Income Tax Slab 2019-20(AY 2020-21)

The 2019 Interim Budget was presented on 1 February 2019 by the interim Finance Minister Piyush Goyal. This budget is primarily driven by populist moves. The biggest announcement this time is the rebate of Rs.12,500 which has been announced for taxpayers who have a taxable income of up to Rs.5 lakh.
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Income tax slabs and rates applicable for the FY 2019-20 and AY 2020-2021

There are 3 different categories of individual taxpayers and 1 for domestic companies. These categories are listed below:
  • Individuals and Hindu Undivided Family (HUF) less than 60 years old
  • Senior Citizens who are 60 years old or more, but less than 80 years old
  • Senior Citizens who are 80 years old or more
  • Domestic Companies
Based on the categories which are mentioned above, the following tables contain the different rates which are applicable for the respective categories.

Income tax slabs applicable for financial year 2019-20:

Annual Income Individuals and Hindu Undivided Family (HUF) less than 60 years old [PART – I] Senior Citizens who are 60 years old or higher, but less than 80 years old [PART – II] Senior Citizens who are 80 years old or more(Super Senior Citizens)
Up to Rs.2.5 lakh Tax rate – Nil Tax rate - Nil Tax rate - Nil
Health and Education Cess – Nil Health and Education Cess – Nil Health and Education Cess - Nil
Rs.2,50,001-Rs.5 lakh Tax rate – 5% Tax Rate – Nil (for income up to Rs.3 lakh) Tax rate – 5% (for income of Rs.3,00,001 to Rs.5 lakh) Tax rate - Nil
Health and Education Cess – 4% of Income Tax Health and Education Cess – 4% of Income Tax Health and Education Cess – Nil
Rs.5,00,001-Rs.10 lakh Tax Rate – 20% Tax rate – 20% Tax rate – 20%
Health and Education Cess – 4% of Income Tax Health and Education Cess – 4% of Income Tax Health and Education Cess – 4% of Income Tax
More than Rs.10 lakh Tax rate – 30% Tax rate – 30% Tax Rate – 30%
Health and Education Cess – 4% Health and Education Cess – 4% of Income Tax Health and Education Cess – 4% of Income Tax
Income Tax Exemption Limit for Financial Year 2019-20 Up to Rs.2.5 lakh for individuals and Hindu Undivided Families (HUFs) except for those who are covered under Part – II and Part – III. Up to Rs.3 lakh except for those who are covered under Part – I and Part – III. Up to Rs.5 lakh except for those who are covered under Part – I and Part – II.

Surcharge:

(A) If the total income is more than Rs.50 lakh, but less than Rs.1 crore: 10% of income tax

(B) If the total income is more than Rs.1 crore: 15% of income tax

Income Tax slabs applicable for Domestic Companies for the financial year 2019-20:

Turnover Amount Tax Rate
If the gross turnover in the previous year is less than Rs.250 crore 25%
If the gross turnover in the previous year is more than Rs.250 crore 30%

Additional rates which are applicable:

Cess: 4% of the corporate tax

Surcharge: When the taxable income is higher than Rs.1 crore but less than Rs.10 crore, the applicable surcharge will be 7%.

Surcharge: When the taxable income is higher than Rs.10 crore, the applicable surcharge will be 12%.

Highlights of the Interim Budget 2019 in regard to tax slabs and rates

The highlights of the interim budget 2019 in regard to the tax slabs and rates can be summed up as follows:

  • Individuals who draw a salary of up to Rs.5 lakh will not be required to pay any income tax.
  • The tax slabs for the financial year 2019-20 remain unchanged.
  • Rs.23,000 crore is to be granted by direct tax proposals which is meant to offer tax relief to about 3 crore taxpayers.
  • Individuals who earn a gross salary of up to Rs.6.5 lakh will be able to avail full tax exemption if they make investments in provident funds, insurance, and other specified savings schemes.
  • The standard deduction has been increased to the extent of Rs.50,000 now, as opposed to the previously prevalent amount of Rs.40,000.

Benefits for individuals with an annual income of up to Rs.5 lakh

As mentioned earlier, no changes have been made in the tax slabs. Thus, the effective tax slabs for the financial year 2019-20 are similar to that of the financial year 2018-19. However, the interim Finance Minister Piyush Goyal has announced that the individuals who are drawing an annual income of up to Rs.5 lakh will not be required to pay any income tax. In his budget speech, Goyal said that the individuals with a total taxable income of up to Rs.5 lakh will be eligible for a tax rebate of Rs.12,500 which will be available under Section 87A of the Income Tax Act.

In this case, it should be noted that the taxable income of an individual will be computed only after considering all the different deductions under Sections 80C, 80D, 80TTA, 80TTB, 80G, etc. of the Income Tax Act. Thus, if the annual income of an individual is below Rs.5 lakh, he or she will be eligible for this rebate under Section 87A. In addition to that, individuals with an annual income of more than Rs.5 lakh, but a taxable income of up to Rs.5 lakh only will also be eligible for the rebate. However, if the taxable income exceeds Rs.5 lakh (i.e. Rs.5,00,001 and up), the individual will not be eligible to avail the benefits of the rebate under Section 87A.

Note: The rebate under Section 87A of the Income Tax Act will be considered to be the actual amount of tax payable by the individual or Rs.12,500, whichever is lower.

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