Income Tax Slab for FY 2020-21 (AY 2021-22)

Which age group do you belong to, and how much do you need to pay this year? Do you have the answer to all these questions, or are you looking for answers? Well, here in this article we will tell you the Income Tax slab for FY 2020-21 (AY 2021-22)

In India, income tax is levied based on a slab system on an individual. Now, different slabs have different tax rates, where the tax rates keep increasing with the increase in the income slab.

Income Tax Slab for FY 2020-21 (AY 2021-22)

With every new budget, such tax slabs tend to change.

Moreover, a new income tax regime was announced in Budget 2020, according to which individuals will have the option to pay taxes as per new tax slabs from FY 2020-2021

Here the taxpayers are divided into three categories:

• Below the age of 60 years: ‘Individuals’ (residents as well as non-residents).
• Above 60 years but below 80 years: Resident Senior Citizens
• Above 80 years of age: Resident Super Senior Citizens

What is the new regime of income tax?

In Budget 2020, with the new tax regime, the tax department has introduced a new section 115BAC. From FY 2020-21 onwards, the individual/HUF can choose from the two tax regimes – the old and the new.

Both the tax regimes have their own tax slabs, rates, exemptions, and deductions. Any individual who chooses the new tax regime from FY 2020-21 onwards will have to give up certain deductions and exemptions.

Below are the deductions and exemptions that a taxpayer will have to give up if they choose the new tax regime.

1. Interest on housing loan (Section 24)
2. Relocation allowance
3. Conveyance
4. Daily expenses during employment
5. Other special allowances [Section 10(14)]
6. Children education allowance
7. Standard deduction
8. Helper allowance
9. House Rent Allowance
10. Leave Travel Allowance (LTA)
11. Professional tax
12. Chapter VI-A deduction (80C,80D, 80E and so on) (Excluding Section 80CCD(2) and 80JJA)

Also Read: Section 80EEA – Income Tax Deduction for Interest on Home Loan

Allowances Allowed under the new tax regime

The following under Section 10(14) are allowed to the individual and HUF.

• Transport Allowance granted to a ‘divyang’ employee (physically disabled employees) to support their commute between the place of residence and place of duty.
• Conveyance Allowance to meet the expenditure on conveyance in performance of duties of an office;
• Any Allowance granted to help individuals meet the cost of travel on tour or on transfer;
• Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.

Here is the comparison of the Old Tax Regime and the New Tax Regime

Income Tax Slab for Resident Individuals aged less than 60 Years (Both Male & Female)

This year individuals and HUFs have the option to choose whether to opt for the same tax slab or the new tax regime.

1. There is no change introduced in the OLD and NEW tax regime in

• Health & Education Cess @4%
• Rates of Surcharge
• Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)

2. Certain income tax deductions and exemptions like section 80C, 80D, HRA, etc. are not available under the new tax regime.

Income Tax Slab for Senior Citizens (Individuals more than or equal to 60 years but less than 80 years) (Both Male & Female)

1. There is no change introduced in the OLD and NEW tax regime in:

• Health & Education Cess @4%
• Rates of Surcharge
• Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)

2. Certain income tax deductions and exemptions like section 80C, 80D, HRA, etc. are not available under the new tax regime.
3. Unlike the old regime that offered 3 lakhs, the basic exemption in the new regime is 2.5 Lakhs.

Income Tax Slab for Super Senior Citizens (Individuals more than or equal to 80 years) (Both Male and Female)

1. There is no change introduced in the OLD and NEW tax regime in

• Health & Education Cess @4%
• Rates of Surcharge
• Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)

2. Certain income tax deductions and exemptions like section 80C, 80D, HRA, etc. are not available under the new tax regime.
3. Unlike the old regime that offered 3 lakhs, the basic exemption in the new regime is 5 Lakhs.

Also Read: How to Pay Income Tax Online: Steps to File Your Income Tax

Income Tax Slab for Hindu Undivided Family (HUF)

1. There is no change introduced in the OLD and NEW tax regime in

• Health & Education Cess @4%
• Rates of Surcharge
• Rebate u/s 87A ( no tax will be payable on total income up to Rs.5 lakh in both regimes)

2. Certain income tax exemptions and deductions are not available under the new tax regime.

Income Tax Slab for AOP, BOI, Artificial Juridical Person

Government has made no changes in the income tax slab limits for FY 2020-2021 in the case of BOI, AOP, Artificial Juridical Person, as compared to last year’s tax regime.

Rebate u/s 87A is not applicable

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Health & Education Cess will be applicable @4%

The surcharge rate will be:

1. Total Income up to Rs 50 Lakhs – NIL
2. Above Rs 50,00,000 – Rs 1,00,00,000 – 10%
3. Above Rs 1,00,00,000- Rs 2,00,00,000- 15%
4. Above Rs 2,00,00,000- Rs 5,00,00,000- 25%
5. Above Rs 5,00,00,000- 37%

Income Tax Slab for Co-operative Society

The Co-operative society also has the option to choose an income tax slab for the FY 2020-21 (AY 2021-22)

Income Tax Slab for Indian Company

Companies with gross receipts up to Rs. 400 crore

The tax would be levied @25% +Surcharge + Cess @4%

Companies with gross receipts more than Rs. 400 crore 

Tax would be levied @30%% + Surcharge + Cess@4

Please Note: 

Domestic companies can also choose to pay tax under the following reduced rates:

• Domestic Companies(Section 115BAA): Tax would be levied @22% + Cess @4% + Surcharge of 10%
• Manufacturing Companies (Section 115BAB): Tax would be levied @15% + Cess @4% + Surcharge of 10%
• A manufacturing company can now opt for Section 115BAB as proposed in the new tax regime.
• Specific exemptions and deductions+ (Minimum Alternate Tax) will not be applicable in case of these reduced taxes.

Income Tax Slab (Foreign Company)

Royalty received from govt/Indian concern/ technical fees as per agreement approved by the Central Government

The tax would be levied @50% + Cess @4% + Surcharge (applicable rates)

Any other Income

Tax would be levied @40% + Cess @4% + Surcharge (applicable rates)

Clear your doubts:

After Budget 2020, people got confused about whether there will be any tax deduction on an income up to Rs. 5 lakh? However, it is partially true. The basic exemption limit has not been changed, which means there will be no tax up to Rs 2.5 lakhs for an individual/HUF.

Moreover, if the income of such a taxpayer does not exceed Rs 2.5 lakhs, then you will not be applicable to pay tax after availing the benefit of rebate u/s 87A. But as your taxable income crosses the threshold of 5 lakhs, then you will not be eligible for availing the tax benefits of rebate u/s 87A. However, the tax payable will be 5% for the income above 2.5 lakhs but up to Rs 5 lakhs.

Let’s use an example to understand this: