Introduction of income tax slab for ay 2020-21:
Under India’s income tax law, income tax is levied on all individuals, HUFs, partnership firms, LLPs, and corporations. Individuals who earn more than the minimum threshold are taxed according to the slab system.
What is the income tax slab?
Individual taxpayers in India are taxed based on a slab system for income taxation purposes. If you have a slab system, different tax rates are set for different income levels. In other words, when the taxpayer’s income increases, so do the tax rates. Progressive and equitable taxes are made possible by this sort of taxation in the country. It’s not uncommon for these income tax slabs to alter with each budget. For different groups of taxpayers, these slab rates are set at different amounts. Individual taxpayers are divided into three categories:
- Individuals under the age of 60, both residents and non-residents
- People over the age of 65 (60 to 80 years of age)
- Elderly residents (aged more than 80 years)
Tax Rates for Fiscal Year 2021 (AY 2021-22 )
The income tax rate for the New Tax Regime -FY 2021-2022 Why is it a choice?
According to the new tax regime, taxpayers can pay income tax at lower they are willing to give up certain legal exemptions and deductions.
Those who choose to remain in the previous system will take advantage of rebates and exemptions if they continue to pay tax at a higher rate.
Rates under the New Tax Regime (FY 2020-21) have been released:
|Income Tax Slab||
New Regime Income Tax Slab Rates FY 2020-21 (Applicable for All Individuals & HUF)
|Rs 0.0 – Rs 2.5 Lakhs||NIL|
|Rs 2.5 lakhs- Rs 3.00 Lakhs||
5% (tax rebate u/s 87a is available)
|Rs. 3.00 lakhs – Rs 5.00 Lakhs||
5% (tax rebate u/s 87a is available)
|Rs. 5.00 lakhs- Rs 7.5 Lakhs||10%|
|Rs 7.5 lakhs – Rs 10.00 Lakhs||15%|
|Rs 10.00 lakhs – Rs. 12.50 Lakhs||20%|
|Rs. 12.5 lakhs- Rs. 15.00 Lakhs||25%|
|> Rs. 15 Lakhs||30%|
Note: The New Tax Slab: What you need to know before making a decision
Before choosing the new tax slab, you should consider the following:
- Suppose you are an individual or a Hindu Undivided Family (HUF) member, and you do not have any business income. In that case, you can exercise the option on or before the due date for the preceding year.
- Taxpayers who choose the next tax system at the beginning of the year cannot change their minds.
- It’s possible to opt for the new tax regime during the financial year if you remove your option for the new tax system and revert to the old one.
Does a third party set the IT slab rates, and can they be changed?
The Finance Act notifies the parliament of the income tax slab rates for every year’s corresponding fiscal year. Therefore, the slab rates are subject to periodic alteration because they are announced yearly in the Finance Act. For example, in FY 2014-15, the minimum exemption amount was raised from Rs. 2 lakh to a whopping Rs. 2.5 lakh.
Having a flat rate for income tax instead of one speed for GST, what are the advantages?
Individuals pay income tax on their earnings, while businesses pay GST on their purchases of goods and services. As a result, people with lesser incomes benefit from lower income tax bracket rates, while higher-income ones benefit from higher tax collection. Progressive taxation is a taxation scheme that increases rates as the taxation criteria increases; when it comes to indirect taxes such as GST, people who consume more pay more.
Is it mandatory to file a tax return for the year?
According to the legislation, individuals who earn more than the exemption level of 2,50,000 must file income tax forms. Non-filing of tax returns will result in penalties. A loan application, a visa application, or even the registration of real estate can be hampered. Note that an individual’s age determines the maximum amount of time they are exempted from paying taxes. Taxpayers will be required to report their income in 2020-21, regardless of their tax status.
FAQ About income tax slab for ay 2020-21
✅ Are all individuals taxed at the same rate?
Yes. Everyone in a particular age group, such as those under 60 years old, seniors (60 years and older) and super seniors (80 years and older), have the same income tax slab rates. That’s true whether they’re salaried, self-employed, unemployed, or independent contractors.
✅ Are there different slab rates for men and women?
But that’s not the case any longer. In India, however, there used to be distinct slats for men and women. As an example, for FY 2010-11, the basic exemption limit for men aged between 18 and 65 years was Rs. 1.6 lakh per year, whereas the basic exemption limit for women aged between 18 and 65 years was Rs. However, the situation has changed for the 2018-19 fiscal year.
✅ With a taxable income of Rs. 5.2 lakh in 2019-20, how do I calculate my tax liability?
Annual earnings of FY 2018-19 are used to calculate income tax in AY 2019-20. This year, the basic exemption level is Rs. 2.5 lakh and the slab rate is 5 per cent for incomes between Rs. 250,001 and Rs.500000. For AY 2019-20, income beyond Rs. 5 lakh will be taxed at a rate of 20 per cent. You owe Rs. 4,000 in taxes at a rate of 20% on Rs. 20,000. 5 percent tax on 2.5 lakh (Rs. 5 lakh – Rs. 2.5 lakh) equals Rs. 12,500 in additional taxes. As a result, your total tax liability for the 2019-20 fiscal year is Rs 16,500. A free online income tax calculator will give you the same result.
Table of Contents
- 1 Introduction of income tax slab for ay 2020-21:
- 2 What is the income tax slab?
- 3 Tax Rates for Fiscal Year 2021 (AY 2021-22 )
- 4 Does a third party set the IT slab rates, and can they be changed?
- 5 Having a flat rate for income tax instead of one speed for GST, what are the advantages?
- 6 Is it mandatory to file a tax return for the year?
- 7 FAQ About income tax slab for ay 2020-21