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2021

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

 Income Tax Slab Rates for FY 2020 21

Income tax is levied on the income earned by all the individuals, HUF, partnership firms, LLPs and Corporates as per the Income tax Act of India. The Indian Income Tax is a progressive tax system. This means higher the income higher the tax and vice versa. Hence, tax is levied as per the slab system if their income is above the minimum threshold limit. These slab rates are different for different categories of taxpayers.

Under slab system different tax rates are prescribed for different ranges of income. It means the tax rates keep increasing with an increase in the income of the taxpayer. This type of taxation enables progressive and fair tax systems in the country. Such income tax slabs tend to undergo a change during every budget.

As the Financial Year 2020-21 has just ended, it is important to take note of all applicable tax slabs for computation of tax payable in the Assessment Year 2021-22 for different assessees.

Individual / HUF – Old Regime:

 

Tax Slabs for Individuals – Old Regime:

Individual

(Other than senior and super senior citizen)

Net Income Range

Rate of Income Tax

Up to Rs. 2.5 Lakh

Nil

Rs. 2.5 Lakh to Rs. 5 Lakh

5%

Rs. 5 Lakh to Rs. 10 Lakh

20%

Above Rs. 10 Lakh

30%

 

Senior Citizen

(who is 60 years or more but less than 80 years at any time during the previous year)

Net Income Range

Rate of Income Tax

Up to Rs. 3 Lakh

Nil

Rs. 3 Lakh to Rs. 5 Lakh

5%

Rs. 5 Lakh to Rs. 10 Lakh

20%

Above Rs. 10 Lakh

30%

 

Super Senior Citizen

(who is 80 years or more at any time during the previous year)

Net Income Range

Rate of Income Tax

Up to Rs. 5 Lakh

Nil

Rs. 5 Lakh to Rs. 10 Lakh

20%

Above Rs. 10 Lakh

30%

 

Tax Slabs for HUF – Old Regime:

Hindu Undivided Family

Net Income Range

Rate of Income Tax

Up to Rs. 2.5 Lakh

Nil

Rs. 2.5 Lakh to Rs. 5 Lakh

5%

Rs. 5 Lakh to Rs. 10 Lakh

20%

Above Rs. 10 Lakh

30%

 

Tax Slab for All Individual/HUF – New Regime:

Net Income Range

Rate of Income Tax

Rs 0.0 to Rs 2.5 Lakhs

Nil

Rs 2.5 lakhs to Rs 5.00 Lakhs

5% (tax rebate u/s 87a is available)

Rs. 5.00 lakhs to Rs 7.5 Lakhs

10%

Rs 7.5 lakhs to Rs 10.00 Lakhs

15%

Rs 10.00 lakhs to Rs. 12.50 Lakhs

20%

Rs. 12.5 lakhs to Rs. 15.00 Lakhs

25%

Above Rs. 15 Lakhs

30%

 

Surcharge:

  • Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:

 

Surcharge for Assessment Year 2021-22 (New Regime)

Range of Income

Rate of Surcharge

Rs. 50 Lakhs to Rs. 1 Crore

10%

Rs. 1 Crore to Rs. 2 Crores

15%

Rs. 2 Crores to Rs. 5 Crores

25%

Rs. 5 Crores to Rs. 10 Crores

37%

Exceeding Rs. 10 Crores

37%

Note:

  • The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112A and 115AD.
  • Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.

 

Marginal Relief:

Range of Income

Marginal Relief

Rs. 50 Lakhs to Rs. 1 Crore

Amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

Rs. 1 Crore to Rs. 2 Crores

Amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 Crore by more than the amount of income that exceeds Rs. 1 Crore.

Rs. 2 Crores to Rs. 5 Crores

Amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 Crore by more than the amount of income that exceeds Rs. 2 Crore.

Rs. 5 Crores onwards

Amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 Crore by more than the amount of income that exceeds Rs. 5 Crore.

 

Health and Education Cess:

  • Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.

Notes:

  1. A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 12,500, whichever is less.
  2. The option to pay tax at lower rates shall be available only if the total income of assessee is computed without claiming specified exemptions or deductions.

 

AOP, BOI and Artificial Juridical Person:

 

AOP, BOI and Artificial Juridical Person

Net Income Range

Rate of Income Tax

Up to Rs. 2.5 Lakh

Nil

Rs. 2.5 Lakh to Rs. 5 Lakh

5%

Rs. 5 Lakh to Rs. 10 Lakh

20%

Above Rs. 10 Lakh

30%

 

Partnership Firm:

 

Basic Tax Rate:

  • For the Assessment Year 2020-21 & 2021-22, a partnership firm (including LLP) is taxable at 30%.

 

Surcharge:

  • The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one Crore rupees.
  • However, the surcharge shall be subject to marginal relief (where income exceeds one Crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one Crore rupees by more than the amount of income that exceeds one Crore rupees).

 

Health and Education Cess:

  • The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

 

Local Authority:

For the Assessment Year 2020-21 & 2021-22, a local authority is taxable at 30%.

Surcharge:

  • The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds 1 Crore rupees.
  • Marginal Relief: The surcharge shall be subject to marginal relief (where income exceeds one Crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one Crore rupees by more than the amount of income that exceeds one Crore rupees).

 

Health and Education Cess:

The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Domestic Company:

  • Income tax rates applicable in case of domestic companies for Assessment Year 2021-22 are as follows:

 

Turnover / Gross Receipts

Tax Rate

Where total turnover or gross receipt during the previous year 2017-18 does not exceed Rs. 400 Crore.

N/a

Where total turnover or gross receipt during the previous year 2018-19 does not exceed Rs. 400 Crore.

25%

Any other domestic company.

30%

 

Surcharge:

  • The amount of income-tax shall be increased by a surcharge at following rates:

 

Surcharge for Assessment Year 2021-22

Range of Income

Rate of Surcharge

Less than 1 Crore

Nil

More than 1 Crore but up to 10 Crore

7%

More than 10 Crore

12%

 

  • Marginal Relief: The surcharge shall be subject to marginal relief, which shall be as under:

 

Income Level

Marginal Relief

Income > Rs. 1 Crore but up to Rs. 10 Crore

The total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 1 Crore by more than the amount of income that exceeds Rs. 1 Crore.

Income > Rs. 10 Crore

The total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 10 Crore by more than the amount of income that exceeds Rs. 10 Crore.

 

Health and Education Cess:

  • The amount of income-tax and the applicable surcharge shall be further increased by Health and Education Cess calculated at the rate of four percent of such income-tax and surcharge.

 

Special Tax Rates Applicable to a Domestic Company:

  • The special income-tax rates applicable in case of domestic companies for assessment year 2021-22 are as follows:

 

Particulars

Tax Rate

Where it opted for Section 115BA

25%

Where it opted for Section 115BAA

22%

Where it opted for Section 115BAB

15%

 

Surcharge:

  • The rate of surcharge in case of a company opting for taxability under section 115BAA or Section 115BAB shall be flat 10% irrespective of amount of total income.

 

Health and Education Cess:

  • The amount of income-tax and the applicable surcharge shall be further increased by Health and Education Cess calculated at the rate of four percent of such income-tax and surcharge.

 

Minimum Alternate Tax (MAT):

  • The domestic company who has opted for special taxation regime under section 115BAA & 115BAB is exempted from provision of MAT. However, no exemption is available in case where section 115BA has been opted.
  • In that case, the provisions of Minimum Alternate Tax (MAT) applies, tax payable cannot be less than 15% (+HEC) of "Book Profit" computed as per section 115JB.
  • However, MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an international financial services center and deriving its income solely in convertible foreign exchange.

 

Foreign Company:

 

Nature of Income

Tax Rate

Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976.

OR

Fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government.

50%

Any Other Income

40%

 

Surcharge:

Income

Rate

Total income > 1 Crore rupees up to 10 Crore rupees

2%

Total Income exceeds 10 Crore rupees

5%

 

  • Marginal Relief: However, the surcharge shall be subject to marginal relief, which shall be as under:

 

Income

Marginal Relief

Income > 1 Crore Rs. but up to 10 Crore Rs.

The total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one Crore rupees by more than the amount of income that exceeds one Crore rupees.

Income exceeds 10 Crore Rs.

The total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten Crore rupees by more than the amount of income that exceeds ten Crore rupees.

 

Health and Education Cess:

  • The amount of income-tax and the applicable surcharge shall be further increased by Health and Education Cess calculated at the rate of 4% of such income-tax and surcharge.

 

Co-operative Society:

 

Taxable Income

Tax Rate

Up to Rs. 10,000

10%

Rs. 10,000 to Rs. 20,000

20%

Above Rs. 20,000

30%

Surcharge:

  • The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds 1 Crore rupees.
  • Marginal Relief: The surcharge shall be subject to marginal relief (where income exceeds one Crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one Crore rupees by more than the amount of income that exceeds one Crore rupees).

 

Health and Education Cess:

The amount of income-tax and the applicable surcharge shall be further increased by Health and Education Cess calculated at the rate of 4% of such income-tax and surcharge.

Special tax rates applicable to a Co-operative Societies:

Particulars

Rate

Any Income Level

22%

Surcharge

10%

Health & Education Cess

4%

 

Important Notes:

  • The Finance Act, 2020 has inserted a new section 115BAD in income-tax act to provide an option to the co-operative societies to get taxed at the rate of 22% plus 10% surcharge and 4% cess. The resident co-operative societies have an option to opt for taxation under newly section 115BAD of the act w.e.f. Assessment Year 2021-22.
  • The option once exercised under this section cannot be subsequently withdrawn for the same or any other previous year.
  • If the new regime of section 115BAD is opted by a co-operative society, its income shall be computed without providing for specified exemption, deduction or incentive available under the Act.
  • The societies opting for this section have been kept out of the purview of Alternate Minimum Tax (AMT).
  • Further, the provision relating to computation, carry forward and set-off of AMT credit shall not apply to these assessees.
  • The option to pay tax at lower rates shall be available only if the total income of co-operative society is computed without claiming specified exemptions or deductions.

 

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