In the union Budget 2020 new scheme was introduced by the finance minister for financial year 20-21 that is taxpayer have following options:
- Then can pay tax at lower rates but with a condition that they have to forego certain deductions and exemptions.
- Or they have options to continue at the existing rates and you can avail rebates and can claim deductions.
What is Income Tax Slabs?
The Income Tax has given power to the Finance Minister to levied tax based on the slab rates. A slab rates means different tax rates for different types of income. The tax rates kept increasing with the increased in the income. With the financial year 2019-20 approaching its end, you can see the rush amongst individuals in planning their finances and knowing about the income tax slabs using tax calculators. A meagre mistake people make is to look for ways to minimize liability for a financial year at its end. Planning at the right time and checking your tax bracket is imperative as it can help you add more money to your savings.
Save Income Tax for the FY 2019-20
It is crucial to know about the income tax slabs for the FY 2019-20. It not only tells you about the tax bracket your annual income falls into but also prepares you for various tax-saving investments. You can use these details to determine your tax liability with the help of online tax calculators.
Depending on the income tax slabs for the assessment year 2020 – 21, you can increase your savings. You can get the benefits of tax-saving investments provided you plan for them at the beginning of the financial year. Many taxpayers procrastinate till the last month of the year, which often results in failing to save taxes. Investing in tax-saving instruments and using a tax calculator timely makes your total annual income fall into lower income tax slabs. Also, your tax-savings can help you achieve long-term goals in life.
When the Finance Bill for 2015 got passed, wealth-tax gets abolished from the budget which was done effectively from assessment year (AY) 2016-17. Arun Jaitley, the Finance Minister, replaced the wealth tax with a surcharge of 2 per cent on the super-rich having a taxable income above Rs 1 crore. The taxpayers henceforth were not required to file a wealth tax return from AY 2016-17 onward.
With effective planning using online tax calculators, you can cut down the amount payable as per the income tax slabs. Leaving the critical decisions until the last minute may make your income fall into a higher tax bracket. This tax system leads to fair tax system in the country. These slab rates mostly change in budget, the slab rates are different for different categories of taxpayers, the categories of “individual Taxpayers” are: –
- Individual up to the age of 60 years resident as well as non-resident.
- Senior citizens from 60 years to 80 years.
- Individual aged 80 years and above.
Income tax Slab rates for FY 20-21
| Total Income | Rates |
| Up to 2.5 lac | Nil |
| 2.5 to 5 lac | 5% |
| 5 to 7.5 lac | 10% |
| 7.5 lac to 10 lac | 15% |
| 10 lac to 12.5 lac | 20% |
| 12.5 lac to 15 lac | 25% |
| Above 15 lac | 30% |
Maximum rebate of 12500 is available u/s 87A if your income is up to 5 lakh after claiming all the deductions.
Income Tax Slabs Rates for resident individuals below 60 years for FY 20-21
| Income tax slab | Rates |
| Up to 2.5 lac | Nill |
| 2.5 lac to 5 lac | 5% |
| 5 lac to 10 lac | 20% |
| Above 10 lac | 30% |
Income Tax slab Rates for resident individual 60 to 80 years for FY 20-21
| Up to 3 lac | Nill |
| 3 lac to 5 lac | 5% |
| 5 lac to 10 lac | 20% |
| Above 10 lac | 30% |
Income Tax Slabs for resident individual above 80 years for FY 20-21
| Income tax Slabs | Rates |
| Up to 5 lac | Nill |
| 5 lac to 10 lac | 20% |
| 10 lac and above | 30% |
Individuals having net taxable income less than or equal to 5 lakhs will be eligible for rebates both old and new tax regime taxpayers can take rebates.
Surcharge
| Income | Surcharge % |
| Income above 50 lac | 10% |
| Income above 1 crore | 15% |
| Income above 2 crore | 25% |
| Income above 5 crore | 37% |