INCOME TAX SLABS (INDIA): FY 2019-20
India follows a progressive system of taxation under which taxes are levied as per applicable tax slabs with higher levels of income being taxed at progressively higher tax rates. The finance ministry reviews and announces the relevant slabs annually on the budget day. Below is a snapshot of the tax rates for the current financial year (FY 2019-20).
FY: Financial year during which the income is earned (financial year in India is from April 1-March 31).
AY: Assessment year is the year in which returns are filed. It is the year in which the income that you have earned in the preceding financial year will be evaluated. For example, the assessment year for income earned between April 1, 2019 - March 31, 2020 shall be AY 2020-21.
Readers may refer to the below slabs to understand their tax liability for the ongoing financial year (returns to be filed in AY 2020-21). The Union Budget 2020-21 has introduced a new tax regime which allows taxpayers the flexibility to choose between two alternative tax slabs starting FY 2020-21 (AY 2021-22).
Income Tax Slabs & Rates FY 2019-20 (AY 2020-21) - For Resident Individuals less than 60 years of age (both male and female), NRIs (all age groups) and HUF
Taxpayers in this category may calculate their tax liability as per above applicable tax slabs and rates less Rebate under Section 87A and adding the relevant Surcharge and Cess.
*For FY 2019-20, Section 87A provides a rebate of up to Rs 12,500 for taxable income up to Rs 5,00,000 for all resident individuals. In essence this translates to zero tax liability for resident Indians with a taxable income up to Rs 5,00,000. This rebate u/s 87A is however not applicable for HUFs and NRIs.
It must be emphasized here that in case the taxable income (income after all deductions) exceeds Rs 5,00,000 and the resultant tax liability is greater than Rs 12,500, then the rebate u/s 87A will not be applicable. In this scenario, the given assessee shall have to pay tax on his entire income falling between Rs 2,50,0001 and Rs 5,00,000 @ tax rate of 5% in addition to his taxes applicable on his income in slabs above Rs 5,00,000.
Surcharge is a tax on tax. It is levied on the income tax amount and not on taxable income. For example, if an assessee named A has a taxable income of Rs 100 with a tax payable of Rs 30 and surcharge rate of 10%, then his applicable surcharge amount would be Rs 3. Here is total tax liability would be Rs 30 + Rs 3 = Rs 33 plus cess.
Like Surcharge, Cess is also a tax on tax. In addition to surcharge tax payment, all individuals who are liable to pay tax also have to pay health and education cess @ 4% of their applicable income tax amount. For instance, the cess for assessee A as mentioned in above example would be 4% of Rs 33 = ~Rs 1. Hence his total tax liability would be Rs 30 + Rs 3 + ~Rs 1 = ~Rs 34.
Income Tax Slabs & Rates FY 2019-20 (AY 2020-21) - For Resident Senior Citizens: 60 years and above but less than 80 years of age (both male and female)
Resident senior citizens may compute their tax liability as per above slab structure (including surcharge and cess) less Rebate under Section 87A if applicable. The application of section 87A, surcharge and cess is same as explained above.
Income Tax Slabs & Rates FY 2019-20 (AY 2020-21) - For Resident Super Senior Citizens: above 80 years of age (both male and female)
In case of resident super senior citizens, income up to Rs 5,00,000 is fully tax exempt. Thus, rebate u/s 87A is not applicable for residents above 80 years of age. Their tax liability can be calculated by referring to the given tax slabs and adding the cess and surcharge as explained previously.