Income Tax Slabs 2020-21 Last Updated : 13 Aug 2020

Income Tax Slabs in India is announced by the Union Finance Minister. At present, there are 2 different regimes for Income Tax Slabs. Under the old regime, taxpayers will be able to enjoy the benefits of deductions and exemptions while the tax slabs are divided into 4 categories ranging from Nil to 30%. However, under the new regime, taxpayers cannot avail the benefits of deductions and exemptions, but the tax slabs are further divided into 7 categories ranging from Nil to 30%.

Given below are the various tables for the latest Income Tax Slabs for the FY 2020-2021:

New Income Tax Slab for Individual (New Regime)

Income Tax Slab Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2,50,001 to Rs.5,00,000 5% of the total income that is more than Rs.2.5 lakh + 4% cess
From Rs.5,00,001 to Rs.7,50,000 10% of the total income that is more than Rs.5 lakh + 4% cess
From Rs.7,50,001 to Rs.10,00,000 15% of the total income that is more than Rs.7.5 lakh + 4% cess
From Rs.10,00,001 to Rs.12,50,000 20% of the total income that is more than Rs.10 lakh + 4% cess
From Rs.12,50,001 to Rs.15,00,000 25% of the total income that is more than Rs.12.5 lakh + 4% cess
Income above Rs.15,00,001 30% of the total income that is more than Rs.15 lakh + 4% cess

Note: New income tax rates are optional

Given below is an example of how income tax is calculated under the new regime (optional):

Components A B C D E F
Annual Salary (Rs.) 2.5 lakh 5 lakh 7.5 lakh 10 lakh 12.5 lakh 15 lakh
Computation of tax on the gross total income
Up to Rs.2.5 lakh Nil Nil Nil Nil Nil Nil
From Rs.2,50,001 to Rs. 5 lakh Nil 12,500 12,500 12,500 12,500 12,500
From Rs.5,00,001 to Rs.7.5 lakh Nil - 25,000 25,000 25,000 25,000
From Rs.7,50,001 to Rs.10 lakh Nil - - 37,500 37,500 37,500
From Rs.10,00,001 to Rs.12.5 lakh Nil - - - 50,000 50,000
From Rs.12,50,001 to Rs.15 lakh Nil - - - - 62,500
Above Rs.15 lakh Nil - - - - -
Total Tax Amount Nil 12,500 37,500 75,000 1,25,000 1,87,500
Additional Cess (4%) Nil 500 1,500 3,000 5,000 7,500
Total payable tax amount Nil 13,000 39,000 78,000 1,30,000 1,95,000

Note: The calculation in this table is based on the new optional tax regime which has been announced on 1 February 2020.

Given below are the three tables for the alternative Income Tax Slabs:

1. Income Tax Slab for Individual who are below 60 years:

Income Tax slab Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2,50,001 to Rs.5,00,000 5% of the total income that is more than Rs.2.5 lakh + 4% cess
From Rs.5,00,001 to Rs.10,00,000 20% of the total income that is more than Rs.5 lakh + Rs.12,500 + 4% cess
Income of above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,12,500 + 4% cess

Individuals who have an income of less than Rs.5 lakh are eligible for tax deductions under Section 87A

Given below is an example of how income tax is calculated for 3 individuals (A, B, and C):
Components A B C
Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000
Standard Deduction (Rs.) 50,000 50,000 50,000
Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000
House Rent Allowance deductions 82,000 90,000 1,40,000
Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000
Computation of tax on the gross total income
Up to Rs.2.5 lakh (Rs.) Nil Nil Nil
From Rs.2,50,001 to Rs.5 lakh (Rs.) 1,900 12,500 12,500
From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 1,00,000
Above Rs.10 lakh (Rs.) 45,000
Total Tax (Rs.) 1,900 52,500 1,57,500
Deductions under Section 87A (Rs.) 1,900 Nil Nil
Additions of cess (Rs.) Nil 2,100 6,300
Total tax that is payable (Rs.) (Total Tax + cess – Deductions under Section 87A) Nil 54,600 1,63,800

2. Income Tax Slab between 60-80 years:

Income Tax slabs Tax Rate
Up to Rs.3 lakh Nil
From Rs.3,00,001 to Rs.5,00,000 5% of the total income that is more than Rs.3 lakh + 4% cess
From Rs.5,00,001 to Rs.10,00,000 20% of the total income that is more than Rs.5 lakh + Rs.10,500 + 4% cess
Income of above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,10,000 + 4% cess

Given below is an example of how income tax is calculated for 3 individuals (A, B, C):
Components A B C
Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000
Standard deduction (Rs.) 50,000 50,000 50,000
Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000
House Rent Allowance deductions 82,000 90,000 1,40,000
Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000
Computation of tax on the gross total income
Up to Rs.3 lakh (Rs.) Nil Nil Nil
From Rs.3,00,001 to Rs.5 lakh (Rs.) Nil 10,500 10,500
From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 99,500
Above Rs.10 lakh (Rs.) 45,000
Total Tax (Rs.) Nil 50,500 1,55,000
Deductions under Section 87A (Rs.) Nil Nil Nil
Additions of cess (Rs.) Nil 2,020 6,200
Total tax that is payable (Rs.) Nil 52,520 1,61,200

3. Income Tax Slabs for individual above 80 years:

Income Tax slabs Tax Rate
Up to Rs.5 lakh Nil
From Rs.5,00,001 to Rs.10,00,000 20% of the total income that is more than Rs.5 lakh + 4% cess
Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,00,000 + 4% cess

Given below is an example of how income tax is calculated for 3 individuals (A, B, C):
Components A B C
Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000
Standard deduction (Rs.) 50,000 50,000 50,000
Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000
House Rent Allowance deductions 82,000 90,000 1,40,000
Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000
Computation of tax on the gross total income
Up to Rs.5 lakh (Rs.) Nil Nil Nil
From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 1,00,000
Above Rs.10 lakh (Rs.) 45,000
Total Tax (Rs.) Nil 40,000 1,45,000
Deductions under Section 87A (Rs.) Nil Nil Nil
Additions of cess (Rs.) Nil 1,600 5,800
Total tax that is payable (Rs.) Nil 41,600 1,50,800

For domestic companies, the tax-slabs depend on the turnover, and it is mentioned below:

Turnover Tax Rate
Gross turnover can be a maximum of Rs.250 crore for the previous year 25%
Gross turnover is more than Rs.250 for the previous year 30%
Apart from the above-mentioned tax rate, an additional surcharge and cess are levied. Given below are the details of the surcharge and the cess that will be levied:
  • Cess: 4% of corporate tax
  • Surcharge: In case the taxable income is more than Rs.1 crore but less than Rs.10 crore, the surcharge that will be levied is 7%. In case the taxable income is more than Rs.10 crore, the surcharge that will be levied is 12%.
  • Non-resident Indians: For non-resident Indians, irrespective of their age, the exemption limit is up to Rs.2.5 lakh.
Important Points
  • In case your net income is more than Rs.50 lakh but less than Rs.1 crore, apart from a 4% cess, a 10% surcharge is also levied. If the net is above Rs.1 crore, a 15% surcharge is levied.
  • Compared to last year’s budget, cess has increased from 3% to 4%.

FAQs about Income Tax Slabs

  1. Do I need to file Income Tax Return (ITR) if my annual income is below Rs.2.5 lakh?
  2. You need not file an ITR if your yearly income is below Rs.2.5 lakh but you should file a ‘Nil Return’ just for the record as there are many cases where you can produce them as proof of your employment. For instance, you can provide your ITR while applying for a loan or passport.

  3. How is the income of a taxpayer classified?
  4. Under Section 14 of the Income Tax Act, the taxpayer’s income has been classified under 5 different income heads such as Salaries individuals, Capital gains, Gains/Profits from profession or business, Income from house property, Income from other sources.

  5. Does family pension come under salary income during taxation?
  6. No, family pension will not be taxed under salary income but as ‘income from other sources.’

  7. Who can claim rebate under Section 87A?
  8. Rebate under Section 87A can be claimed by any resident Indian whose total annual income is below Rs.5 lakh. The maximum available rebate under 87A is Rs.12,500.

  9. Will my income be taxed if I am an agriculturist?
  10. Any income which is generated from agriculture or its allied activities will not be taxed. However, it will be considered for rate purpose while calculating tax on any non-agricultural income that you may have.

News About Income Tax Slabs

  • Income tax exemption cannot be claimed on meal vouchers and passes under new tax slab

    The Income Tax Department has changed the rules for claiming tax exemption on free meals which are provided by various employers if the new tax slab is opted.

    According to a notification by the Income Tax Department, employees who are opting for the new tax slab under Section 115BAC will not receive the benefit of tax exemption on meal coupons and vouchers.

    The Income Tax Department had considered free meals or beverages by employers for their employees during office hours to be a personal benefit and not expenditure for official purposes, according to Mr. Shailesh Kumar, Partner, Nangia & Co LLP. Hence similar allowances have been withdrawn from the new slab of tax exemptions.

    The Central Board of Direct Taxes has amended the rules relating to the exemption for the salaried employees who chose the new tax regime announced by Finance Minister, Nirmala Sitharaman. The amendment has been made to Rule 3 which deals with perquisites valuation.

  • Pending income tax returns to be refunded; 14 lakh people to benefit

    The Income Tax Department said that it will refund income tax returns of up to Rs.5 lakh which is most likely to benefit more than 14 lakh people.

    The central government will also refund pending GST and custom refunds worth Rs.18,000 crore in order to provide relief to business entities.

    The decision comes in the wake of the Covid-19 creating a havoc due to which businesses have suffered. The refund will allow the groups to take care of their financial needs. It is estimated that the move will benefit close to 1 lakh business entities.

  • Income tax rates slashed by the government in Budget 2020

    Under the Budget 2020, the Finance Minister Nirmala Sitharaman announced a deduction in income tax rates. Under the new rates, individuals who are earning up to Rs.5 lakh will not need to pay any tax. Individuals who are earning between Rs.5 lakh and Rs.7.5 lakh will have to pay 10%. Individuals earning between Rs.7.5 lakh and Rs.10 lakh will have to pay 20%. Individuals earning between Rs.10 lakh and Rs.12.5 lakh will have to pay 20%. Individuals earning between Rs.12.5 lakh and Rs.15 lakh will have to pay 25%. In case you are earning more than Rs.15 lakh, 30% will have to be paid.

  • Income Tax Speculations in the Union Budget

    There are several income tax speculations in the Union Budget in order to boost the economy by boosting consumption. Tweaking of tax slabs, raising of the minimum exemption limit, and direct tax simplification are some speculations. Increase of tax savings through infrastructure bonds may be allowed for up to Rs.50,000 per year. Taxpayers will also receive a significant relief if the current tax slab of 10% is extended to Rs.10 lakh. If this is done, there would be a shift of 1.47 crore taxpayers from the 20% tax slab to the 10% tax slab. For general income taxpayers, the basic exemption limit of Rs.2.5 lakh has not been suggested to be changed. For the financial year 2019-20, the standard deduction was Rs.50,000. Those having a taxable income up to Rs.5 lakh had got Rs.12,500 rebate.

  • Personal income tax slab changes recommended by the Direct Tax Committee

    With the Union Budget 2020 approaching, a report has been prepared by the Central Direct Tax Committee. As per the report, changes have been suggested in the current direct tax system.

    According to the committee, the current personal income tax slabs need to be overhauled. Individuals earning between Rs.2.5 lakh and Rs.10 lakh will have to pay a 10% tax. However, there will be a full rebate of up to a year for Rs.5 lakh. Individuals who are earning between Rs.10 lakh and Rs.20 lakh will have to pay a 20% tax per year. According to the recommendation, a 30% tax should be levied for individuals who earn between Rs.20 lakh and Rs.2 crore. In case you are earning more than Rs.2 crore, a 35% tax must be paid. The removal of surcharge has also been recommended by the committee. Various pros and cons of the two different models of taxation were also discussed by the committee. The report also states various benefits of the territorial system such as easier compliance, interpretation of tax treaties, residential status disputes, etc. Various limitations of the system have also been discussed in the report. An additional source rule has also been suggested by the report since the current definition of income has been deemed to accrue in the country.

Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

reTH65gcmBgCJ7k
This Page is BLOCKED as it is using Iframes.