Depending on your net taxable income, you will have to pay income tax. Income tax is a tax levied on your net taxable income. A person includes you, a Hindu Undivided Family, an Association of Persons, a Body of Individuals, and even a corporation.
It is under the Income Tax Act, of 1961 that income tax in India is levied. The Finance Minister submits the Finance Bill to Parliament every year. It is the bill that forms the Income-tax Act when it is passed by both houses of Parliament and endorsed by the President. In the first schedule of the Finance Act, slabs and rates are specified for the current assessment year.
Indian Income Tax Slabs: What are they?
Under the existing regime, individuals pay income tax based on a slab system that is nothing more than a separate category according to their age.
- Residents under the age of 60,
- Individuals under 60 years of age who are not residents
- Older than 60, but not older than 80, senior citizens who live in the state
- Over-80-year-old residents of the city
Depending on the tax slab into which the individual falls, he/she will be subject to a certain level of income tax. We will discuss the income-tax rate for FY 2020-21 (2020-21 assessment year).
A slab of income tax for resident individuals for the AY 2021-22
With Budget 2020, individuals can choose between a new tax regime or the old one. The tax rate is different for FY 20-21 depending on the tax regime selected by the individual. A Scripbox income tax calculator allows you to estimate your tax liabilities under both the old and new tax regimes. It is an easy-to-use online tool for calculating sole proprietorship tax return
We will discuss the applicable slabs and rates in more detail.
A new regime for income tax slabs and rates in FY21-22
| Income Tax Slab | Tax Rate for New Regime |
| Up to Rs. 2.5 lakh | Nil |
| Rs. 2.5 lakh to 5 lakh | 5% |
| Rs. 5 lakh to 7.5 lakh | 10% |
| Rs. 7.5 lakh to 10 lakh | 15% |
| Rs. 10 lakh to 12.5 lakh | 20% |
| Rs. 12.5 lakh to 15 lakh | 25% |
| Rs. 15 lakh & above | 30% |
Note:
The rebate under section 87A is limited to Rs. 12,500 if the net income is under Rs. 5 lakh. Therefore, no tax is due if the total tax liability is below Rs.12.50.
A Health and education cess of 4% on income tax will increase the tax payable by individuals in accordance with the above slab rates
Additionally, individual taxpayers in India cannot claim deductions under sections 80C, 80D, or 80E under the above slab rate due to certain restrictions.
Below are the tax exemption & deductions that the taxpayer has to give up:
- Human Resources Allowance (HRA)
- Allowance for leave travel (LTA)
- The amount allowed for conveyance
- A helper’s allowance
- The relocation allowance
- Deductions standard
- Tax professional
- Allowance for special needs
- The interest on housing loans is allowed under section 24
- It is still possible to deduct under Section 80CCD(2). Section 80C, 80D, 80E, etc.
Prior to the deadline for filing income tax returns, taxpayers should exercise their option to choose between the new and old tax regimes.
AY 2021-22 and FY 2020-21 (old regime) Income Tax Slabs and Rates
| Income Tax Slab | Rates |
| Up to Rs. 2.5 lakh | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% of the total income exceeding Rs. 5,00,000 |
| Rs. 5,00,001 to Rs. 10,00,000 | Rs. 12,500 + 20% of the total income exceeding Rs. 5,00,000 |
| Above 10,00,000 | Rs. 1,12,500 + 30% of the total income exceeding Rs. 10,00,000 |
In addition to the above income tax slab rates, there will be a 4% health and education cess on income tax. In addition, an individual taxpayer can claim a tax rebate under section 87A up to a maximum of Rs. 12,500 if the individual has a net annual income of Rs. 5,00,000. Taxpayers can claim the tax rebate on their income tax returns.
Frequently Asked Questions
- The delay in receiving TDS/TCS reports will result in what?
If The taxpayer fails to deposit their TDS/TCS returns on time is liable to pay a penalty of Rs. 200 for every day the return is delayed under Section 234E.
- Is it possible to file ITR after the deadline has passed?
The late filing fee and reduced interest can still be filed before the end of Assessment Year for the concerned financial year, regardless if you fail to submit the return on a scheduled date.
- If I have paid excess tax, how will I be refunded?
If you file your income tax return, you can claim back the excess tax. It will be credited to your bank account via ‘ECS transfer’. It is essential that no mistakes are made when considering bank details such as ‘account number’, ‘IFSC code’ in the ITR form.
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