Here is an overview of the existing tax slabs so that you can make your plans in advance.
Taxpayers in India are classified into different groups based on their respective incomes. Each group has to pay income tax based on the slab they come under. There is a designated rate of tax deduction, which is usually revised every year. Before we proceed to the rates prescribed by the government, it is important to have a clear idea of the categories of tax-payers:
Read more: Right time to start tax planning
Following these categories, the income tax slabs in India for the year 2019–20 are given below:
Annual Income
Up to Rs. 2.5 lakh
Rate of Tax Charged
Nil
Health and Education Cess
Nil
Annual Income
Rs 250,001–Rs 5 lakh
Rate of Tax Charged
5%
Health and Education Cess
4% of the income tax and surcharge
Annual Income
Rs. 500,001–Rs 10 lakh
Rate of Tax Charged
20%
Health and Education Cess
4% of the income tax and surcharge
Annual Income
More than Rs 10 lakh
Rate of Tax Charged
30%
Health and Education Cess
4% of the income tax and surcharge
Annual Income | Rate of Tax Charged | Health and Education Cess |
---|---|---|
Up to Rs. 2.5 lakh | Nil | Nil |
Rs 250,001–Rs 5 lakh | 5% | 4% of the income tax and surcharge |
Rs. 500,001–Rs 10 lakh | 20% | 4% of the income tax and surcharge |
More than Rs 10 lakh | 30% | 4% of the income tax and surcharge |
Annual Income
Up to Rs 3 lakh
Rate of Tax Charged
Nil
Health and Education Cess
Nil
Annual Income
Rs 300,001–Rs 5 lakh
Rate of Tax Charged
5%
Health and Education Cess
4% of the income tax and surcharge
Annual Income
Rs. 500,001–Rs 10 lakh
Rate of Tax Charged
20%
Health and Education Cess
4% of the income tax and surcharge
Annual Income
More than Rs 10 lakh
Rate of Tax Charged
30%
Health and Education Cess
4% of the income tax and surcharge
Annual Income | Rate of Tax Charged | Health and Education Cess |
---|---|---|
Up to Rs 3 lakh | Nil | Nil |
Rs 300,001–Rs 5 lakh | 5% | 4% of the income tax and surcharge |
Rs. 500,001–Rs 10 lakh | 20% | 4% of the income tax and surcharge |
More than Rs 10 lakh | 30% | 4% of the income tax and surcharge |
Annual Income
Up to Rs 5 lakh
Rate of Tax Charged
Nil
Health and Education Cess
Nil
Annual Income
Rs 500,001–Rs 10 lakh
Rate of Tax Charged
20%
Health and Education Cess
4% of the income tax and surcharge
Annual Income
More than Rs 10 lakh
Rate of Tax Charged
30%
Health and Education Cess
4% of the income tax and surcharge
Annual Income | Rate of Tax Charged | Health and Education Cess |
---|---|---|
Up to Rs 5 lakh | Nil | Nil |
Rs 500,001–Rs 10 lakh | 20% | 4% of the income tax and surcharge |
More than Rs 10 lakh | 30% | 4% of the income tax and surcharge |
These rates are valid for FY 2019–20 and FY 2020-21.
When paying income tax for FY 2020–21, taxpayers can also opt for a new taxation regime with lower tax rates. However, under the new regime, the taxpayer cannot claim any tax exemptions and deductions. Take a look at the special tax rates here:
Annual Income (Rs)
Up to Rs 2,50,000
Rate of Tax Charged
Nil
Annual Income (Rs)
Rs 2,50,001–Rs 5,00,000
Rate of Tax Charged
5%
Annual Income (Rs)
Rs 5,00,001–Rs 7,50,000
Rate of Tax Charged
10%
Annual Income (Rs)
Rs 7,50,001–Rs 10,00,000
Rate of Tax Charged
15%
Annual Income (Rs)
Rs 10,00,001–Rs 12,50,000
Rate of Tax Charged
20%
Annual Income (Rs)
Rs 12,50,001–Rs 15,00,000
Rate of Tax Charged
25%
Annual Income (Rs)
Above Rs 15,00,000
Rate of Tax Charged
30%
Annual Income (Rs) | Rate of Tax Charged |
---|---|
Up to Rs 2,50,000 | Nil |
Rs 2,50,001–Rs 5,00,000 | 5% |
Rs 5,00,001–Rs 7,50,000 | 10% |
Rs 7,50,001–Rs 10,00,000 | 15% |
Rs 10,00,001–Rs 12,50,000 | 20% |
Rs 12,50,001–Rs 15,00,000 | 25% |
Above Rs 15,00,000 | 30% |
If your annual income is above Rs 50 lakh, a additional surcharge is levied on your income. The rate of surcharge varies based on the income range, but the slabs are the same for all age groups. The current surcharge rates are given below:
Annual Income
Rs 50 lakh–Rs 1 crore
Rate of Surcharge
10%
Extent of Relief
Payable income tax and surcharge will not exceed the income tax on Rs 50 lakh by more than the amount of income exceeding Rs 50 lakh.
Annual Income
Rs 1 crore–Rs 2 crore
Rate of Surcharge
15%
Extent of Relief
Payable income tax and surcharge will not exceed the income tax on Rs 1 crore by more than the amount of income exceeding Rs 1 crore.
Annual Income
Rs 2 crore–Rs 5 crore
Rate of Surcharge
25%
Extent of Relief
Payable income tax and surcharge will not exceed the income tax on Rs 2 crore by more than the amount of income exceeding Rs 2 crore.
Annual Income
Rs 5 crore–Rs 10 crore Above Rs 10 crore
Rate of Surcharge
37%
Extent of Relief
Payable income tax and surcharge will not exceed the income tax on Rs 1 crore by more than the amount of income exceeding Rs 1 crore.
Annual Income | Rate of Surcharge | Extent of Relief |
---|---|---|
Rs 50 lakh–Rs 1 crore | 10% | Payable income tax and surcharge will not exceed the income tax on Rs 50 lakh by more than the amount of income exceeding Rs 50 lakh. |
Rs 1 crore–Rs 2 crore | 15% | Payable income tax and surcharge will not exceed the income tax on Rs 1 crore by more than the amount of income exceeding Rs 1 crore. |
Rs 2 crore–Rs 5 crore | 25% | Payable income tax and surcharge will not exceed the income tax on Rs 2 crore by more than the amount of income exceeding Rs 2 crore. |
Rs 5 crore–Rs 10 crore Above Rs 10 crore | 37% | Payable income tax and surcharge will not exceed the income tax on Rs 1 crore by more than the amount of income exceeding Rs 1 crore. |
The government no longer differentiates between men and women as far as payment of tax is concerned. So, before you plan your investment in order to avail tax exemptions, it is important to know the income tax slab you fall under.
Read more: Tax-saving investment options
Company Turnover
Company where total turnover during previous year (FY 2017–18) was less than Rs 400 crore
Rate of Tax Charged in AY 2020–21
25%
NA
Company Turnover
Company where total turnover during previous year (FY 2018–19) was less than Rs 400 crore
Rate of Tax Charged in AY 2020–21
NA
25%
Company Turnover
Any other domestic company
Rate of Tax Charged in AY 2020–21
30%
30%
Company Turnover | Rate of Tax Charged in AY 2020–21 | Rate of Tax Charged in AY 2021–22 |
---|---|---|
Company where total turnover during previous year (FY 2017–18) was less than Rs 400 crore | 25% | NA |
Company where total turnover during previous year (FY 2018–19) was less than Rs 400 crore | NA | 25% |
Any other domestic company | 30% | 30% |
This will be levied on the total of income tax and surcharge.
Domestic companies can also opt for special tax rates under the new regime in AY 2020–21:
Section Chosen for Income Tax Purposes
Section 115BA
Rate of Tax Charged in AY 2020–21
25%
Rate of Tax Charged in AY 2021–22
25%
Section Chosen for Income Tax Purposes
Section 115BAA
Rate of Tax Charged in AY 2020–21
22%
Rate of Tax Charged in AY 2021–22
22%
Section Chosen for Income Tax Purposes
Section 115BAB
Rate of Tax Charged in AY 2020–21
15%
Rate of Tax Charged in AY 2021–22
15%
Section Chosen for Income Tax Purposes | Rate of Tax Charged in AY 2020–21 | Rate of Tax Charged in AY 2021–22 |
---|---|---|
Section 115BA | 25% | 25% |
Section 115BAA | 22% | 22% |
Section 115BAB | 15% | 15% |
Who would not want to save as much as possible from their taxes? The Government of India offers provisions to do the same. Section 80C lists a number of tax-saving investments:
These are just a few of the tools that allow you to avail tax exemption (refer to Section 80C).
Read more: Investments under Section 80C
Investing in equity-linked savings schemes (ELSS) is considered to be the most profitable. These funds enjoy the shortest lock-in period but generate better income than PFF or NPS. The interest that your FD earns is not tax-free, but your income from ELSS is exempted from tax. (More on the benefits of ELSS)
All you need to do is set aside a little time from your busy schedule. Use this time to assess the pros and cons of each of these instruments. Then choose the ones that best suit your requirements.
A thorough understanding of the income tax slabs prescribed by the Indian government would help you plan your investment and savings. This is how you balance your income and expenditure.
Read more: Reasons to file ITR