Income Tax Slab

The calculation of income tax in India is done based on applying different tax rates to different annual income groups, which are called slabs. For calculating income tax, first of all, actual annual taxable income is calculated as per the provisions of various sections in the Income Tax Act, providing for different income inclusions and exclusions for the same.

Budget 2020 Tax Highlights

Main tax highlights from the budget presented by Hon’ble Finance Minister Ms. Nirmala Sitharaman on 1st Feb 2020

  • Option to the taxpayer choose between old income tax rate and slabs and the new ones
  • New tax slabs offer reduction in applicable tax rate from 20% to 10% and from 30% to 20% in some cases (details in table below)
  • In case the tax payer opts for new slabs and rates, no exemption or deduction can be claimed such as those on account of house rent allowance (HRA) investments, LIC premium, school fees, mediclaim etc.

Tax Slab for Individuals below 60 Years of Age

Income range per annum New Slabs for FY 2020-21, AY 2021-22 Old Slabs, mandatory upto FY 2019-20 and optional from FY2020-21
Up to Rs. 2.5 lakhs No Tax No tax
Above Rs. 2.5 lakhs to Rs. 5 lakhs 5% 5%
Above Rs. 5 lakhs to Rs. 7.5 lakhs 10% 20%
Above Rs. 7.5 lakhs to Rs. 10 lakhs 15% 20%
Above Rs. 10 lakhs to Rs. 12.5 lakhs 20% 30%
Above Rs. 12.5 lakhs to Rs. 15 lakhs 25% 30%
Above Rs. 15 lakhs 30% 30%
Rebate under section 87(A) 100% tax rebate subject to maximum of Rs. 2,500 available to resident individual whose total income does not exceed Rs. 3.5 lakhs 100% tax rebate subject to maximum of Rs. 2,500 available to resident individual whose total income does not exceed Rs. 3.5 lakhs

Cess at 4% of tax applicable in all cases. Surcharge at 10% for income above Rs. 50 lakhs and at 15% for income above Rs. 1 crore.

A rebate of Rs. 12,500 is available under the old income tax regime, whereas the same rebate is available in the new income tax regime if the annual taxable income does not exceed Rs. 5 lakhs.

The total reduction in tax liability will range from Rs. 25,000 for a person earning Rs. 7.5 lakhs per annum to Rs. 75,000 for a person earning Rs 15 lakhs or more per annum under the new tax slabs. However, the actual savings will be lower if one were to include the impact of fore-going exemptions under the new tax regime.

Tax Slab for Senior Citizens (age more than 60 years but less than 80 years FY 2019-20)

Income range per annum New Slab for FY 2020-21, AY 2020-21 Tax Rate FY 2019-20, AY 2020-21
Up to Rs. 3 lakhs No Tax No Tax
Above Rs. 3 lakh to Rs. 5 lakhs 5% 5%
Above Rs. 5 lakhs to Rs. 7.5 lakhs 10% 20%
Above Rs. 7.5 lakhs to Rs. 10 lakhs 15% 20%
Above Rs. 10 lakhs to Rs. 12.5 lakhs 20% 30%
Above Rs. 12.5 lakhs to Rs. 15 lakhs 25% 30%
Above Rs. 15 lakhs 30% 30%
Rebate under section 87(A) 100% tax rebate subject to maximum of Rs. 2,500 available to resident individual whose total income does not exceed Rs. 3.5 lakhs 100% tax rebate subject to maximum of Rs. 2,500 available to resident individual whose total income does not exceed Rs. 3.5 lakhs

Cess at 4% of tax applicable in all cases. Surcharge at 10% for income above Rs. 50 lakhs and at 15% for income above Rs. 1 crore.

The rebate of Rs. 12,500 is applicable for all income under the old income tax regime. Whereas, it is available only for the income upto Rs. 5 lakhs under the new income tax regime.

Tax slabs for Senior Citizens (age more than 80 years FY 2019-20)

Income range per annum New Slab for FY 2020-21, AY 2021-22 Tax Rate FY 2019-20, AY 2020-21
Up to Rs. 2.5 lakhs per annum No Tax No Tax
Up to Rs. 5 lakhs per annum No Tax No Tax
Above Rs. 5 lakhs to Rs. 7.5 lakhs 10% 20%
Above Rs. 7.5 lakhs to Rs. 10 lakhs 15% 20%
Above Rs. 10 lakhs to Rs. 12.5 lakhs 20% 30%
Above Rs. 12.5 lakhs to Rs. 15 lakhs 25% 30%
Above Rs. 15 lakhs 30% 30%

Cess at 4% of tax applicable in all cases. Surcharge at 10% for income above Rs. 50 lakhs and at 15% for income above Rs. 1 crore.

Tax slabs for Firms and Domestic Companies FY 2019-20

Tax Head Firms Domestic Companies
Income Tax for turnover upto Rs. 400 crores 30% 25%
Income Tax for turnover above Rs. 400 crores 30% 30%
Surcharge as % of income tax 12% of tax in case the total income exceeds Rs. 1 crore
  • 7% of tax in case income is more than Rs. 1 crore but less than Rs. 10 crore.
  • 10% of tax in case income is more than Rs. 10 crore.
Cess as % of tax and surcharge 3% of tax plus surcharge 3% of tax plus surcharge

The above table highlights the latest tax slabs for the firms and domestic companies. The tax treatment in both the cases differs from the tax treatment of individuals and HUFs.

New vs Old Income Tax Regime

Scenario -I: In case you are salaried and claiming deductions under Section 80C, 80D, standard deduction and HRA exemption
The deductions and exemptions claimed would be Rs. 50,000 as the standard deduction, Rs. 1.5 lakh under section 80C, Rs. 25,000 under Section 80D, and HRA exemption which will vary at each income level.
At a gross salary of Rs. 7.5 lakhs, the HRA exemption would be Rs. 1.5 lakhs, at gross salary Rs. 10 lakh, the HRA exemption would be Rs. 2 lakhs, at gross salary Rs. 12.5 lakhs, the HRA exemption would be Rs. 2.5 lakhs, at gross salary Rs. 15 lakhs, the HRA exemption would be Rs. 3 lakh, and at gross salary Rs. 20 lakhs, the HRA exemption would be Rs. 4 lakh.
The tax benefit for each slab would be:

Gross Salary Tax Payable in Current IT Slab Tax Payable in New IT Slab Tax Saving (Payable)
At 7.5 lakhs - 39,000 (39,000)
At 10 lakhs 28,600 78,000 (49,400)
At 12.5 lakhs 70,200 1,30,000 (59,800)
At 15 lakhs 1,11,800 1,95,000 (83,200)
At 20 lakhs 2,34,000 3,51,000 (1,17,000)

Scenario -II: In case you are claiming the most common deductions i.e., deduction under Section 80C, 80D, and standard deduction
The standard deduction of Rs. 50,000, deduction under Section 80C of Rs. 1.5 lakhs, and deduction under Section 80D of Rs. 25,000 will together amount to Rs. 2.25 lakhs as total deduction claimed.
The tax benefit under each slab would be:

Gross Salary Tax Payable in Current IT Slab Tax Payable in New IT Slab Tax Saving (Payable)
At 7.5 lakhs 18,200 39,000 (20,800)
At 10 lakhs 70,200 78,000 (7,800)
At 12.5 lakhs 1,24,800 1,30,000 (5,200)
At 15 lakhs 2,02,800 1,95,000 7,800
At 20 lakhs 3,58,800 3,51,000 7,800

Scenario -III: In case you are claiming only the standard deductions
The tax benefit under each slab when you claim only the standard deduction would be:

Gross Salary Tax Payable in Current IT Slab Tax Payable in New IT Slab Tax Saving (Payable)
At 7.5 lakhs 54,600 39,000 15,600
At 10 lakhs 1,06,600 78,000 28,600
At 12.5 lakhs 1,79,400 1,30,000 49,400
At 15 lakhs 2,57,400 1,95,000 62,400
At 20 lakhs 4,13,400 3,51,000 62,400

FAQs

What is the income tax rate for 2019-20?

The latest income tax slab for 2019-20 is as follows:

Income Slab Tax for individual below 60 years of age
Upto Rs. 2,50,000 NIL
Rs. 2,50,001 to 5,00,000 5%
Rs. 5.00,001 to 10,00,0000 20%
Above Rs. 10,00,000 30%
What are the income tax slabs proposed in the new income tax regime?

In the new Income tax regime, the slabs are:

  1. Upto Rs. 2.5 lakh – NIL
  2. From Rs. 2.5 lakh to Rs. 5 lakh– 5%
  3. From Rs. 5 lakh to Rs. 7.5 lakh – 10%
  4. From Rs. 7.5 lakh to Rs. 10 lakh – 15%
  5. From Rs. 10 lakh to Rs. 12.5 lakh – 20%
  6. From Rs. 12.5 lakh to Rs. 15 lakh – 25%
  7. Above Rs. 15 lakh – 30%
Do I have to forgo all the tax exemptions and deductions as per the new income tax regime?

As per the new income tax regime proposed in the budget, you will have to forgo all the common income tax deductions and exemptions available such as deductions under section 80C, 80D, except for employer’s contribution to NPS (80CCD (2)).

What is the senior citizen income tax Slab for 2019-20?

The income tax slab rates applicable to senior citizens for 2019-20 are:

Income Slab Tax Rate FY 2019-20, AY 2020-21
Upto Rs. 3,00,000 No Tax
Rs. 3,00,001 to 5,00,000 5%
Rs. 5,00,001 to 10,00,000 20%
Above Rs. 10 lakhs 30%
Rebate under section 87(A) 100% tax rebate subject to maximum of Rs. 2,500 available to resident individual whose total income does not exceed Rs. 3.5 lakhs
Is there a choice between a new and old income tax regime?

Yes, you can choose between the new and old income tax regime in each financial year provided you don’t have business income.

Is the tax rebate of Rs. 12,500 under section 87A available in new regime?

Yes, the taxpayer can still claim the tax rebate of Rs. 12,500 if the annual income does not exceed Rs. 5 lakh in a financial year.

Are cess and surcharge still payable under the new income tax regime?

Yes, 4% of cess and surcharge as pe your income is also applicable in the new income tax regime.

What is the income limit for income tax slab 2019-20?

The income limit as per tax slab 2019-20 to which no income tax is levied is Rs. 2.5 lakhs for individual below 60 years and Rs. 3 lakhs for senior citizens.

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