INCOME TAX CALCULATION 2020-21
Income tax is a direct tax that a government levies on the income of its citizens. The Income Tax Act, 1961, mandates that the central government collect this tax. The government can change the income slabs and tax rates every year in its Union Budget.
Income does not only mean money earned in the form of salary. It also includes income from house property, profits from business, gains from profession (such as bonus), capital gains income, and 'income from other sources'. The government also often provides certain leeway such that various deductions are made from an individual's income before the tax to be levied is calculated.
Income Tax Returns
Income Tax Returns (ITR) form are the basis of calculating a person's income tax. It is a statement showing the status of a person, all their sources of revenue, deductions and, lastly, the tax payable or tax refund, if any.
Income Tax slabs
What income tax rate a person pays depends on the slab they fall in. The government has categorised incomes into slabs like — up to Rs 250,000, Rs 250,000-Rs 5,00,000, Rs 5,00,000-Rs 1 million, and more than Rs 1 million. The rates on different slabs might be different based on age groups.
Standard deduction
Tax on some components of income can be waived by the government. These tax reliefs are known as standard deductions.
INCOME SLAB AND TAX RATES FOR F.Y. 2020-21/A.Y 2021-22
Income Tax Rate & Slab for Individuals & HUF:
Individual (Resident or Resident but not Ordinarily Resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year & for HUF:
Taxable income Tax Rate
(Existing Scheme) Tax Rate
(New Scheme)
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 5% 5%
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Above Rs. 15,00,000 30% 30%
Resident or Resident but not Ordinarily Resident senior citizen, i.e., every individual, being a resident or Resident but not Ordinarily Resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:
Taxable income Tax Rate
(Existing Scheme) Tax Rate
(New Scheme)
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 3,00,000 Nil 5%
Rs. 3,00,001 to Rs. 5,00,000 5% 5%
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Above Rs. 15,00,000 30% 30%
Resident or Resident but not Ordinarily Resident super senior citizen, i.e., every individual, being a resident or Resident but not Ordinarily Resident in India, who is of the age of 80 years or more at any time during the previous year:
Taxable income Tax Rate
(Existing Scheme) Tax Rate
(New Scheme)
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 5,00,000 Nil 5%
Rs. 5,00,001 to Rs. 7,50,000 20% 10%
Rs. 7,50,001 to Rs. 10,00,000 20% 15%
Rs. 10,00,001 to Rs. 12,50,000 30% 20%
Rs. 12,50,001 to Rs. 15,00,000 30% 25%
Above Rs. 15,00,000 30% 30%
Surcharge:
a) 10% of Income tax where total income exceeds Rs.50 lakh
b) 15% of Income tax where total income exceeds Rs.1 crore
c) 25% of Income tax where total income exceeds Rs.2 crore
d) 37% of Income tax where total income exceeds Rs.5 crore
Note: Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).
Education cess: 4% of income tax plus surcharge
Note:A resident or Resident but not Ordinarily Resident individual is entitled to rebate under section 87A if his total income does not exceed Rs. 5, 00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less. rebate under section 87A is available in both scheme I.e. existing scheme as well as new scheme.
To know about this optional New Scheme which is optional for individual and HUF Click here
2.Income Tax Rates for AOP/BOI/Any other Artificial Juridical Person:
Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
Rs. 2,50,001 to Rs. 5,00,000 5%
Rs. 5,00,001 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
Surcharge:
a) 10% of Income tax where total income exceeds Rs.50 lakh
b) 15% of Income tax where total income exceeds Rs.1 crore
c) 25% of Income tax where total income exceeds Rs.2 crore
d) 37% of Income tax where total income exceeds Rs.5 crore
Note: Enhanced Surcharge rate (25% or 37%) is not applicable in case of specified incomes I.e. short-term capital gain u/s 111A, long-term capital gain u/s 112A & short-term or long-term capital gain u/s 115AD(1)(b).
Education cess: 4% of tax plus surcharge
Tax Rate For Partnership Firm:
A partnership firm (including LLP) is taxable at 30%.
Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore
Education cess: 4% of Income tax plus surcharge
Income Tax Slab Rate for Local Authority:
A local authority is Income taxable at 30%.
Surcharge: 12% of Income tax where total income exceeds Rs. 1 crore
Education cess: 4% of tax plus surcharge
Tax Slab Rate for Domestic Company:
A domestic company is taxable at 30%. However, the tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year.
Particulars Tax Rate(%)
If turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year 2018-19 25%
If company opted section 115BA (Note 1) 25%
If company opted for section 115BAA (Note 2) 22%
If company opted for section 115BAB (Note 3) 15%
Any other domestic company 30%
Note 1: Section 115BA - A domestic company which is registered on or after March 1, 2016 and engaged in the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it and also It is not claiming any deduction u/s 10AA, 32AC, 32AD, 33AB, 33ABA, 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB), 35AC, 35AD, 35CCC, 35CCD, section 80H to 80TT (Other than 80JJAA) or additional depreciation, can opt section 115BA on or before the due date of return by filing Form 10-IB online. Company cannot claim any brought forwarded losses (if such loss is related to the deductions specified in above point).
Note 2: Section 115BAA - Total income of a company is taxable at the rate of 22% (from A.Y 2020-21), if the following conditions are satisfied:
- Company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA).
- Company is not claiming any brought forwarded losses (if such loss is related to the deductions specified in above point).
- Provisions of MAT is not applicable on such company after exercising of option. company cannot claim the MAT credit (if any available at the time of exercising of section 115BAA).
Note 3: Section 115BAB - Total income of a company is taxable at the rate of 15% (from A.Y 2020-21), if the following conditions are satisfied:
- Company (not covered in section 115BA and 115BAA) is registered on or after October 1, 2019 and commenced manufacturing on or before 31st March, 2023.
- Company is not formed by splitting up or reconstruction of a business already in existence.
- Company does not use any machinery or plant previously used for any purpose.
- Company does not use any building previously used as a hotel or a convention center, as the case may be.
- Company is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to (or distribution of) such article or thing manufactured or produced by it. Business of manufacture or production shall not includes business of -
Development of computer software;
Mining ;
Conversion of marble blocks or similar items into slabs;
Bottling of gas into cylinder;
Printing of books or production of cinematographic film; or
Any other notified by Central Govt.
- Company is not claiming any deduction u/s 10AA or 32(1)(iia) or 32AD or 33AB or 33ABA or 35(1)(ii)/(iia)/(iii)/35(2AA)/(2AB) or 35AD or 35CCC or 35CCD or section 80H to 80TT (Other than 80JJAA and 80M).
- Company is not claiming any brought forwarded losses (if such loss is related to the deductions specified in above point).
- Provisions of MAT is not applicable on such company after exercising of option. company cannot claim the MAT credit (if any available at the time of exercising of section 115BAA).
Surcharge:
a) 7% of Income tax where total income exceeds Rs.1 crore
b) 12% of Income tax where total income exceeds Rs.10 crore
c) 10% of income tax where domestic company opted for section 115BAA and 115BAB
Education cess: 4% of Income tax plus surcharge
Tax Rates for Foreign Company:
A foreign company is taxable at 40%
Surcharge:
a) 2% of Income tax where total income exceeds Rs. 1 crore
b) 5% of Income tax where total income exceeds Rs. 10 crore
Education cess: 4% of Income tax plus surcharge
Income Tax Slab for Co-operative Society:
Taxable income Tax Rate
(Existing Scheme) Tax Rate
(New Scheme)
Up to Rs. 10,000 10%
Rs. 10,001 to Rs. 20,000 20% 22%
Above Rs. 20,000 30%
Surcharge:
a) 12% of Income tax where total income exceeds Rs. 1 crore
b) In case of Concessional scheme, surcharge rate is 10%
Education cess: 4% of Income tax plus surcharge
To know about this optional New Scheme which is optional for Co-operative society Click here
Disclaimer: This information has been taken from https://www.incometaxindia.gov.in/news/finance-act-2020.pdf. Tax laws are subject to amendments made thereto from time to time. Please consult a professional tax advisor before acting on the above.
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