Income Tax Slabs: Here are the latest income tax slabs and rates–the economic times

Clipped from: https://economictimes.indiatimes.com/wealth/tax/latest-income-tax-slabs/articleshow/62751981.cms

From the financial year (FY) 2020-21, individual taxpayers can choose between two tax regimes – the existing or old tax regime and the new, concessional one. The old tax regime allows the taxpayer to continue with existing tax exemptions such as House Rent Allowance, Leave Travel Allowance and deductions under different sections of the Income-tax Act, 1961. While those opting for the new regime will have to forego most of the (approx. 70) tax exemptions and deductions that are available under the old regime.

With regards to income tax slabs, the old regime has higher tax rates and three tax slabs, whereas the new regime has lower tax rates and six tax slabs.

Here is a look at the latest income tax slabs and rates for FY 2020-21 and FY 2021-22. The income tax rates and slabs given below will be applicable for individuals filing income tax returns for FY 2020-21 and planning for tax-saving for FY 2021-22.

We will be comparing the income tax rates and slabs under the new and old tax regimes for individuals, senior citizens, super senior citizens for FY 2020-21.

The left-hand side of the table given below shows the old tax regime which comes with deductions and tax exemptions. The right-hand side of the table shows rates in the new tax regime without any tax exemptions and deductions.

Income tax slabs for resident individual below 60 years of age, non-resident individuals (NRI) irrespective of age and HUFs

Old tax regime (With deductions and exemptions)
Total income
New tax regime (without deductions and exemptions)
Nil
Up to Rs 2.5 lakh
NIL
5%
From Rs 2,50,001 to Rs 5 lakh
5%
20%
From Rs 5,00,001 to Rs 7.5 lakh
10%
20%
From Rs 7,50,001 to Rs 10 lakh
15%
30%
From Rs 10,00,001 to Rs 12.5 lakh
20%
30%
From Rs 12,50,001 to Rs 15 lakh
25%
30%
From Rs 15,00,001
30%

Income tax slabs for resident individual age above 60 years but below 80 years (senior citizen)

Old tax regime (With deductions and exemptions)
Total income
New tax regime (without deductions and exemptions)
Nil
Up to Rs 2.5 lakh
NIL
Nil
From Rs 2,50,001 to Rs 3 lakh
5%
5%
From Rs 3,00,001 to Rs 5 lakh
5%
20%
From Rs 5,00,001 to Rs 7.5 lakh
10%
20%
From Rs 7,50,001 to Rs 10 lakh
15%
30%
From Rs 10,00,001 to Rs 12.5 lakh
20%
30%
From Rs 12,50,001 to Rs 15 lakh
25%
30%
From Rs 15,00,001
30%

Income tax slabs for resident individual age above 80 years (Super senior citizen)

Old tax regime (With deductions and exemptions)
Total income
New tax regime (without deductions and exemptions)
Nil
Up to Rs 2.5 lakh
NIL
Nil
From Rs 2,50,001 to Rs 5 lakh
5%
20%
From Rs 5,00,001 to Rs 7.5 lakh
10%
20%
From Rs 7,50,001 to Rs 10 lakh
15%
30%
From Rs 10,00,001 to Rs 12.5 lakh
20%
30%
From Rs 12,50,001 to Rs 15 lakh
25%
30%
From Rs 15,00,001
30%

Applicable for all individual tax payers:

  • Rebate of up to Rs 12,500 is available under section 87A under both tax regimes. Thus, no income tax is payable for total taxable income up to Rs 5 lakh in both regimes.
  • Rebate under section 87A is not available for NRIs and Hindu Undivided Families (HUF)
  • Cess at the rate of 4% is applicable on the income tax amount.
  • Surcharge at different rates on the income tax is applicable before the levy of cess if the total income exceeds Rs 50 lakh in a financial year.

Abhishek Soni, CEO, Tax2win.in, an ITR filing website says, “If senior citizens or super senior citizens are opting for new tax regime then the benefit of higher exemption limit will not be available, i.e., limit of higher exemption of Rs 3 lakh in case of senior citizens and Rs 5 lakh in case of super senior citizens will not be available under the new optional regime. Therefore, under the new tax regime, basic exemption limit will remain Rs 2.5 lakh for all taxpayers.”

Under the existing tax regime, the basic tax exemption limit for an individual depends on their age and residential status. According to their age, resident individual taxpayers are divided into three categories:

1. Resident individuals below the age of 60 years
2. Resident senior citizens aged 60 years or above but below 80 years
3. Resident super senior citizens who are 80 years or above

Do keep in mind that only individuals having no business income in a financial year are eligible to choose between both the tax regimes every year. Thus, such an individual can choose the old tax regime in one year and new tax regime in the next year. However, those having business income, once they have opted for the new tax regime, cannot choose between both the tax regimes every financial year. They have only once in a lifetime opportunity to switch back to the old tax regime.

As mentioned above, even the surcharge is levied on the income tax amount if the total income crosses a certain level. Given below is the table showing surcharges that will be levied.

Taxable Income
Surcharge (%)
Income above Rs 50 lakh but below Rs 1 crore
10
Income above Rs 1 crore but below Rs 2 crore
15
Income above Rs 2 crore but below 5 crore
25
Income above Rs 5 crore
37
  1. How is tax liability calculated?
    The tax liability is calculated on the income arrived at after availing all the deductions and other tax-exemptions available to the individual.
  2. How to calculate total income?
    To calculate your total income, you must add the income received from various sources such as salary, pension, interest received from fixed deposit, recurring deposit, savings account and so on.
  3. How do I know my tax payment details?
    Once the tax is deposited by you or any other individual has deducted tax and deposited with the government on your behalf, then total amount of tax deposited against your PAN will be reflected in Form 26AS. You can download the statement from your account on the income tax e-filing website.
  4. How can I pay taxes?
    A taxpayer can pay tax offline or online. For offline method, an individual is required to visit the bank branch and pay the tax due along with duly filled challan. Another way is paying taxes online using Net banking facility of any of the authorised banks.

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