Update on Income Tax Slab & Tax Rates for the AY 2020-21

Union Finance Minister Piyush Goyal in his interim budget 2019 has proposed that individuals with taxable income up to Rs 5 lakh will get full tax rebate under section 87A of the Income Tax Act. This is the big update regarding Income tax slab and tax rates for the AY 2020-21.

This means that anyone with net taxable income up to Rs 5 lakh will not be required to pay any taxes. However, anyone with net taxable income above Rs 5 lakh will not be able to avail this tax benefit.

In the Finance Bill, 2019 the maximum amount of tax rebate under section 87A of the Income Tax Act has been proposed to increase to Rs 12,500 from the existing Rs 2,500. This proposed tax rebate will be admissible to taxpayers having total income up to Rs 5 lakh instead of current Rs 3.5 lakh. For more updates you may visit the official website of Income Tax India.

Income Tax Slab & Tax Rates for the Assessment Year 2020-21 1

Summary of Income Tax Slab and Tax Rates for AY 2020-21

The Income Tax rates in India are different for different categories and status of tax payers. The Income Tax slab and tax rates for Individuals, Senior Citizen and Very Senior Citizens, HUFs, AOP, BOI and Co-operatives are progressive in nature, where a lower tax rate is imposed on low-income earners compared to those with higher income, making it based on the taxpayer’s ability to pay. That means it takes a larger percentage from high-income earners than it does from low-income earners. Individuals, HUFs, AOP, BOI and Co-operatives are taxed as per different slab rates ( varies from Nil to 30% ). However, Firms and Companies are taxed on fixed rate basis, except for certain specified incomes.

When income increases a specified limit(s), Surcharge on Income Tax is charged at specified Surcharge rate on Income Tax. The specified limit(s) for charging Surcharge and Surcharge rates are different for different categories of tax payers. Cess (Health and Education / Education) is charged at specified rate on (Income Tax + Surcharge)

Income Tax Slabs / Rates for AY 2020-21

Individual resident aged below 60 years (Individual resident born on or after 1st April 1960)

Income SlabIncome Tax
Upto ₹ 2,50,000/-NIL
Above ₹ 2,50,000/- to ₹ 5,00,000/-5% of (taxable income – 2,50,000). In case, taxable income is upto Rs. 5 lacs, the tax payable shall be nil on account of Tax Relief u/s 87A
Above ₹ 5,00,000/- to ₹ 10,00,000/-₹ 12,500/- + 20% of (taxable income – 5,00,000)
Above ₹ 10,00,000/-₹ 112,500/- + 30% of (taxable income – 10,00,000).
Surcharge (subject to Marginal Relief)10% of Income Tax, in case taxable income is above ₹ 50 lacs.
15% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

Senior Citizen (Individual resident born on or after 1st April 1940 but before 1st April 1960)

Income SlabIncome Tax
Upto ₹ 3,00,000/-NIL
Above ₹ 3,00,000/- to ₹ 5,00,000/-5% of (taxable income – 3,00,000). In case, taxable income is upto Rs. 5 lacs, the tax payable shall be nil on account of Tax Relief u/s 87A
Above ₹ 5,00,000/- to ₹ 10,00,000/-₹ 10,000/- + 20% of (taxable income – 5,00,000).
Above ₹ 10,00,000/-₹ 110,000/- + 30% of (taxable income – 10,00,000)
Surcharge (subject to Marginal Relief)10% of Income Tax, in case taxable income is above ₹ 50 lacs.
15% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

Very Senior Citizen (Individual resident born before 1st April 1940)

Income SlabIncome Tax
Upto ₹ 5,00,000/-NIL
Above ₹ 5,00,000/- to ₹ 10,00,000/-20% of (taxable income – 5,00,000).
Above ₹ 10,00,000/-₹ 100,000/- + 30% of (taxable income – 10,00,000)
Surcharge (subject to Marginal Relief)10% of Income Tax, in case taxable income is above ₹ 50 lacs.
15% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

 

Any NRI or HUF or AOP or BOI or AJP

Income SlabIncome Tax
Upto ₹ 2,50,000/-NIL
Above ₹ 2,50,000/- to ₹ 5,00,000/-5% of (taxable income – 2,50,000).
Above ₹ 5,00,000/- to ₹ 10,00,000/-₹ 12,500/- + 20% of (taxable income – 5,00,000).
Above ₹ 10,00,000/-₹ 112,500/- + 30% (taxable income – 10,00,000)
Surcharge (subject to Marginal Relief)10% of Income Tax, in case taxable income is above ₹ 50 lacs.
15% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

Co-operative Society

Income SlabIncome Tax
Upto ₹ 10,000/-10% of the income.
Above ₹ 10,000/- to ₹ 20,000/-₹ 1,000/- + 20% of (taxable income – 10,000)
Above ₹ 20,000/-₹ 3,000/- + 30% of (taxable income – 20,000)
Surcharge (subject to Marginal Relief)12% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

Firm

Income Tax30% of taxable income.
Surcharge (subject to Marginal Relief)12% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

Local Authority

Income Tax30% of taxable income.
Surcharge (subject to Marginal Relief)12% of Income Tax, in case taxable income is above ₹ 1 crore.
Health & Education Cess4% of (Income Tax + Surcharge).

Domestic Company (1) – Turnover upto ₹ 250 crores

Income Tax25% of taxable income.
Surcharge (subject to Marginal Relief)7% of income tax, in case taxable income is above ₹ 1 crore.
12% of income tax, in case taxable income is above ₹ 10 crores.
Health & Education Cess4% of (Income Tax + Surcharge).

Domestic Company (2) – Turnover exceeding ₹ 250 crores

Income Tax30% of taxable income.
Surcharge (subject to Marginal Relief)7% of income tax, in case taxable income is above ₹ 1 crore.
12% of income tax, in case taxable income is above ₹ 10 crores.
Health & Education Cess4% of (Income Tax + Surcharge).

Company other than a Domestic Company

IncomeIncome Tax Rate
Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government50%
Any other income40%
Surcharge (subject to Marginal Relief)2% of income tax, in case taxable income is above ₹ 1 crore.
5% of income tax, in case taxable income is above ₹ 10 crores.
Health & Education Cess4% of (Income Tax + Surcharge).

Marginal Relief on Surcharge

In case taxable income exceeds ₹ 50 lacs / ₹ 1 crore Surcharge is payable on income tax at applicable rates. If increase in ‘Income Tax + Surcharge’ is more than the increase income over ₹ 50 lacs / ₹ 1 crore, the ‘Surcharge’ is reduced by such amount so that the ‘Income Tax + Surcharge’ become equal to increase in ‘Total Taxable Income’ over Rs. 50 lacs / 1 Crore respectively. The amount so reduced from ‘Surchage’ is ‘Marginal Relief on Surcharge’.

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