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Income Tax Slabs for FY 20-21 and AY 21-22 applicable to all taxpayers

Income Tax Slabs

The income tax slabs are applicable as per the net taxable income. Income tax is a tax levied on the net taxable income of a person. A person, here, includes an individual, Hindu Undivided Family (HUF), Association of person (AOP), Body of Individuals (BOI), a firm and a company. 

Income tax in India is levied under the Income tax Act, 1961. Every year, the Finance Minister puts forth the Finance Bill in Parliament. The bill when passed by both the houses of the Parliament and along with the President’s assent results in the formation of the Income-tax act. The slabs and rates applicable for the current assessment year are specified in the first schedule of the Finance Act.

What is are income tax slabs?

Income Tax in India is levied on the individual taxpayer on the basis of a slab system which is nothing more than a separate category according to the age of the taxpayer. The income tax rate under the existing regime is mentioned below:

  • Resident Individual, who is below 60 years of age,
  • Non Resident Individual, who is below the age of 60 years
  • Resident senior citizens (age above 60 years but less than 80 years)
  • Resident super-senior citizens (age above 80 years)

The income tax levied and paid by the individual would depend on the slab under which he/she is falling. We will be covering the income-tax rate for FY 2020-21 (the assessment year 2021-22)

Income tax slabs for individuals

Budget 2020, provides an opportunity to choose between a new-tax regime or continue with the old-tax regime. The tax rate for FY 20-21 is different on the basis of the regime chosen by the individual. You can use Scripbox’s income tax calculator and estimate the tax liabilities under the old as well as new tax regime. Our income tax calculator is a simple and easy to use online tool. 

Let us discuss the applicable slabs and rates in a detail.

Income tax slabs under the new tax regime for all individuals for FY 2020-21 (AY 2021-22)

Note: if the net income is under 5 lakh, rebate under section 87A is allowed and is limited to Rs. 12,500. This means that if the total tax liabilities is less than Rs.12,500, no tax is required to be paid.

The amount of tax payable by an individual as per the above slab rate will be increased by health and education cess of 4%

Furthermore, the above slab rate in India comes with a few restrictions. An individual has to let go of tax benefit  or deduction and tax exemption to opt for the new tax regime.

Income Tax SlabTax Rate for Individual
Up to Rs. 2.5 lakhNil
Rs. 2.5 lakh to 5 lakh5%
Rs. 5 lakh to 7.5 lakh10%
Rs. 7.5 lakh to 10 lakh15%
Rs. 10 lakh to 12.5 lakh20%
Rs. 12.5 lakh to 15 lakh25%
Rs. 15 lakh & above30%
Below are the tax exemption & deductions which the taxpayer has to give up:
  • House Rent Allowance (HRA)
  • Leave Travel Allowance (LTA)
  • Conveyance Allowance
  • Helper Allowance
  • Relocation Allowance
  • Standard deduction
  • Professional Tax
  • Other Special Allowance
  • Interest on housing loan allowed under section 24
  • Deductions under Chapter VI-A like 80C, 80D, 80E, etc. However deduction under 80CCD(2) can still be claimed.

The option to choose between the new and the old tax regime should be exercised before the due date of filing of income tax returns.

Income tax slabs under the old tax regime for all individuals for FY 2020-21 (AY 2021-22)

Income Tax Slab for IndividualTax rate for an individual below 60 years of age 
Up to Rs. 2.5 lakhNil
Rs. 2,50,001 to Rs. 5,00,0005% of the total income exceeding Rs. 5,00,000
Rs. 5,00,001 to Rs. 10,00,000Rs. 12,500 + 20% of the total income exceeding Rs. 5,00,000
Above 10,00,000Rs. 1,12,500 + 30% of the total income exceeding Rs. 10,00,000

The tax calculated as per the above income tax slab rate will be increased by a health and education cess of 4%. Furthermore, a tax rebate under section 87A is allowed to an individual taxpayer up to a maximum of Rs. 12,500 for individuals having net income of Rs. 5,00,000. The taxpayers can claim this tax rebate while filing income tax returns.

Income tax slabs under the old tax regime for Senior Citizens FY 2020-21 (AY 2021-22)

Income Tax SlabSenior Citizens(aged more than 60 years but less than 80 years)
Income up to Rs. 3,00,000Nil
Income from Rs. 3,00,000 – 5,00,00005% 
Income from Rs. 5,00,000 – 10,00,00020%
Above 10,00,00030%

The tax calculated as per the above slab rates will be increased by a health and education cess of 4%. 

Income tax slabs under the old tax regime for Super Senior Citizens FY 2020-21 (AY 2021-22)

Income Tax SlabSuper Senior Citizens(aged 80 years and above)
Income up to Rs. 3,00,000Nil
Income from Rs. 3,00,000 – 5,00,00005% 
Income from Rs. 5,00,000 – 10,00,00020%
Above 10,00,00030%

The tax amount calculated as per the above income tax slab rate will be increased by a health and education cess of 4%. 

In all the above cases, the amount of the income-tax calculated will be increased by a surcharge. 
Total Taxable IncomeSurcharge Rate
Total income is greater than Rs, 50,00,000 but less than Rs. 1,00,00,00010%
Total income is greater than Rs, 1,00,00,000 but less than Rs. 2,00,00,00015%
Total income is greater than Rs, 2,00,00,000 but less than Rs. 5,00,00,00025%
Total income is greater than Rs, 5,00,00,000 37%

Hindu Undivided Family

“Hindu undivided family” has not been defined under the income tax act. As per the Hindu laws, HUF is a family that consists of all males lineally descended from a common ancestor and includes their wives and daughters.

HUF is treated as a separate person under the income-tax act. A HUF is taxed as per the below slab rate:

Income tax slabs under the old tax regime for Hindu Undivided Family for FY 2020-21 (AY 2021-22)

Income Tax SlabTax Rate
Up to Rs. 2.5 lakhNil
Rs. 2,50,001 to Rs. 5,00,0005% of the total income exceeding Rs. 5,00,000
Rs. 5,00,001 to Rs. 10,00,000Rs. 12,500 + 20% of the total income exceeding Rs. 5,00,000
Above 10,00,000Rs. 1,12,500 + 30% of the total income exceeding Rs. 10,00,000

Income tax slabs under the new tax regime for Hindu undivided family for FY 2020-21 (AY 2021-22)

Income Tax SlabTax Rate
Up to Rs. 2.5 lakhNil
Rs. 2.5 lakh to 5 lakh5%
Rs. 5 lakh to 7.5 lakh10%
Rs. 7.5 lakh to 10 lakh15%
Rs. 10 lakh to 12.5 lakh20%
Rs. 12.5 lakh to 15 lakh25%
Rs. 15 lakh & above30%

The tax calculated in both the cases as per the above slab rates will be increased by a health and education cess of 4%.

In both the above cases, the amount of the income-tax calculated will be increased by a surcharge as per the below table:
Total Taxable IncomeSurcharge Rate
Total income is greater than Rs, 50,00,000 but less than Rs. 1,00,00,00010%
Total income is greater than Rs, 1,00,00,000 but less than Rs. 2,00,00,00015%
Total income is greater than Rs, 2,00,00,000 but less than Rs. 5,00,00,00025%
Total income is greater than Rs, 5,00,00,000 37%

Associations of Persons, Bodies of Individuals and Other Artificial Judicial Persons

Before moving on to the taxation part, let us first understand what AOP, BOI and other Artificial Judicial persons are:

Association of person:

In general, whenever persons join together for a common purpose and action and their object is to produce income. This association will be considered as an association of person for the purpose of income tax in India. A person in AOP could be a company or an individual person. The term person could include any association, body of individuals, or company, irrespective of whether it is incorporated or not. 

Body of Individuals:

The body of individuals denotes the status of persons like executors or trustees who merely receive the income jointly and who may be assessable in the same manner as the beneficiaries are assessed individually. Thus, in the case of BOI, only individuals can join with the intention of earning some income.

Artificial judicial person:

This would cover every artificial judicial person not covered elsewhere. For example, a deity would be assessed under the income tax act under an artificial judicial person.

Now that we know a bit of the above categories, let’s talk about their taxation.

Below are the applicable income tax rates to the above categories of persons:
Share of profit of members is unknownShare of profit of members is known
Tax will be levied at the maximum marginal rate. However, if any of the members of the AOP or BOI are taxed at a rate higher than the maximum marginal rate, then the AOP or BOI will be taxed at that higher rate.A) The total income of any member (excluding the share from AOP/BOI)exceeds the minimum exemption limit: AOP/BOI’s will be taxed at the maximum marginal rate.
B) No member has total income (excluding the share from AOP/BOI)exceeding the minimum exemption limit: AOP/BOI taxed at the rates applicable to an individual.
In both the above cases, the amount of the income-tax calculated will be increased by a surcharge as per the below table:
Total Taxable IncomeSurcharge Rate
Total income is greater than Rs, 50,00,000 but less than Rs. 1,00,00,00010%
Total income is greater than Rs, 1,00,00,000 but less than Rs. 2,00,00,00015%
Total income is greater than Rs, 2,00,00,000 but less than Rs. 5,00,00,00025%
Total income is greater than Rs, 5,00,00,000 37%

Partnership Firm’s, LLP & Local Authority:

In the case of partnership firms and LLP, every firm is liable to pay tax @30% plus surcharge. This applicable surcharge is 12% if the net income is above Rs. 1 crore. along with a health and education cess of 4%.

Taxation of Companies:

A company, as per the income-tax act, can be divided amongst two categories, a domestic 

Domestic Company:

A domestic company means an Indian company, which has been formed under the Companies Act 2013, or the erstwhile Companies Act 1956 and has its registered office in India.

Domestic companies can further be divided into two groups:

  • Closely-held companies
  • Widely-held companies

For both categories of companies, taxation will be based on the below criteria:

If the company opts to be taxed as per the old income tax regime:
Total IncomeTax Rate
a) If the total turnover or gross receipts of the previous year 2018-19 does not exceed Rs. 400 croreb) In all other cases25%
30%
Certain manufacturing domestic companies opting to be taxed under section 115BA.Note: Conditions mentioned under 115BA(2) are to be satisfied, such as deductions and incentives are disallowed.a) The company has been registered and set-up on or after  01.03.2016.b) Company is engaged in the business of manufacturing of any article or thing.c) The total income shall be computed without considering the deductions u/s 10AA, 32AC, 32AD etc.25%
Surcharge applicable for the old income tax regime:
Total Income of the domestic companySurcharge Rate
Total income is greater than Rs, 1,00,00,000 but less than Rs. 10,00,00,0007%
Total income is greater than Rs, 10,00,00,000 12%

Health and Education Cess:

Health and Education Cess to be levied @4% on income tax amount inclusive of surcharge.

If the company opts to be taxed as per the new regime as per section 115BBA

Total IncomeTax Rate
a) If the total turnover or gross receipts of the previous year 2018-19 does not exceed Rs. 400 croreb) In all other cases
Note: Conditions specified under section 115BAA are to be satisfied. No deductions and incentives are to be allowed

22%

The surcharge is applicable @10% irrespective of the fact whether the total net income is less than or more than 1 crore. This will be further increased by a Health & Education Cess of 4%.

If the company opts to be taxed as per the new regime as per section 115BAB
CriteriaTax Rate
Below are the conditions that need to be satisfied in order for the domestic company to opt for this section:
a) The domestic company should be a manufacturing entity set up and registered on or after 01.10.2019b) The manufacturing business should be commenced on or before 31.03.2023c) The company should not be engaged in any business other than the business of manufacturing.d) The total income of the company has been computed without considering the deductions u/s 10AA, 32AD, 33AB, etc.

25%

The surcharge is applicable @10% irrespective of the fact whether the total net income is less than or more than 1 crore. This will be further increased by a Health & Education Cess of 4%.

Foreign Company:

For the purpose of the income-tax act, a foreign company means a company which is not a domestic company. A foreign company is taxed at a rate of 40% plus surcharge. Furthermore, a surcharge of 2% shall be levied if the total net income of the company exceeds Rs. 1 crore but less than Rs. 10 crores.

If the total net income exceeds Rs. 10 crores, a surcharge of 5% is levied on the total net income. This is further increased by a Health and Education Cess of 4%. This is levied on the income tax (inclusive of surcharge).

Published on August 6, 2020