Here are the latest income tax slabs and rates

The Union Budget 2020 introduced a new income tax regime with reduced tax rates for those willing to forego 70 tax-exemptions and deductions under it. This new tax system has been made optional and continues to co-exist with the old one that comprises of three tax rates and various exemptions and deductions available to a taxpayer. The new income tax slabs and rates have come into effect from April 1, 2020.

If a taxpayer has opted for the new regime, then his income will be taxed as per the following tax rates:

Individuals with a net taxable income of up to Rs 5 lakh in the financial year will be able to avail tax rebate of Rs 12,500 under section 87A in both the existing and new tax regimes. Effectively, this means that individual taxpayers with net taxable income of up to Rs 5 lakh will continue to pay zero tax in both the tax regimes.

However, individuals who have opted for the new tax regime would not be able to avail common tax breaks such as deductions under section 80C for maximum of Rs 1.5 lakh by investing in specified instruments, section 80D for medical insurance paid, house rent allowance, leave travel allowance etc.

Also Read: 70 exemptions that you lose out in new tax regime

On the other hand, individuals who have opted for the existing tax regime will continue to pay tax on their income at the same rates in FY 2020-21 as in FY 2019-20.

Abhishek Soni, CEO, Tax2win.in, an ITR filing website says, "If senior citizens or super senior citizens are opting for new tax regime then the benefit of higher exemption limit will not be available i.e. limit of higher exemption of Rs 3 lakh in case of senior citizens and Rs 5 lakh in case of super senior citizens will not be available under the new optional regime. Therefore, under the new tax regime, basic exemption limit will remain Rs 2.5 lakh for all taxpayers."

Under the existing tax regime, the basic tax exemption limit for an individual depends on their age and residential status. According to their age, resident individual taxpayers are divided into three categories:

1. Resident individuals below the age of 60 years
2. Resident senior citizens above 60 years but below 80 years
3. Resident super senior citizens above the age of 80 years

Here is a look at the latest income tax slabs for FY 2018-19, FY 2019-20 and FY 2020-21:

Income tax slabs for resident individuals below 60 years of age

Income tax slabs for resident individual between 60 and 80 years of age (Senior Citizen)

Income tax slabs for resident individual above 80 years of age (Super Senior Citizen)

As per the Budget 2019 announcement, no changes in the income tax slabs and rates have been proposed. A rebate of Rs 12,500 will be available for all taxpayers with taxable income up to Rs 5 lakh. This rebate will be available under Section 87A of the Income Tax Act from FY 2019-20 onwards. Also, standard deduction for financial year 2019-20 would be Rs 50,000.

For the FY 2019-20, new surcharge rates have been introduced for the super rich.

Surcharges to be levied for FY 2019-20:

For non-resident individuals (NRI), the basic exemption limit is of Rs 2.5 lakh in a financial year irrespective of their age. Surcharge as mentioned in the table above will be levied on the taxable income. However, rules regiarding determining NRI criteria has changed from April 1, 2020. Click here to read all about it.

In Budget 2018, cess on income tax was increased to 4 per cent for FY 2018-19 onwards from 3 per cent for FY 2017-18 across the board for taxpayers. Due to the hike in cess, the tax liability for the highest slab (assuming an income of Rs 15 lakh) has increased by Rs 2,625. In the middle income tax slab, the tax outgo increases by Rs 1,125, and there is a nominal increase in the tax liability of Rs 125 for lowest income tax slab.

Here's how much your income tax liability will be:

Click here to use our Income Tax Calculator

As per the current income tax slabs, taxation of income of resident individuals below 60 years is as follows: Income up to Rs 2.5 lakh is exempt from tax, 5 per cent tax on income between Rs 250,001 to Rs 5 lakh; 20 per cent tax on income between Rs 500,001 and Rs 10 lakh; and 30 per cent tax on income above Rs 10 lakh.

For senior citizens (aged 60 years or above but less than 80 years), income up to Rs 3 lakh is exempt from tax. Income from Rs 300,001 to Rs 5 lakh is taxed at 5 per cent, from Rs 500,001 to Rs 10 lakh at 20 per cent and above Rs 10 lakh at 30 per cent.

For super senior citizens, aged 80 years and above, income up to Rs 5 lakh is exempt from tax. Income from Rs 500,001 to Rs 10 lakh is taxed at 20 per cent and above Rs 10 lakh is taxed at 30 per cent.

Income tax slabs for FY 2017-18

After taking the deductions under Section 80 (C) to 80 (U), the tax is payable after adding the cess and surcharge, if applicable.

1. How is tax liability calculated?
   The tax liability is calculated on the income arrived at after availing all the deductions and other tax-exemptions available to the individual.
2. How to calculate total income?
   To calculate your total income, you must add the income received from various sources such as salary, pension, interest received from fixed deposit, recurring deposit, savings account and so on.
3. How do I know my tax payment details?
   Once the tax is deposited by you or any other individual has deducted tax and deposited with the government on your behalf, then total amount of tax deposited against your PAN will be reflected in Form 26AS. You can download the statement from your account on the income tax e-filing website.
4. How can I pay taxes?
   A taxpayer can pay tax offline or online. For offline method, an individual is required to visit the bank branch and pay the tax due along with duly filled challan. Another way is paying taxes online using Net banking facility of any of the authorised banks.