Income Tax is the tax that is levied by the Government of India on the income earned by individuals and other entities like a Hindu Undivided Family or a Company. This is based on various slabs as decided by the GOI
Announcement of slabs, tax rates for various slabs, and the exemptions allowed happening during the presentation of the Annual Budget.
Knowing your income tax slabs is very important so that you are able to carry out an efficient tax planning exercise well in time.
Before getting to know the income tax rates for particular slabs for the ongoing financial year, let us know the individual categories of taxpayers.
Another important point to be noted here is that the Annual Budget of 2020 has announced a new tax slab for individuals. There are many calculators available online to see which tax regime works best for your income level. Do a thorough calculation before making the switch to the new regime.
Tax slabs for individuals below 60 years
Income Range Per Annum | Tax Rate As Per Old regime(Financial Year 2019-20) | Tax Rate As Per the New Regime |
---|---|---|
Up to Rs 2.5 lakh | No tax | No tax |
Rs 2.5 - 5 lakh | 10% | 5% |
Rs 5 -7.5 lakh | 20% | 10% |
Rs 7.5 -10 lakh | 20% | 15% |
Rs 10 lakh - 12.5 lakh | 30% | 20% |
Rs 12.5 - 15 lakh | 30% | 25% |
Rs 15 lakh and above | 30% | 30% |
Individuals in the age group of 60-80 are categorized as Senior Citizens. The tax rates for this group are slightly different under the old regime.
Income Range Per Annum | Tax Liability As Per Old Regime | Tax Liability As Per the New Regime |
---|---|---|
Up to Rs 3 lakh | No tax | No tax |
Rs 3 - 5 lakh | 5% | 5% |
Rs 5 -7.5 lakh | 20% | 10% |
Rs 7.5 -10 lakh | 20% | 15% |
Rs 10 lakh - 12.5 lakh | 30% | 20% |
Rs 12.5 - 15 lakh | 30% | 25% |
Rs 15 lakh and above | 30% | 30% |
The individuals aged 80 and above are categorized as Super Senior Citizens and any income of up to Rs 5 lakh is exempt from tax.
Income Range Per Annum | Tax Liability As Per Old Regime | Tax Liability As Per the New Regime |
---|---|---|
Up to Rs 5 lakh | No tax | No tax |
Rs 5 -7.5 lakh | 20% | 10% |
Rs 7.5 -10 lakh | 20% | 15% |
Rs 10 lakh - 12.5 lakh | 30% | 20% |
Rs 12.5 - 15 lakh | 30% | 25% |
Rs 15 lakh and above | 30% | 30% |
For those individuals earning an income above Rs 50 lakh, a surcharge at the rate mentioned below is applicable. Luckily the surcharge rates remain the same even in the new tax regime.
Total Income Exceeding | Surcharge As Per Old Tax Regime | Surcharge As Per New Regime |
---|---|---|
Rs 50 lakh to 1 crore | 10% | 10% |
Rs 1 -2 Crore | 15% | 15% |
Rs 2 -5 Crore | 25% | 25% |
Rs 5- 10 Crore | 37% | 37% |
Above 10 crore | 37% | 37% |
Note:
Any individual looking to move to the new tax regime should bear in mind that he/she will have to give up the tax exemptions that were available under the old regime. 70 exemptions were dropped from the Income Tax exemption list.
Some of the common exemptions especially the ones under Sec 80C that will not be allowed if you opt for the new tax regime are
The Finance Act 2020 has allowed some deductions as below to be admissible as earlier. They are
With the new tax regime, the options for tax saving with the help of deductions have been reduced. However, to compensate for this, the tax rate has also been reduced. Look at the exemptions that you have been claiming to make the right decision of opting for the regimes. Remember, while salaried employees have the option to pick the tax regime most suitable to them every financial year, those with salaried and business income should make their decision carefully. After moving to the new regime, they will be able to make the choice to move to the old regime only once in their lifetime.
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