1. Rebate under Section 87A changed from Rs 2,500 to Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs (from Rs 3.5 Lakhs)
2. Standard Deduction raised for Salaried & Pensioners from Rs 40,000 to Rs 50,000
3. Increased Tax for super-rich: Surcharge increased to 25% for income between 2 to 5 crore & to 37% for income beyond Rs 5 crores
4. Additional Tax Deduction of Rs 1.5 lakhs u/s 80EEA on home loans on purchase of affordable home
5. Additional Tax Deduction of Rs 1.5 lakhs u/s 80EEB on Auto loans on purchase of Electric vehicles
6. No Tax on Notional Rental Income from Second House
7. Capital gains exemption on reinvestment in two house properties: Tax payers can now buy two houses on sale of 1 house if the capital gains are less than Rs 2 crore. This benefit can be availed only once in lifetime
8. TDS threshold increased from Rs 10,000 to Rs 40,000 on Bank Interest Income
Income Tax Slab Rate for AY 2020-21
- INDIVIDUAL
1.1 Individual (resident or non-resident), who is of the age of less than 60 years 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% |
1.2 Resident senior citizen, i.e., every individual, being a 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:
| 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% |
1.3 Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more 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% |
Plus: –
Surcharge: – 10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000.
Health and Education cess: – 4% of income tax and surcharge.
Note: – A resident individual is entitled for 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.
2. Income Tax Rate for Partnership Firm:
A partnership firm (including LLP) is taxable at 30%.
Plus:
Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
Health and Education cess: 4% of income tax plus surcharge.
3. Tax Rate for Companies:
Tax rates 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% |
Tax rates for foreign companies:
The tax rate for foreign company is 40%.
Plus: –
Surcharge:-
| Company | Net income is between Rs. 1Cr. – 10 Cr. | Net income exceeds Rs. 10Cr. |
| Domestic company | 7% | 12% |
| Foreign company | 2% | 5% |
Health and Education cess: 4% of income tax plus surcharge.
4. Income Tax Rates 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% |
Plus: –
Surcharge: – 10% of income tax where total income exceeds Rs. 50,00,000.
15% of income tax where total income exceeds Rs. 1,00,00,000.
Health and Education cess: – 4% of income tax and surcharge.
5. Income Tax Slab Rate for Co-operative 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% |
Plus:
Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
Health and Education cess: 4% of income tax plus surcharge.
6. Income Tax Slab Rate for Local Authority:
A local authority is taxable at 30%.
Plus:
Surcharge:- 12% of tax where total income exceeds Rs. 1 crore.
Health and Education cess: 4% of income tax plus surcharge.
CONSIDERING REBATE , LETS RECALCULATE THE MAXIMUM TOTAL INCOME AT WHICH , THERE IS NO TAX
| CATEGORY | <60 | <80 | >80 |
| B]| ASIC EXEMPTION LIMIT | ₹ 2,50,000 | ₹ 3,00,000 | ₹ 5,00,000 |
| RECALCULATING THE MAXIMUM TOTAL INCOME AT WHICH , THERE IS NO TAX | |||
| TOTAL INCOME AFTER DEDUCTIONS | ₹ 5,00,000 | ₹ 5,00,000 | ₹ 5,00,000 |
| TAX ON TOTAL INCOME | ₹ 12,500 | ₹ 10,000 | ₹ 0 |
| LESS: REBATE 87A | -₹ 12,500 | -₹ 10,000 | ₹ 0 |
| ACTUAL TAX LIABILITY | ₹ 0 | ₹ 0 | ₹ 0 |
| SO, EFFECTIVE TAX EXEMPTION LIMIT AT WHICH , THERE IS NO TAX | ₹ 5,00,000 | ₹ 5,00,000 | ₹ 5,00,000 |
LET’S FIND BREAK-EVEN INCOME, WHERE YOU HAVE NO TAX TO PAY ASSUMPTION – THESE CALCULATIONS ARE DONE KEEPING IN MIND SALARIED PERSONS
FINANCIAL YEAR 2019-2020 / ASSESSMENT YEAR 2020-2021
| <60 | <80 | >80 | |
| GROSS INCOME | 9,35,000 | 10,00,000 | 10,00,000 |
| LESS: DEDUCTIONS FROM INCOME | |||
| STANDARD DEDUCTION | 50,000 | 50,000 | 50,000 |
| SECTION 24 | 2,00,000 | 2,00,000 | 2,00,000 |
| SECTION 80C | 1,50,000 | 1,50,000 | 1,50,000 |
| SECTION 80TTA | 10,000 | ||
| SECTION 80TTB | 50,000 | 50,000 | |
| SECTION 80D | 25,000 | 50,000 | 50,000 |
| NET INCOME WHERE THERE WONT BE ANY TAX- TOTAL INCOME | 5,00,000 | 5,00,000 | 5,00,000 |
| TAX ON ABOVE INCOME | 12,500 | 10,000 | – |
| REBATE AS PER 87A | -12,500 | -10,000 | – |
| ACTUAL TAX LIABILITY | 0 | 0 | 0 |
B. POPULAR DEDUCTIONS UNDER INCOME TAX AVAILABLE TO ALL INDIVIDUALS
PLAN MAXIMUM DEDUCTIONS / INVESTMENTS BEFORE MARCH 2020 TO MINIMIZE YOUR TAXABLE INCOME & ALSO TAX
| 24 | 24 => Home loan interest | ₹ 2,00,000 |
| 80C | 80C => LIC / PPF / KVP / EPF / SSY / NSC / HOME LOAN PRINCIPAL / SCHOOL FEES/ ELSS/STAMP DUTY | ₹ 1,50,000 |
| 80CCD(1B) | 80CCD(1B) => NPS | ₹ 50,000 |
| 80DD | 80DD => Exp of disabled dependent | 75000/125000 |
| 80U | 80U => own Physical Disability | 75000/125000 |
| 80TTA | 80TTA = > Interest on Savings Account. Only available to Persons other than Senior citizen / Very senior citizen | ₹ 10,000 |
| 80TTB | 80TTB = > Interest on Savings Account. and Interest on deposits with Post Offices, Banks, Co-operative bank. Only available to senior citizen & Very senior Citizen | ₹ 50,000 |
| 80G | 80G => Donation ( Only if paid by cheque/ Bank Mode ) | 50% of Donation or 10% Total income. W.E.IS HIGHER |
| 80GG | 80GG => deduction for the rent paid (Available to all Individuals except to those who gets HRA from Employment). Eligibility will be least amount of the following :- | |
| 1) Rent paid minus 10 percent the adjusted total income. | ||
| 2) Rs 5,000 per month | ||
| 3) 25 percent of the adjusted total income | ||
| 80D | 80D => Mediclaim For self, spouse and dependent children ( Only if paid by cheque/ Bank Mode ) | 25000/50000 |
| Up to ₹ 25,000 [₹ 50,000 if specified person is a senior citizen or very senior citizen | ||
| 80D | 80D => Mediclaim For Parents ( Only if paid by cheque/ Bank Mode ) | 25000/50000 |
| Upto Rs. 25,000 shall be allowed [Rs. 50,000 if parent is a Senior citizen / Very Senior Citizen | ||
| Note for 80D | Within overall limit, deduction shall also be allowed up to ₹ 50,000 towards medical expenditure incurred on the health of specified person provided such person is a very senior citizen and no amount has been paid to effect or to keep in force an insurance on the health of such person. |
C. ALLOWANCES AND DEDUCTIONS ONLY ALLOWED TO SALARIED INDIVIDUALS
| 1 | HRA EXEMPTION | A salaried individual having a rented accommodation can get the benefit of HRA (House Rent Allowance). However, if you aren’t living in any rented accommodation and still continue to receive HRA, it will be taxable. HRA exemption available to Lower of following three |
| a.Total HRA received from your employer | ||
| b. Rent paid less 10 percent of (Basic salary +DA) | ||
| c. 40 percent of salary (Basic+DA) for non-metros and 50 percent of salary (Basic+DA) for metros | ||
| 2 | STANDARD DEDUCTION | Rs. 50,000 Standard deduction for Assessee who has Salary/ Pension Income |