What is Income Tax Slab?
Income Tax Slab is the correlation between the tax to be paid and your annual income. In India, Income Tax is imposed on each and every person who is in the working class. On the basis of Income Tax Slab, different tax rates have been selected for different income class people. In Income Tax Slab citizens of the country who are in working-class and pay taxes are categorized on the basis of their annual income. Income Tax Slabs 2020-21
Advantages of Income Tax Slab
Not all the taxpayers have the same income, if a taxpayer has an income of ₹50 Lakhs in front there is another taxpayer who has an income of ₹1 Lakh and both have to pay the same rate of tax then it is unfair. Income Tax in India is designed with a great balance for both a more income and less income taxpayer. To ensure the less burden on less income tax payer Income Tax Slab plays a major role. By the work of Income Tax Slab, the act give relief from taxpayers to less income individual of working-class and it ensures the proper and strict tax pay to the higher income taxpayer.
The Income Tax Act identify that
1. All incomes are not created equal, for example, lottery winnings are not taxed the same way as interest incomes.
2. All tax payers have not same income value; a taxpayer with high income should not be taxed equal as a tax payer with less income.
INCOME TAX SLABS UNDER THE NEW TAX ARRANGEMENT FOR FY 2020-21
In budget 2020, a new structure of Income Tax Slab brought to individual taxpayers who are below the age of 60 by our respected Finance Minister Nirmala Sitharaman. In this new tax slab structure, some part is from the old one and some are new. As per the new one, the taxpayer has the choice to file their income tax from any of them.
The following table shows the important difference between the tax slabs.
|Total Income (In Rs.)||Tax rates as per the new slab structure||Tax rates as per the old slab structure|
|Up to Rs 2,50,000||Nil||Nil|
|Rs 2,50,001 to Rs 5,00,000||Nil||5%|
|Rs 5,00,001 to Rs7,50,000||10%||20%|
|Rs 7,50,001 to Rs 10,00,000||15%||20%|
|Rs 10,00,001 to Rs 12,50,000||20%||30%|
|Rs 12,50,001 to Rs 15,00,000||25%||30%|
|Rs 15,00,000 and above||30%||30%|
- If an individual taxpayer chooses the new Income Tax Slab structure FY 2020-21 onwards then the taxpayer will also have to go with some impunity and deductions.
Here is the list of impunity and deductions if a taxpayer will choose new tax slab structure-
- House Rent Allowance
- Helper Allowance
- Daily expenses in the course of employment
- Children Education Allowance
- Standard deduction
- Leave Travel Allowance
- Professional tax
- Interest on housing loan
In the existing tax slab structure there is one more type of catogrisation of individual tax payer which was based on age:
- Individuals (below the age of 60 years), includes residents as well as non-residents.
- Resident senior citizens. (60years to 80years)
- Resident super senior citizens. (above 80 years)
INCOME TAX SLAB FOR FY 2020-21(AY2021-22) FOR A INDIVIDUAL TAX PAYER BELOW 60 YEARS
|Income Tax Slab||Rate||Tax Payable|
|Rs 0 to Rs 2,50,000||0%||Rs 0|
|Rs 2,50,001 to Rs 5,00,000||5%||Rs 12,500|
|Rs 5,00,001 toRs 10,00,000||20%||Rs 1,00,000|
|Rs 10,00,001 and above||30%||Rs 1,50,000|
If only one tax payer of each category pay tax then the sumup of tax imposed is 2,62,500.
Income Tax Payable Rs 2,62,500.
INCOME TAX SLAB FOR FY 2020-21(AY 2021-22) FOR A RESIDENT TAX PAYER ( 60 YEARS TO 80 YEARS)
|Income Tax SLab||Rate||Tax Payable|
|Rs 0 to Rs 3,00,000||0%||Rs 0|
|Rs 3,00,001 to Rs 5,00,000||5%||Rs 10,000|
|Rs 5,00,001 to Rs10,00,000||20%||Rs 1,00,000|
|Rs 10,00,000 and above||30%||Rs 1,50,000|
So, if only one citizen of each category between 60 years to 80 years pay proper tax then it sumup of imposed tax is 2,60,000.
Total Tax Payable Rs 2,60,000
INCOME TAX SLAB FOR FY 2020-21(AY 2021-22) FOR A RESIDENT TAX PAYER (ABOVE 80 YEARS)
|INCOME TAX SLAB||Rate||Tax Paayable|
|Rs 0 to Rs 5,00,000||0%||Rs 0|
|Rs 5,00,001 to Rs 10,00,000||20%||Rs 1,00,000|
|Rs 10,00,001 and above||30%||Rs 1,50,000|
If only one citizen of each category above 80 years proper tax then it sums up of imposed tax is Rs 2,50,000.
Total Tax Payable Rs 2,50,000
Income Tax is just you have to pay on your income. But there are some other taxes too. Secondary and Higher Secondary education also have to paid. The education cess is currently charged is 4% of the tax payable. This is over and above the total tax payable for the taxpayer.
There is an additional charge. This additional charge is for higher-income citizens of the country. A citizen with an income of more then ₹50 Laths but less than ₹1 crore, the additional charge is 10%. Citizens with an income of more than ₹1 Crore, the additional charge is 15%.
TAXES ON INSTITUIONAL SETUPS
It is compulsory for working-class people to pay tax but it is not only for the individual, but it is also for institutional setups like Domestic Company, Foreign Company, Co-operative Society, Partnership Firm, etc.
INCOME TAX SLAB FOR DOMESTIC COMPANY AY 2020-21
|Where its total turnover or gross receipt during the previous 2016-17 year does not exceed Rs 250 crore||NA|
|Where its total turnover or gross receipt during the previous year 2017-18 does not exceed Rs 400 Crore||25%|
|Where it choose for Section 115BA||25%|
|Where it choose for Section 115BAA||22%|
|Where It choose for Section 115BAB||15%|
|Any other domestic company||30%|
Surcharge:- If the income of any domestic company exceeds ₹1 Crore but under ₹10 Crore, the additional charge or surcharge will imposed on the company is 7%. If the income of the company exceeds ₹10 Crore, the additional charge or surcharge is 12%.
INCOME TAX SLAB FOR FOREIGN COMPANY AY 2020-21
|NATURE OF INCOME||RATE|
|Royalty received by the government of India 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 Government||50%|
|Any Other Income||40%|
Surcharge:- If the income of any Foreign Company exceeds ₹1 Crore but not exceeds ₹10 Crore, the surcharge is 2%. If the income of any Foreign Company exceeds ₹10 Crore, the surcharge is 5%.
INCOME TAX SLAB FOR CO-OPERATIVE SOCIETY AY 2020-21
|Up to Rs. 10,000||10%|
|Rs. 10,000 to Rs. 20,000||20%|
|Above Rs. 20,000||30%|
Surcharge:- If the total income exceeds ₹1 Crore, the surcharge will be 12%. However, the surcharge shall be subject to marginal relief.
INCOME TAX SLAB FOR PARTNERSHIP FIRM AY 2020-21
Surachrge:- If the income of any Partnership Firm exceeds ₹1 Crore, the surcharge is 12%.