Your income from salary, business or other income like income from fixed/recurring deposits etc are taxed as per income tax slabs. Budget 2020 presented on February 1, 2020 has made some changes in the tax slab.
There would be two options:
- use existing tax slabs with all exemptions
- use new simplified tax structure but forgo all exemptions
Income Tax Slabs:
There is NO separate tax slab for men and women. Earlier women used to have slight benefit over men in terms of lower taxes!
The tax slabs are determined on age of person. As of today there are 3 slab rates based on age:
- Below 60 years of age
- Senior Citizens (60 to less than 80 years of age)
- Very Senior Citizens (80+ years of age)
The table below gives the tax slab rates:
Income Tax Slab for HUFs & Individuals (below 60 years – for both Men & Women)
New Simple Tax Slab without exemption:
| Income Slab | Tax Rate |
| Income up to Rs 2,50,000 | No Tax |
| Income from Rs 2,50,000 – 5,00,000 | 5% |
| Income from Rs 5,00,000 – 7,50,000 | 10% |
| Income from Rs 7,50,000 – 10,00,000 | 15% |
| Income from Rs 10,00,000 – 12,50,000 | 20% |
| Income from Rs 12,50,000 – 15,00,000 | 25% |
| Income more than Rs 15,00,000 | 30% |
Tax Slab with exemption:
| Income Slab | Tax Rate |
| Income up to Rs 2,50,000 | No Tax |
| Income from Rs 2,50,000 – 5,00,000 | 5% |
| Income from Rs 5,00,000 – 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
- Surcharge:
- 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
- 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
- 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
- 37% surcharge on income tax if the total income exceeds Rs 5 crore
- Health and Education Cess: 4% cess on income tax including surcharge
- Rebate under Section 87A: Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs
Income tax slab for senior citizens (60 years to less than 80 years old) (both men & women)
New Simple Tax Slab without exemption:
| Income Slab | Tax Rate |
| Income up to Rs 3,00,000 | No Tax |
| Income from Rs 3,00,000 – 5,00,000 | 5% |
| Income from Rs 5,00,000 – 7,50,000 | 10% |
| Income from Rs 7,50,000 – 10,00,000 | 15% |
| Income from Rs 10,00,000 – 12,50,000 | 20% |
| Income from Rs 12,50,000 – 15,00,000 | 25% |
| Income more than Rs 15,00,000 | 30% |
Tax Slab with exemption:
| Income Slab | Tax Rate |
| Income up to Rs 3,00,000 | No Tax |
| Income from Rs 3,00,000 – 5,00,000 | 5% |
| Income from Rs 5,00,000 – 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
- Surcharge:
- 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
- 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
- 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
- 37% surcharge on income tax if the total income exceeds Rs 5 crore
- Health and Education Cess: 4% cess on income tax including surcharge
- Rebate under Section 87A: Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs
Income tax slab for Very senior citizens (80 years or more) (both men & women)
New Simple Tax Slab without exemption:
| Income Slab | Tax Rate |
| Income up to Rs 5,00,000 | No Tax |
| Income from Rs 5,00,000 – 7,50,000 | 10% |
| Income from Rs 7,50,000 – 10,00,000 | 15% |
| Income from Rs 10,00,000 – 12,50,000 | 20% |
| Income from Rs 12,50,000 – 15,00,000 | 25% |
| Income more than Rs 15,00,000 | 30% |
Tax Slab with exemption:
| Income Slab | Tax Rate |
| Income up to Rs 5,00,000 | No Tax |
| Income from Rs 5,00,000 – 10,00,000 | 20% |
| Income more than Rs 10,00,000 | 30% |
- Surcharge:
- 10% surcharge on income tax if the total income exceeds Rs 50 Lakhs but below Rs 1 crore
- 15% surcharge on income tax if the total income exceeds Rs 1 crore but below Rs 2 crore
- 25% surcharge on income tax if the total income exceeds Rs 2 crore but below Rs 5 crore
- 37% surcharge on income tax if the total income exceeds Rs 5 crore
- Health and Education Cess: 4% cess on income tax including surcharge
Income Tax Slabs for FY 2020-21 in Budget 2020
Income tax slab for Domestic Companies:
| Company Turnover | Tax Rate |
| Less than 400 crore (enhanced in July budget) | 25% |
| More than 400 crore | 30% |
- Surcharge:
- 7% surcharge if the income is more than 1 crore but less than 10 crore
- 12% surcharge if the income is more than 10 crore
- Health and Education Cess: 4% cess on income tax including surcharge
Also Read: 25 Tax Free Incomes & Investments in India
Income tax slab for Partnership Firm:
A partnership firm (including LLP) income is taxable at 30%.
- Surcharge: 12% surcharge on income tax if the total income exceeds Rs 1 crore
- Health and Education Cess: 4% cess on income tax including surcharge
Capital Gains Tax Rates:
Some income related to capital gains are taxed at special rates as shown below:
| Capital Gains | Tax Rate |
| Short term capital gains from assets (Other than shares & mutual funds) | At Income Tax Slab rates listed above |
| Long term capital gains from assets (Other than shares & mutual funds) | 20% (+4% Health and Education Cess) |
| Short term capital gains on shares and equity mutual funds | 15% (+4% Health and Education Cess) |
| Long term capital gains on shares and equity mutual funds | 10% (+4% Health and Education Cess) |
| Short term capital gains on debt mutual funds | At Income Tax Slab rates listed above |
| Long term capital gains on debt mutual funds | At 20% (+4% Health and Education Cess) with indexation |
The above rates are based on FM speech. We will update after the budget documents are out and we look at the fine print.