Income Tax Slabs : In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab.
Existing tax regime:
There are three categories of individual taxpayers:
- Individuals (below the age of 60 years), which includes residents as well as non-residents
- Resident senior citizens (60 years and above but below the age of 80 years)
- Resident super senior citizens (above 80 years of age)
There are different slabs for each category of taxpayers. The latest income tax slab for AY 2019-20, AY 2020-21 and AY 2021-22 are discussed in this article. Such tax slabs tend to undergo a change during every budget.
New tax regime:
Budget 2020 has announced a new tax regime giving taxpayers an option to pay taxes as per the new tax slabs from FY 2020-21 onwards.
Income tax slabs under the new tax regime for all individuals for FY 2020-21 (AY 2021-22)
|Income Tax Slab||Tax Rate|
|Up to Rs 2.5 lakh||NIL|
|Rs 2.5 lakh to Rs 5 lakh||5% (Tax rebate of Rs 12,500 available under section 87A)|
|Rs 5 lakh to Rs 7.5 lakh||10%|
|Rs 7.5 lakh to Rs 10 lakh||15%|
|Rs 10 lakh to Rs 12.5 lakh||20%|
|Rs 12.5 lakh to Rs 15 lakh||25%|
|Rs 15 lakh and above||30%|
- The tax calculated on the basis of such rates will be subject to health and education cess of 4%.
- Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will have to give up certain exemptions and deductions.
- Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
- Leave Travel Allowance
- House Rent Allowance
- Daily expenses in the course of employment
- Relocation allowance
- Helper allowance
- Children education allowance
- Other special allowances [Section 10(14)]
- Standard deduction
- Professional tax
- Interest on housing loan (Section 24)
- Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
- Points to remember while opting for the new tax regime:
- Option to be exercised on or before the due date of filing return of income for AY 2021-22
- In case a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once. A business taxpayer withdrawing from the optional tax regime has to follow the regular income tax slabs.