Income Tax Slabs & Rates FY(2021-2022)

  • Individuals and business organizations must pay income tax rates if their yearly income exceeds the minimum exemption level, according to the Income Tax Act of India 1961. People who pay tax can, however, take advantage of tax incentives under several parts of the Act. To take advantage of these advantages, one must first grasp the income tax bracket and rates that apply.

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Income Tax Slabs & Rates FY(2021-2022)
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What is the Income Tax Rate, and how does it work?

 

In India, where people earn a wide variety of incomes, imposing a single rate of taxation on everyone would not be a reasonable proposal. As a result, the Act divides income categories and charges tax at varying rates based on the division. Income tax rates or slabs are the names given to these categories. Depending on the person who pays tax, the rates or slabs also differ based on age and entity categorization. Every year, at the Central Government's Budget Conference, the income tax rates are changed and altered. Once suggested, these adjustments and revisions are accepted by Parliament and become law.

 

Resident Persons' Income Tax Rates or Slabs

 

The baseline exemption limit for each citizen is determined by their salary. Individual taxpayers are classified into one of three classifications for  income tax slab rates:

 

  1. People under the age of 60, including both residents and non-residents.
  2. Senior individuals living in the area who are over 60 but not over 80 years old.
  3. Residents who are over the age of 80 are considered super elderly people.

 

Income Tax Rates in FY 2020-21 (AY 2021-22)

 

Income Tax Rate Tax relevant as per the New Regime
0 – 2,50,000 NA
2,50,001 – 5,00,000 5.00%
.5,00,001 – 7,50,000 12500 + 10% of total income crossing ₹5,00,000
7,50,001 – 10,00,000 37500 + 15% of total income crossing ₹7,50,000
10,00,001 – 12,50,000 75000 + 20% of total income crossing ₹10,00,000
12,50,001 – 15,00,000 ₹125000 + 25% of total income crossing ₹12,50,000
Beyond 15,00,000 ₹187500 + 30% of total income crossing ₹15,00,000

 

Income tax slab rates for FY 2020-21 (AY 2021-22) 

 

  Existing Regime Slab Rates FY 20-21 (AY 21-22) Existing Regime Slab Rates FY 20-21 (AY 21-22) Existing Regime Slab Rates FY 20-21 (AY 21-22) New Regime Slab Rates FY 20-21 (AY 21-22)
INCOME TAX SLABS Resident Individuals & HUF under 60 years of age & NRIs Resident Individuals & over 60 to under 80 years Resident Individuals & over 80 years Applicable for every individual and Hindu Undivided Family
₹ 0.0 – ₹ 2.5 Lakhs NA NA NA NA
₹ 2.5 – ₹ 3.00 Lakhs 5% (tax rebate u/s 87a is possible) NA NA 5% (tax rebate u/s 87a is possible)
₹ 3.00- ₹ 5.00 Lakhs 5% (tax rebate u/s 87a is possible) 5% (tax rebate u/s 87a is possible) NA 5% (tax rebate u/s 87a is possible)
₹ 5.00 – ₹ 7.5 Lakhs 20% 20% 20% 10%
₹ 7.5 – ₹ 10.00 Lakhs 20% 20% 20% 15%
₹ 10.00 – ₹ 12.50 Lakhs 30% 30% 30% 20%
₹ 12.5 – ₹ 15.00 Lakhs 30% 30% 30% 25%
Above ₹ 15 Lakhs 30% 30% 30% 30%

 

New Income Tax Rate Slabs (AY 2020-2021)

 

Total Income New Tax Regime
Up to ₹ 2.5 lakh NA
From ₹ 2,50,001 to ₹ 3 lakh 5%
From ₹ 3,00,001 to ₹ 5 lakh 5%
From ₹ 5,00,001 to ₹ 7.5 lakh 10%
From ₹ 7,50,001 to ₹ 10 lakh 15%
From ₹ 10,00,001 to ₹ 12.5 lakh 20%
From ₹ 12,50,001 to ₹ 15 lakh 25%
From ₹ 15,00,001 and above 30%

 

Old Income Tax Rates(2020-2021)

 

1. Under 60 years of age and HUF

Income Tax Rate Slab Percentage
Up to ₹ 2.5 lakhs NA
₹ 2.5 lakh -₹ 5Lakhs 5%
₹ 5 .00 lakh – ₹ 10 lakhs 20%
Above ₹10.00 lakh 30%

 

2. From 60 years to 80 years

Income Tax Rate Slab Percentage
₹ 0-.00- ₹ 3.00 lakh NA
₹ 3.00 lakh- ₹ 5.00 Lakh 5%
₹ 5.00 lakh – ₹ 10 Lakh 20%
Above ₹ 10 Lakh 30%

 

3. Above 80 years old age

 

Income Tax Rate Slab Percentage
₹ 0.00 – ₹ 5.00 Lakh* No Tax
₹ 5.00 lakh – ₹ 10 Lakh 20%
> ₹ 10 Lakh 30%

 

Crucial Points to Bear in Mind When Choosing the Current Tax System

 

When a person or a HUF has no company revenue, the choices must be practiced on or before the end of the preceding year.

 

If a person who pays tax has a business salary, an alternative that has been executed cannot be rescinded. Furthermore, if the taxpayer pulls back the choice, it will be an irrevocable decision because they would not be able to opt-in afterward for the income tax rates.

 

Senior citizen, that is, anybody who is a resident or a resident but not an ordinary resident in India and is 60 years old or older but much less than 80 years old at any time during the preceding year:

 

Income Tax Old Rate Existing Rate
Up to ₹ 2,50,000 NA NA
₹ 2,50,001 to ₹ 3,00,000 NA 5%
₹ 3,00,001 to ₹ 5,00,000 5% 5%
₹ 5,00,001 to ₹ 7,50,000 20% 10%
₹ 7,50,001 to ₹ 10,00,000 20% 15%
₹ 10,00,001 to ₹ 12,50,000 30% 20%
₹ 12,50,001 to ₹ 15,00,000 30% 25%
Above ₹ 15,00,000 30% 30%

 

Amendments to the Internal Revenue Code for the Fiscal Year 2019-20

 

The Finance Minister proposed changes to the income tax rate system in his budget address for Fiscal Year (FY) 2019-20. The income tax rate will be in effect for the Assessing Year (AY) 2020-21.

Here are some of the most important measures revealed in the 2019-20 Budget Cabinet Meeting.

  1. A resident person's annual income of up to ₹ 5 lakh is tax-free.
  2. The surcharges have been hiked to 25% for those with yearly incomes between ₹ 2 crore and ₹ 5 crores. Persons with a yearly salary of more than ₹ 5 crores now face a surcharge of 37 percent.
  3. Yearly sales of up to ₹ 400 crores are subject to a 25% corporate income tax rate.
  4. TDS of 2% is levied on money withdrawals exceeding ₹ 1 crore in a calendar year.

 

The method to calculate Yearly Income Tax

 

Income Tax Slabs Tax Rate Tax Calculation
₹ 2,50,000 No required tax ₹ 12,500
₹ 2,50,000 – ₹ 5,00,000 5% (₹ 5,00,000 to ₹ 2,50,000) ₹ 12,500
₹ 5,00,000 – ₹ 10,00,000 20% (₹ 8,00,000 to ₹ 5,00,000) ₹ 60,000
₹ 10,00,000 30% NA
Tax   ₹ 72,500
Cess 4% of ₹ 72,500 ₹ 2,900
Total tax in FY 2017-18 (AY 2018-19)   ₹ 75,400

 

The new rate of Income Tax for domestically based companies

 

Particular New regime Old regime
The company will opt for section 115 BAB (it's not covered under section 115BA & 115BAA) and is registered on or after 1st October 2019 and has commenced manufacturing on or before 31st March 2023. 15% NA
The company will opt for Section 115 BAA, where the total income of a company has been calculated without claiming any specified deductions, incentives, exemptions, and additional depreciation 22% NA
The company opts for section 115BA registered on or after March 1, 2016, and engaged in the manufacture of any article or thing and does not claim the deduction as specified in the section clause. 25% NA
Gross Receipt or turnover of the company is less than ₹ 400 crore in the previous year 2018-19 25% 25%
Any other domestic company 30% 30%

 

In the shorter term, how do taxes affect the economy?

 

Primarily as a result of their influence on supply. Tax cuts boost demand by increasing disposable income and encouraging firms to recruit and spend more. Tax hikes have the opposite effect. When the economy is weak, these demand impacts can be significant, but they are much lower when the economy is close to capacity.

 

The time of selection of old and new system

 

Type of income Time selection difference between the two system
TDS is deducted from wages or any other type of income.

A worker can pick the new tax system and notify their boss at the start of the fiscal year 2020-21. Annually, employees have the option of changing their tax regime.


Nevertheless, if a new tax bracket system is chosen at the start of the year, it cannot be altered for TDS purposes at any point throughout the year; even so, the choice can be modified when submitting an income-tax return.

Earnings from a Business or a Profession When it comes to company or professional revenue, the option to select between tax regimes is only accessible once per business.

 

FAQs Related to Income Tax Rates

 

 

1. Is it necessary for me to select the New Tax Regime when submitting taxes for AY 20-21?

 

No, the New Income Tax System is voluntary, and the Finance Department implemented it to make tax filing easier. The taxpayer has the choice to choose a fresh tax regime or stick with the existing one. If you're a worker, you can choose your selection at the beginning of the year and modify it the following year. Nevertheless, the opportunity to pick in the instance of business or profession is only accessible once in AY 20-21. We recommend that you assess your tax liability under both regimes and then select the most favourable one for you.

 

2. Is it possible to claim 80C exemptions and switch to a new income tax bracket system?

 

No, unlike the old tax rate system, the current tax rate regime does not enable many reductions and exclusions. If the taxpayer chooses the New regime's concessionary tax bracket rates, deductions under Section 80C are not available.

 

3. How should I figure my income tax for the fiscal year 2020-21?

 

Individual taxpayers in FY 20-21 can choose between two tax systems to pay their taxes: the previous tax system or the current one. Individuals have the option to stay with the previous tax system if they so want under the current income tax system. Suppose the taxpayer chooses the current tax regime. In that case, they will have to forgo particular deductions that were accessible under the previous tax system and will be accessible if the old tax regime is continued. Only one exemption is available under the current tax structure, that is Section 80CCD (2). This implies that the employer's National Pension Scheme investment is withheld from the individual's annual wage.

 

4. What methods does the government use to collect taxes?

 

The government collects taxes in 3 ways: a) consensual contribution by taxpayers into different designated banks; b) compulsory payment by consumers into different designated banks; and c) compulsory payment by consumers into different designated banks. For instance, taxpayers must pay Advance Tax as well as Self Assessment Tax but also taxes deducted at source (TDS) from the recipient's income and taxes collected at origin (TCS).

 

5. What timeframe is taken into account when calculating income tax?

 

A person's personal yearly salary is subject to income tax. Underneath the Income Tax Law, each year begins on April 1st and ends on March 31st of the following calendar year. The year is divided into two categories under the Income Tax Law: (i) preceding year and (ii) assessment year.

 

6. What do the terms "income tax on firms" and "income tax apart from corporations" signify on the Challan?

 

Corporate tax is the tax which businesses must contribute to their earnings, and it is designated as Income-tax on Businesses (Corporation tax)-0020 on the challan for delivery. Income-tax is the name of the tax repaid by non-corporate assessees, and it should be noted as Income-tax (besides for Companies)-0021 on the challan for payments.

 

7. Is the deadline for submitting an income tax return consistent for all?

 

No, the submission deadline isn't exclusive to all individuals. Individual taxpayers have until July 31st of the assessment year to file their returns. Nevertheless, as a result of Covid, the deadline for reporting ITR for FY 19-20 has been prolonged to December 31st for non-audit instances and January 31st for audit instances.

 

8. What does the term "rebate" imply within section 87 A of the Income Tax Act?

 

The Income Tax Act of 1961 has a section called Section 87A that provides for tax refunds. People earning less than a certain amount are eligible for a tax reduction under the clause established by the Finance Act of 2013. Any resident in India with an annual income of less than ₹ 5,00,000 is entitled to a refund under Section 87 A. People with a total taxable income of less than ₹ 5 Lac are eligible for a complete income tax refund. This refund is exclusively available to people, not businesses, and is computed before the 4% medical and academic cess is added.

 

9. Who sets the IT slab prices, and are they subject to change?

 

Yes, the government can adjust the IT bracket prices. If the IT bracket rates vary throughout the fiscal year, they are included in the budgeting for that year and reported to the Government.

 

Is there a distinct slab rate for each category? Yes. Individual taxpayers under the age of 60, between the ages of 60 and 80 (senior citizens), and over the age of 80 have different slab rates (super senior citizens). In addition, the tax rates for partnership businesses and LLPs, corporations, local governments, and cooperative organizations, among others, vary.

 

10. Is it necessary for me to submit an Income Tax Return (ITR) if my yearly income is less than the basic exemption level of 2.5 lakh?

 

A variety of elements influence the taxing procedure. It's a good idea to speak with a personal tax expert.

 

11. What is the procedure for filing a tax return online?

 

Sign in to either the income tax e-filing site or ClearTax to file your tax return online. Log in to  https://www.incometaxindiaefiling.gov.in/ logging in using your PAN, password, and captcha; you may unzip the ZIP files and fill in the needed information in these utilities, then submit it. Ensure to double-check the report before uploading it or within 120 days after filing it. Without verification, an ITR submission is incomplete. You may also use "prepare and submit online" to immediately fill in the data in the auto-populated ITR application.   You may also use ClearTax to streamline your e-filing and complete it in under 10 mins. 

 

12. What is the formula for calculating the income tax surcharge?

 

A surcharge is a levy on top of a tax. As a result, the surcharge is based on the amount of tax owed rather than the amount of revenue received. For instance, if you earn Rupees 1000 and pay a 30% tax of Rupees 300 if the earnings are entitled to a surcharge, you would be charged a 10 percent surcharge on the tax of Rupees 300, that is ₹ 30. The surcharge is charged at varying rates, with 10% being collected if total income exceeds 50 lakh, 15% being levied if overall income exceeds 1 crore, 25% being levied if total income exceeds 2 crores, and 37% being levied if overall income exceeds 5 crores.

 

13. How do you figure out a senior citizen's age for income tax purposes?

 

Regarding income tax purposes, someone over the age of 60 is considered a senior citizen, while someone over the age of 80 is considered a super senior citizen. In order to give some relief, the income tax law has increased the tax exemption levels and granted particular incentives to senior people and super elderly people.

 

14. What is the best way to pay income tax digitally?

 

Please visit nsdl.com to make an income tax payment electronically. Identify the suitable challan, such as 'challan number / ITNS 280' for payment of self-assessment tax, and then click Proceed. Pick tax Payal as "income tax (besides firms), choose the kind of payment, decide the mode of payment, and input data such as PAN, AY, address, and so on in the box that appear₹ When you click Next, a new window will open, prompting you to make a payment via online banking or debit card. A counterfoil will appear as proof of payment after the payment has been completed. Please keep this counterfoil on hand for future use.

 

15. What is the method of calculating tax liability?

 

The tax due is determined in the income tax slab rates using the revenue after all reductions, and other tax exemptions have been taken into account. 

 

16. How do you figure up your overall earnings?

 

You must include the earnings from numerous sources, such as a wage, a pension, earnings from a fixed deposit, a recurring deposit, a savings account, and so on, to compute your overall income to determine the income tax slab rates.

 

17. What is the best way to find out about one's tax payment information?

 

The entire percentage of money deposited under your PAN will be recorded in Form 26AS after you or another person has deducted tax and filed it with the government on your account. The report is available for download from your profile on the income tax e-filing portal for income tax slab rates.

 

Conclusion


People who pay taxes are required by law to submit an income tax return each year in order to establish their tax liabilities. Governments rely on income taxes to fund their operations. They're used to pay for government commitments, support essential facilities, and give commodities to residents. This article deals with the income tax rates and everything you need to know about income tax rates for fy 2021-22.

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