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.
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 A.Y. 2021-22 and A.Y. 2020-21 are discussed in this article. Such tax slabs tend to undergo a change during every budget.
Income Tax Slabs and Rates for Financial Year: 2020-21 (A.Y. – 2021-22)
Budget 2020 has announced a new tax regime giving taxpayers an option to pay taxes at lower rates without claiming deductions under various sections. The following Income Tax slab rates are notified in new tax regime vs old tax regime:
| Income Tax Slab | Tax Rates As Per New Regime | Tax Rates As Per Old Regime |
|---|---|---|
| ₹0 – ₹2,50,000 | Nil | Nil |
| ₹2,50,001 – ₹ 5,00,000 | 5% | 5% |
| ₹5,00,001 – ₹ 7,50,000 | ₹12500 + 10% of total income exceeding ₹5,00,000 | ₹12500 + 20% of total income exceeding ₹5,00,000 |
| ₹7,50,001 – ₹ 10,00,000 | ₹37500 + 15% of total income exceeding ₹7,50,000 | ₹62500 + 20% of total income exceeding ₹7,50,000 |
| ₹10,00,001 – ₹12,50,000 | ₹75000 + 20% of total income exceeding ₹10,00,000 | ₹112500 + 30% of total income exceeding ₹10,00,000 |
| ₹12,50,001 – ₹15,00,000 | ₹125000 + 25% of total income exceeding ₹12,50,000 | ₹187500 + 30% of total income exceeding ₹12,50,000 |
| Above ₹ 15,00,000 | ₹187500 + 30% of total income exceeding ₹15,00,000 | ₹262500 + 30% of total income exceeding ₹15,00,000 |
Note: The tax calculated on the basis of such above rates will be subject to health and education cess of 4%.
Further, Rebate under section 87A up to Rs 12,500, shall be continued in the new tax regime. It shall make zero tax payable in the new tax regime for Individuals having income upto Rs 5 Lakh.
Surcharge Applicable in F.Y. 2020-21 (Marginal Relief Available):
| 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% |
New tax regime slab rates are not differentiated based on age group. However, under old tax regime the basic income threshold exempt from tax for senior citizen (aged 60 to 80 years) and super senior citizens (aged above 80 years) is ₹ 3 lakh and ₹ 5 lakh respectively.
However, under new tax regime person cannot claim up to 70 income tax deductions while calculating taxes. They are as follows:
- Leave Travel Allowance (LTA)
- House Rent Allowance (HRA)
- Conveyance
- Daily expenses in the course of employment
- Relocation allowance
- Helper allowance
- Children education allowance
- Other special allowances [Section 10(14)]
- Standard deduction
- Professional tax
- Interest on housing loan (Section 24)
- Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
Hence, every person has to make his/her own calculation as per old and new tax regime and calculate which one is beneficial based on type of investments made and returns earned on those investments.
Points to remember while opting for the new tax regime:
- Option to be exercised on or before the due date of filing return of income for AY 2021-22
- 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.
Consider an example, a person aged 35 years has the total income of ₹11, 00,000 and has made the investment under section 80C of ₹1, 50,000 and under Section 80CCD of ₹50,000. He has claimed income tax deduction with medical and Leave travel allowance of ₹50000 and HRA of ₹1,50,000 The tax payable under new and old tax regime is as follows:
| Particulars | New Regime | Old Regime |
|---|---|---|
| Gross total income | ₹ 11,00,000 | ₹ 11,00,000 |
| Less: Deductions under 80C | ₹ 0 | ₹ 1,50,000 |
| Less: Standard Deduction (Medical & Travel Allowance) | ₹ 0 | ₹ 50,000 |
| Less: Deductions under 80CCD | ₹ 0 | ₹ 50,000 |
| Less : HRA deduction as per section 10(13A) | ₹ 0 | ₹ 1,50,000 |
| Taxable Income | ₹ 11,00,000 | ₹ 7,00,000 |
| Taxes payable as per slab rates | ||
| ₹0 – ₹2,50,000 | ₹ 0 | ₹ 0 |
| ₹2,50,001 – ₹ 5,00,000 | ₹ 12,500 | ₹ 12,500 |
| ₹5,00,001 – ₹ 7,50,000 | ₹ 25,000 | ₹ 40,000 |
| ₹7,50,001 – ₹ 10,00,000 | ₹ 37,500 | ₹ 0 |
| ₹10,00,001 – ₹12,50,000 | ₹ 20,000 | ₹ 0 |
| Total taxes | ₹ 95,000 | ₹ 52,500 |
Income Tax Slabs and Rates for Financial Year: 2019-20 (A.Y. – 2020-21)
- Individuals Below 60 Years of Age:
| Income Tax Slab | Individuals Below The Age Of 60 Years |
|---|---|
| Up to `2,50,000 | Nil |
| 2,50,001 to 5,00,000 | 5% |
| 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 per above table.
- Individuals Between 60 to 80 Years of Age:
| Income Tax Slab | Senior Citizens (Aged 60 Years But Less Than 80 Years) |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 10,000 + 20% of total income exceeding 5,00,000 |
| Above 10,00,000 | 1,10,000 + 30% of total income exceeding 10,00,000 |
Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as per above table.
- Individuals above 80 Years of Age:
| Income Tax Slab | Very Senior Citizens (Aged 80 Years And Above) |
|---|---|
| Up to 5,00,000 | Nil |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 1,00,000 + 30% of total income exceeding 10,00,000 |
Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as per above table.
Further, Rebate under section 87A up to Rs 12,500, shall be available. It shall make zero tax payable for Individuals having income upto Rs 5 Lakh.
Surcharge Rates for F.Y. 2019-20 (Marginal Relief Available) :
| 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% |
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Note: This Post was last updated on September 20, 2020
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