’t exceed Rs 5 crore	25%
Net income exceeds Rs 5 crore	37%

 

Income Tax Slabs for Domestic Companies for FY 2019-20 – Part IV

Turnover Particulars	Tax Rate
Gross turnover upto 400 Cr. in the FY 2017-18	25%
Gross turnover exceeding 400 Cr. in the FY 2017-18	30%
Where the company opted for Section 115BA	25%
Where the company opted for Section 115BAA	22%
Where the company opted for Section 115BAB	15%

 

In addition cess and surcharge is levied as follows:

Cess: 4% of corporate tax

Surcharge applicable:

Income Limit	Surcharge Rate on the amount of income tax
Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Crore	7%
Net income exceeds Rs.10 Crore	12%

 

However, the rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be 10% irrespective of amount of total income.

Tax slabs and tax rates for AY 2019-20 (FY 2018-19):

Income Tax Slabs for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2018-19 – Part I

Income Tax Slabs	Tax Rate for Individual & HUF Below the Age Of 60 Years
Up 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	₹12,500 + 20% of total income exceeding ₹5,00,000
Above ₹10,00,000	₹1,12,500 + 30% of total income exceeding ₹10,00,000

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2018-19 – Part II

Income Tax Slabs	Tax Rate for 60 Years Old Or More but Less than 80 Years Old
Income up to Rs 3,00,000*	No tax
Income from Rs 3,00,000 – Rs 5,00,000	5%
Income from Rs 5,00,000 – 10,00,000	20%
Income more than Rs 10,00,000	30%

Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Income Tax Slabs for Super Senior Citizens(80 Years Old Or More) for FY 2018-19 – Part III

Income Tax Slabs	Tax Rate for Super Senior Citizens (Aged 80 Years And Above)
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%

 

Note: An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

Surcharge applicable to the individuals covered in Part I, II and III:

Income limit	Surcharge Rate on the amount of income tax
Net income exceeds Rs.50 Lakhs but doesn’t exceed Rs. 1 Crore	10%
Net income exceeds Rs.1 Crore	15%

 

Income Tax Slabs for Domestic Companies for FY 2018-19 – Part IV

Turnover Particulars	Tax Rate
Gross turnover upto 250 Cr. in the FY 2016-17	25%
Gross turnover exceeding 250 Cr. in the FY 2016-17	30%

 

In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax

Surcharge applicable:

Income Limit	Surcharge Rate on the amount of income tax
Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Crore	7%
Net income exceeds Rs.10 Crore	12%