What are Income Tax Slabs? Income tax in India calculated on the basis of applying different tax rates to different annual income groups, known as Income Tax Slabs.
Income tax payment for individuals and corporate entities is a mandatory requirement as per the Income Tax Act, 1961 if their annual income exceeds the minimum exemption limit.
However, taxpayers can avail tax benefits under various sections of the Act. To reclaim these benefits, one must understand the income tax slab and the applicable rates.
In India, where individuals earn an income within a diverse range. Levying a tax on all individuals at a specific rate would not be an appropriate policy.
Therefore the Act levies different taxes at different rates. Thus these groups known as tax slabs.
The income tax slab revised and amended every year during the budget session of the central government. These amendments and amendments, once proposed, enacted, and enacted as approved by Parliament.
Income tax has classified three categories of “individual “taxpayers such as:
- Individuals (aged less than 60 years) including residents and non-residents
- Resident Senior citizens (60 to 80 years of age)
- Resident Super senior citizens (aged more than 80 years)
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Income Tax Slab 2020-21
| Income Range Per Annum | Tax Rate As Per Old Regime | Tax Rate As Per New Regime |
|---|---|---|
| Up to ₹ 2.50 Lakh | No Tax | No tax |
| ₹ 2.50 Lakh – ₹ 5 Lakh | 5% | 5% |
| ₹ 5 Lakh – ₹ 7.50 Lakh | 20% | 10% |
| ₹ 7.50 Lakh – ₹ 10 Lakh | 20% | 15% |
| ₹ 10 Lakh – ₹ 12.50 Lakh | 30% | 20% |
| ₹ 12,50,000 – ₹ 15,00,000 | 30% | 25% |
| Above ₹ 15,00,000 | 30% | 30% |
Income Tax Slabs for Individuals below 60 Years of Age
| Income Range Per Annum | New Slabs For FY 2020-21, AY 2021-22 | Old Slabs, Mandatory Upto FY 2019-20 And Optional From FY 2020-21 |
|---|---|---|
| Up to ₹ 2.50 Lakh | No Tax | No tax |
| Above ₹ 2.50 Lakh to ₹ 5 Lakh | 5% | 5% |
| Above ₹ 5 Lakh to ₹ 7.50 Lakh | 10% | 20% |
| Above ₹ 7.50 Lakh to ₹ 10 Lakh | 15% | 20% |
| Above ₹ 10 Lakh to ₹ 12.50 Lakh | 20% | 30% |
| Above ₹ 12.50 Lakh to ₹ 12.50 Lakh | 25% | 30% |
| Above ₹ 15 Lakh | 30% | 30% |
| Rebate under section 87(A) | 100% tax rebate subject to a maximum of ₹ 2,500 available to a resident individual whose total income does not exceed ₹ 35 Lakh | 100% tax rebate subject to a maximum of ₹ 2,500 available to a resident individual whose total income does not exceed ₹ 3.50 Lakh |
Cess at 4% of tax applicable in all cases. Surcharge at 10% for income above ₹ 50 Lakh and at 15% for income above ₹ 1 Cr.
An exemption of ₹ 12,500 is available under the old income tax regime, while the same exemption is available in the new income tax regime if the annual taxable income does not exceed ₹ 5 lakh.
The total reduction in tax liability will be from 25,000 to ₹ 50,000 to ₹ 50,000 per annum, earning from ₹ 5,000 to ₹ 5,000 per person to ₹ 15 lakh or more per year under the new tax slab. However, actual savings would be lower if one were to include exempt effects under the new tax regime.
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Income Tax Slab for Senior Citizens (age more than 60 years but less than 80 years FY 2019-20)
| Income Range Per Annum | New Slab For FY 2020-21, AY 2021-22 | Tax Rate FY 2019-20, AY 2020-21 |
|---|---|---|
| Up to ₹ 3 Lakh | No Tax | No Tax |
| Above ₹ 3 Lakh to ₹ 5 Lakh | 5% | 5% |
| Above ₹ 5 Lakh to ₹ 7.50 Lakh | 10% | 20% |
| Above ₹ 7.50 Lakh to ₹ 10 Lakh | 15% | 20% |
| Above ₹ 10 Lakh to ₹ 12.50 Lakh | 20% | 30% |
| Above ₹ 12.50 Lakh to ₹ 15 Lakh | 25% | 30% |
| Above ₹ 15 Lakh | 30% | 30% |
| Rebate under section 87(A) | 100% tax rebate subject to a maximum of ₹ 2,500 available to a resident individual whose total income does not exceed ₹ 3.50 Lakh | 100% tax rebate subject to maximum of ₹ 2,500 available to resident individual whose total income does not exceed ₹ 3.50 Lakh |
Cess at 4% of tax applicable in all cases. Surcharge at 10% for income above ₹ 50 Lakh and at 15% for income above ₹ 1 Cr
The exemption of Reg 12,500 is applicable to all income under the old income tax regime. Whereas, it is available only for income up to lakh 5 lakh under the new income tax regime.
Senior Citizens Tax Slab (age more than 80 years FY 2019-20)
| Income Range Per Annum | New Slab For FY 2020-21, AY 2021-22 | Tax Rate FY 2019-20, AY 2020-21 |
|---|---|---|
| Up to ₹ 2.50 Lakh per annum | No Tax | No Tax |
| Up to ₹ 5 Lakh per annum | No Tax | No Tax |
| Above ₹ 5 Lakh to ₹ 7.50 Lakh | 10% | 20% |
| Above ₹ 7.50 Lakh to ₹ 10 Lakh | 15% | 20% |
| Above ₹ 10 Lakh to ₹ 12.50 Lakh | 20% | 30% |
| Above ₹ 12.50 Lakh to ₹ 15 Lakh | 25% | 30% |
| Above ₹ 15 Lakh | 30% | 30% |
Cess at 4% of tax applicable in all cases. Surcharge at 10% for income above ₹ 50 Lakh and at 15% for income above ₹ 1 Cr.
New vs Old Income Tax Slabs Regime
Scenario -I: In case you are salaried and claiming deductions under Section 80C, 80D, standard deduction and HRA exemption
The deductions and exemptions claimed would be ₹ 50,000 as the standard deduction, ₹ 1.50 Lakh under section 80C, ₹ 25,000 under Section 80D, and HRA exemption which will vary at each income level.
At a gross salary of ₹ 7.50 Lakh, the HRA exemption would be ₹ 1.50 Lakh, at gross salary ₹ 10 Lakh, the HRA exemption would be ₹ 2 Lakh, at gross salary ₹ 12.50 Lakh, the HRA exemption would be ₹ 2.50 Lakh, at gross salary ₹ 15 Lakh, the HRA exemption would be ₹ 3 Lakh, and at gross salary ₹ 20 Lakh, the HRA exemption would be ₹ 4 Lakh.
| Gross Salary | Tax Payable In Current IT Slab | Tax Payable In New IT Slab | Income Tax Saving (Payable) |
|---|---|---|---|
| ₹ 7.50 Lakh | – | 39,000 | (39,000) |
| ₹ 10 Lakh | 28,600 | 78,000 | (49,400) |
| ₹ 12.50 Lakh | 70,200 | 1,30,000 | (59,800) |
| ₹ 15 Lakh | 1,11,800 | 1,95,000 | (83,200) |
| ₹ 20 Lakh | 2,34,000 | 3,51,000 | (1,17,000) |
Scenario -II: In case you are claiming the most common deductions i.e., deduction under Section 80C, 80D, and standard deduction
The standard deduction of ₹ 50,000, deduction under Section 80C of ₹ 1,50,000, and deduction under Section 80D of ₹ 25,000 will together amount to ₹ 2.25 Lakh as total deduction claimed.
| Gross Salary | Tax Payable In Current IT Slab | Tax Payable In New IT Slab | Income Tax Saving (Payable) |
|---|---|---|---|
| At ₹ 7.50 Lakh | 18,200 | 39,000 | (20,800) |
| At ₹ 10 Lakh | 70,200 | 78,000 | (7,800) |
| At ₹ 12.50 Lakh | 1,24,800 | 1,30,000 | (5,200) |
| At ₹ 15 Lakh | 2,02,800 | 1,95,000 | 7,800 |
| At ₹ 20 Lakh | 3,58,800 | 3,51,000 | 7,800 |
Scenario -III: In case you are claiming only the standard deductions
| Gross Salary | Tax Payable In Current IT Slab | Tax Payable In New IT Slab | Income Tax Saving (Payable) |
|---|---|---|---|
| At ₹ 7.50 Lakh | 54,600 | 39,000 | 15,600 |
| At ₹ 10 Lakh | 1,06,600 | 78,000 | 28,600 |
| At ₹ 12.50 Lakh | 1,79,400 | 1,30,000 | 49,400 |
| At ₹ 15 Lakh | 2,57,400 | 1,95,000 | 62,400 |
| At ₹ 20 Lakh | 4,13,400 | 3,51,000 | 62,400 |
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