Finance Minister Nirmala Sitharaman unleashed the union budget for the financial year 2020-2021 which revolved around three core ideas viz. economic development, aspirational India and caring society. The finance budget 2020 also had new income tax rates which are optional and the individual taxpayer can opt for the one which is most suitable and convenient for them.
The new income tax slabs have lower interest rates. The reduced income tax rate will be a great boon for pensioners, new job starters, entrepreneurs and taxpayers who are unable to avail the advantages of exemptions and deductions as per the present tax regime. The new slabs will be a great help for the people who wish to save some money which would earlier have gone as tax. The budget 2020 proposes the abolition of dividend tax of the companies.
Here is detailed chalk out of the new income tax rates for FY 2020-2021.
FOR INDIVIDUALS
1. For individuals (resident or non-resident) less than 60 years of age as on the last day of the relevant previous year.
| Net income range | Income-Tax rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000- Rs. 5,00,000 | 5% |
| Rs. 5,00,000- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
2. For resident senior citizen between the age group of 60-80 years at any time during the previous year.
| Net income range | Income-Tax rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,000 – Rs. 5,00,000 | 5% |
| Rs. 5,00,000- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
3. For resident super senior citizen who is over 80 years of age at any time during the previous year.
| Net income range | Income-Tax rate |
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,000- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Additionally, a surcharge of 10% and 15% of income tax will be charged when total income is more than Rs. 50,00,000 and Rs. 1,00,00,000 respectively. Plus health and education cess of 4% of income tax and a surcharge will also be charged.
Section 87A entitles the resident individual for a rebate if their income is not more than Rs.5,00,000. The rebate shall either be Rs. 12,500 or 100% of income tax, whichever is less.
FOR PARTNERSHIP FIRMS
Partnership firms (LLP also)are taxable at 30%. Additionally, they are liable to pay a surcharge of 12% of tax when the total income goes over Rs. 1 crore. Along with that health and education cess pertaining to 4% of income tax plus surcharge will also be charged.
FOR COMPANIES
Income tax slab for Domestic companies
| Particulars | Tax rates |
| Total turnover or gross receipts during the previous year 2017 -18 doesn’t exceed Rs. 250 Crore | 25% |
| Other domestic companies | 30% |
Domestic companies have to havea surcharge of 7% of their net income is between Rs.1 crore to 10 crore and 12% if the net income exceeds Rs. 10 crore.
The income tax rate for Foreign companies is equal to 40%. Additionally, they have to pay a surcharge of 2% of their net income is between Rs.1 crore to 10 crores and 5% if the net income exceeds Rs. 10 crores.
Plus, health and education cess equal to 4% of income tax plus a surcharge.
For HUF/AOP/BOI/Any other Artificial Juridical Person
| Net income range | Income-Tax rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,000- Rs. 5,00,000 | 5% |
| Rs. 5,00,000- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Additionally, a surcharge of 10% and 15% of income tax will be charged when total income is more than Rs. 50,00,000 and Rs. 1,00,00,000 respectively. Plus health and education cess of 4% of income tax and a surcharge will also be charged.
FOR COOPERATIVE SOCIETY
| Net income range | Income-Tax rate |
| Up to Rs. 10,000 | 10% |
| Rs. 10,000 to Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
Additionally, a surcharge of 12% of the income tax will be charged when total income is more than Rs. 1,00,00,000. Plus health and education cess of 4% of income tax and a surcharge will also be charged.
FOR LOCAL AUTHORITY
The local authority is taxable at 30%. Additionally, a surcharge of 12% of the income tax will be charged when total income is more than Rs. 1,00,00,000. Plus health and education cess of 4% of income tax and a surcharge will also be charged.
The information mentioned above is gathered by LoansJagat which is the leading loan provider in the Fintech industry. For more details and exact notifications, one should visit the ministry portals.
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