Income Tax Slab Rate : According to the Income-tax Act, 1961, the income is classified under 5 classifications also known as Income head-
- Salary Income – A person engaged in employee and employer relationship
- House Property Income – It relates to income earned by owing a House property
- Profits and Gains of Business or Profession – A person engaged in a Profession or Business
- Capital gains Income – Income arise due to transfer of capital assets
- Other Sources Income – Others (Dividend, Interest, etc.)
Nature of Income
Income earned by an assessee is generally distinguished into Two types which are distinguished on the basis of their nature-
- Normal Income – Income taxable at normal rates (Slab Rates)
- Special Income – Income taxable at special rates.
Classification of Income Heads into the nature of income
| Income Head | Further Classification | Nature of Income |
| Salary Income | – | Normal Income |
| Profits and Gains of Business or Profession | – | Normal Income |
| House Property Income | – | Normal Income |
| Capital Gain Income | 1. Short term Capital gain 2. Short term Capital gain u/s 111A 3. Long Term Capital Gain | 1. Normal Income 2. Special Income 3. Special Income |
| Other Sources | 1. Casual Income 2. Others | 1. Special Income 2. Normal Income |
Read Also: Partner’s Remuneration, salary, Interest – Section 40b under Income Tax Act
Taxation of Normal Income for FY 2020-21
1. Individuals and HUF
a) Income Tax Rates for Individual (Less Than 60 Years Old) and HUF for FY 2019-20
| Income Tax Slab (in Rs) | Tax Rate |
| Up to Rs 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 Rs 5,00,000 |
| Above 10,00,000 | 1,12,500 + 30% of total income exceeding Rs 10,00,000 |
b) Income Tax Slabs for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for FY 2019-20
| Income Tax Slabs | Tax Rate |
|---|---|
| Income up to Rs 3,00,000 | No tax |
| Income from Rs 3,00,000 to Rs 5,00,000 | 5% |
| Income from Rs 5,00,000 to 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
Read Also: Books of Accounts -Section 44AA of Income Tax
c) Income Tax Slabs for Super Senior Citizens (80 Years Old Or More) for FY 2019-20
| Income Tax Slabs | Tax Rate for Super Senior Citizens |
|---|---|
| Income up to Rs 5,00,000 | No tax |
| Income from Rs 5,00,000 to 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
Surcharge applicable to the individuals or HUF :
| Income limit | Surcharge Rate on 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% |
The maximum surcharge in case of LTCG u/s 112A and STCG u/s 111A shall not exceed 15%. Surcharge on unexplained income chargeable to tax under section 115BBE shall be charged at flat rate of 25% irrespective of amount of Income.
Health and Education cess: 4% of Income tax plus surcharge.
Note: Non-Residents not to be treated senior Citizens.
Read Also: 10 new Changes in Income Tax Return Forms for A.Y. 2020-2021
2. Income Tax Rates for AOP/BOI/ Any other Artificial Juridical Person:
| Taxable income | Tax Rate |
|---|---|
| Up to 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% |
Surcharge applicable :
| Income limit | Surcharge Rate on 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 limit | Surcharge Rate on income tax |
| Net income exceeds Rs 50 lakh but doesn’t exceed Rs 1 crore | 10% |
| Net income above Rs 1 crore | 15% |
Health and Education cess: 4% of Income tax plus surcharge
Read Also: TDS and TCS Rates Chart – Examples of how to calculate TDS for FY 2020-21
3. Income Tax Rate For Partnership Firm/ LLP/ Local Authority
Flat Income Tax rate of 30% is applicable for Partnership Firm/ LLP/ Local Authority.
Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore
Health and Education cess: 4% of Income tax plus surcharge
Read Also: FAQs on Income Tax Audit under section 44AB of Income Tax Act, 1961
4. Income Tax Rate for AY 2020-21 for Co-operative Society
| Taxable income | Tax Rate |
|---|---|
| Up to Rs. 10,000 | 10% |
| Rs. 10,000 to Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
Surcharge: 12% of taxable income if net income exceed 1 crore. However, the surcharge shall be subject to marginal relief.
Health and Education Cess: 4% of Income Tax Plus Surcharge
Read Also: Mediclaim Deduction Tax benefit: Section 80D of Income Tax Act, 1961
5. Income Tax Slabs for Company for FY 2019-20
| Turnover Particulars | Income Tax Slabs |
|---|---|
| With turnover up to INR 400 crores | 25% |
| With turnover above INR 400 crores | 30% |
| If the company utilized Section 115BA | 25% |
| If the company utilized Section 115BAA | 22% |
| If the company utilized Section 115BAB | 15% |
| For any Foreign company | 40% |
Surcharge on Domestic Companies
| 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% |
Surcharge on Foreign Companies
| Income Limit | Surcharge Rate on the amount of income tax |
|---|---|
| Net income exceeds Rs.1 Crore but doesn’t exceed Rs.10 Crore | 2% |
| Net income exceeds Rs.10 Crore | 5% |
Read Also: National Pension Scheme (NPS) in India
Taxation of Special Income
Special incomes have a different rate of tax but they are the same for every Assessee.
| Particular | Rate of tax |
|---|---|
| Long term Capital Gain U/S 112 | 20% |
| Long term Capital Gain U/S 112A above Rs 1,00,000 | 10% |
| Short term Capital Gain U/S 111A | 15% |
| Casual Income | 30% |
Example – Calculation of the tax liability of an individual aged less than 60 years whose total income is Rs.15,22,000.
Solution Tax liability as per slab rates will be
| Slab Rates | Rate | Calculation | Tax (in Rs) |
|---|---|---|---|
| up to 2,50,000 | 0% | 250000 X 0% | 0 |
| up to 5,00,000 | 5% | 250000 X 5% | 12500 |
| up to 10,00,000 | 20% | 500000 X 20% | 100000 |
| up to 15,22,000 | 30% | 522000 X 30% | 156600 |
| Total | 269100 | ||
| ADD : Cess | 4% | 269100 X 4% | 10764 |
| Tax liability | 279864 |
Read Also: Important Income Tax Penalties under Income Tax Act, 1961
Important Points to Note
- Marginal Relief is provided to the Assessee as Surcharge is calculated on the entire tax amount due to which increase in tax due to surcharge may be greater than the increase in income, so such defect is rectified by allowing marginal relief.
- Surcharge- The surcharge is a tax on tax. It is levied on the tax payable, and not on the income generated. For example, if you have an income of Rs 1000 on which the tax is Rs 300, the surcharge would be 10% of Rs 300 or Rs 30.
- Cess- A cess is a tax on tax. It is levied on the tax collected rather than the income of the taxpayer. For example, if a tax of Rs 100 is payable on Rs 1,000, a cess of 4% would be levied on Rs 100 that is Rs 4 will be paid as Cess.
- DEFICIENCY and REBATE are two benefits offered by the lawmakers to the resident individuals on the INDIA.
- DEFICIENCY-
This is provided to a resident individual along with normal Income less than Exemption Limit. The difference between normal income and exemption limit is known as deficiency. The difference is allowed to adjusted or set off against (in given order)-
- LTCG u/s 112
- STCG u/s 111A
- LTCG u/s 112A
Read Also: Advance Tax liability : Calculation, Due dates, Interest
- REBATE-
Section 87A specifies that a resident individual can obtain a rebate of up to Rs.12,500, if the Total taxable income (after deductions) is not in excess of Rs.5 lakh. For example, in case income tax payment amounts to Rs.10,000, Section 87A provides you a rebate of full Rs. 10,000 amount. This rebate is given before the addition of the 4% cess.
Read Also:
- ITR-2 : Who can File ITR-2 | Who cannot file | How to file ITR?
- ITR-1 Sahaj: Who can file it | Who cannot | How to file ITR 1 online?
- ITR 4 Sugam – Who can file | Who cannot file ITR 4 | How to file ITR 4?
- TDS on Salary : How to calculate TDS on salary as per section 192 of Income Tax
The author of the above article is Aditya Kishore.
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