The Union Budget for the year 2021 was presented by the Finance Minister Nirmala Sitharaman on the 1st of February, 2021. The new income tax rate will be applicable from FY 2020-21 corresponding to Assessment Year 2021-22. The Union Budget will be presented on the 1st of February, 2021.
Furthermore, given the budget is just a couple of days away now, the expectations surrounding it are huge. Additionally, the FM has also launched the “Union Budget Mobile App” to access the budget documents by the Members of Parliament (MPs) and the general public.
Income Tax Slab Rates for FY 2021-22 AY (2022-23)
Income tax slab rates for individuals (for resident or non-resident below the age of 60 years)
| Existing Regime | New Tax Regime u/s 115BAC | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to INR 2,50,000 | NIL | Up to INR 2,50,000 | NIL |
| INR 2,50,001 to INR 5,00,000 | 5% above INR 2,50,000 | INR 2,50,001 to INR 5,00,000 | 5% above INR 2,50,000 |
| INR 5,00,001 to INR 10,00,000 | INR 12,500 + 20% above INR 5,00,000 | INR 5,00,001 to INR 7,50,000 | INR 12,500 + 10% above INR 5,00,000 |
| Above INR 10,00,000 | INR 1,12,500 + 30% above INR 10,00,000 | INR 7,50,001 to INR 10,00,000 | INR 37,000 + 15% above INR 7,50,000 |
| INR 10,00,001 to INR 12,50,000 | INR 75,000 + 20% above INR 10,00,000 | ||
| INR 12,50,001 to INR 15,00,000 | INR 1,25,000 + 25% above INR 12,50,000 | ||
| Above INR 15,00,000 | INR 1,87,000 + 30% above INR 15,00,000 | ||
Income Tax slab rates for senior citizens (for individuals who are of the age of 60 years or more but less than the age of 80 years)
| Existing Regime | New Tax Regime u/s 115BAC | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to INR 3,00,000 | NIL | Up to INR 2,50,000 | Nil |
| INR 3,00,001 to INR 5,00,000 | 5% above INR 3,00,000 | INR 2,50,001 to INR 5,00,000 | 5% above INR 2,50,000 |
| INR 5,00,001 to INR 10,00,000 | INR 10,000 + 20% above INR 5,00,000 | INR 5,00,001 to INR 7,50,000 | INR 12,500 + 10% above INR 5,00,000 |
| Above INR 10,00,000 | INR 1,10,000 + 30% above INR 10,00,000 | INR 7,50,001 to INR 10,00,000 | INR 37,500 + 15% above INR 7,50,000 |
| INR 10,00,001 to INR 12,50,000 | INR 75,000 + 20% above INR 10,00,000 | ||
| INR 12,50,001 to INR 15,00,000 | INR 1,25,000 + 25% above INR 12,50,000 | ||
| Above INR 15,00,000 | INR 1,87,500 + 30% above INR 15,00,000 | ||
Income tax slab rates for Super Senior citizens (for individuals of the age of 80 years and above)
| Existing Regime | New Tax Regime u/s 115BAC | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to INR 5,00,000 | NIL | Up to INR 2,50,000 | Nil |
| INR 5,00,001 to INR 10,00,000 | 20% above INR 5,00,000 | INR 2,50,001 to INR 5,00,000 | 5% above INR 2,50,000 |
| Above INR 10,00,000 | INR 1,00,000 + 30% above INR 10,00,000 | INR 5,00,001 to INR 7,50,000 | INR 12,500 + 10% above INR 5,00,000 |
| INR 7,50,001 to INR 10,00,000 | INR 37,500 + 15% above INR 7,50,000 | ||
| INR 10,00,001 to INR 12,50,000 | INR 75,000 + 20% above INR 10,00,000 | ||
| INR 12,50,001 to INR 15,00,000 | INR 1,25,000 + 25% above INR 12,50,000 | ||
| Above INR 15,00,000 | INR 1,87,500 + 30% above INR 15,00,000 | ||
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated in the above 3 categories.
Surcharge: 10% of Income Tax when total income exceeds INR 50,00,000 and 15% of income tax when total income exceeds INR 1,00,00,000.
Rebate: An individual (resident) is entitled to rebate under section 87A if his total income does not exceed INR 5,00,000. The amount of rebate shall be 100% of income-tax or INR 12,500, whichever is less.
Income Tax slab rates for partnership firms
A partnership firm that includes LLP is taxable at 30%.
Surcharge: A surcharge of 12% is payable if total income exceeds INR 1 Cr.
Cess: An additional 4% surcharge will be taxable for Health and Education Cess.
Income Tax Rates for Companies
| Particulars | Tax Rates |
| Existing Companies | 22% |
| Newly Incorporated Companies (Manufacturing) | 15% |
The tax rate for foreign companies is 40%.
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount.
Surcharge: A surcharge of 12% is payable if total income exceeds INR 1 Cr.
Income Tax slab rates for AOP/BOI/Any other artificial juridical person
| Net Income Range | Income Tax Rates |
| Up to INR 2,50,000 | NIL |
| INR 2,50,000 to INR 5,00,000 | 5% |
| INR 5,00,000 to INR 10,00,000 | 20% |
| Above INR 10,00,000 | 30% |
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated above.
Surcharge: 10% of Income Tax when total income exceeds INR 50,00,000 and 15% of income tax when total income exceeds INR 1,00,00,000.
Income Tax slab rates for co-operative society
| Net Income Range | Income Tax Rate |
| Up to INR 10,000 | 10% |
| INR 10,000 to INR 20,000 | 20% |
| Above INR 20,000 | 30% |
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated above.
Surcharge: 12% of tax is applicable when total income exceeds INR 1 Cr.
Income Tax rates for local authority
The local authority is taxable at 30%.
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated above.
Surcharge: 12% of Income Tax when total income exceeds INR 1 Cr.
What is Surcharge?
A surcharge is an additional charge on Income Tax. It was introduced with a principal that the rich should contribute more by way of tax, as compared to the poor.
Earlier the surcharge was applicable only on corporate assessments. In Budget 2013, a 10% surcharge was introduced on rich individuals having income greater than INR 1 crore. This rate was subsequently increased to 12% in budget 2015 and further to 15% in budget 2016.
How to Calculate Surcharge?
A Surcharge is calculated on total income tax and not on total income. Criteria for income above INR 1 crore is only to check the applicability of Surcharge. Also, note that if a surcharge is applicable then education cess will be calculated on the total amount of income tax plus a surcharge. Let’s look at a scenario to understand.
| Particulars | Taxpayer A | Taxpayer B |
|---|---|---|
| Total taxable income | 97,00,000 | 1,01,00,000 |
| Total tax payable as per Income Tax Slab Rate | 27,35,000 | 37,25,000 |
| Applicability of Surcharge | No | Yes |
| Surcharge @ 15% | NA | 5,58,750 |
| Total tax plus Surcharge | 27,35,000 | 42,83,750 |
| Education Cess @ 2% and higher education cess @ 1% | 82,050 | 1,28,510 |
| Total tax payable | 28,17,050 | 44,12,260 |
Surcharge Rates
The given tax rate slabs are applicable to any individual, HUF or artificial judicial person.
| Nature of Income | Up to INR 50L | More than 50L and up to 1 Cr. | More than 1 Cr. and up to 2 Cr. | More than 2 Cr. and up to 5 Cr. | More than 5 Cr. and up to 5 Cr. | More than 5 Cr. and up to 10 Cr. | More than 10 Cr. |
| Short term capital gain covered under section 111A | NIL | 10% | 15% | 15% | 15% | 15% | 15% |
| Long term capital gain covered under section 112A | NIL | 10% | 15% | 15% | 15% | 15% | 15% |
| Any other Income | NIL | 10% | 15% | 25% | 15% | 37% | 37% |
Income Tax Slab Rates FY 2020-21 (AY 2021-22)
Income tax slab rates for individuals (for resident or non-resident below the age of 60 years):
| Income Range | Current Income Tax Rates | New Income Tax Rates |
| Up to INR 2,50,000 | NIL | NIL |
| INR 2,50,001 to INR 5,00,000 | 5% | 5% |
| INR 5,00,001 to INR 7,50,000 | 20% | 10% |
| INR 7,50,001 to INR 10,00,000 | 20% | 15% |
| INR 10,00,001 to INR 12,50,000 | 30% | 20% |
| INR 12,50,001 to INR 15,00,000 | 30% | 25% |
| Above INR 15,00,000 | 30% | 30% |
Income Tax slab rates for senior citizens (for individuals who are of the age of 60 years or more but less than the age of 80 years):
| Existing Tax Regime | New Tax Regime u/s 115BAC | ||
| Income Range | Tax Slab Rates | Income Range | Tax Slab Rates |
| Up to INR 3,00,000 | NIL | Up to INR 2,50,000 | NIL |
| INR 3,00,001 to INR 5,00,000 | 5% | INR 2,50,001 to INR 5,00,000 | 5% |
| INR 5,00,001 to INR 10,00,000 | 20% | INR 5,00,001 to INR 7,50,000 | 10% |
| Above INR 10,00,000 | 30% | INR 7,50,001 to INR 10,00,000 | 15% |
| INR 10,00,001 to INR 12,50,000 | 20% | ||
| INR 12,50,001 to INR 15,00,000 | 25% | ||
| Above INR 15,00,000 | 30% | ||
Income tax slab rates for Super Senior citizens (for individuals of the age of 80 years and above):
| Income Range | Current Income Tax Rates |
| Up to INR 5,00,000 | NIL |
| INR 5,00,001 to INR 10,00,000 | 20% |
| Above INR 10,00,000 | 30% |
| Income Range | New Income Tax Rates |
| Up to INR 2,50,000 | NIL |
| INR 2,50,001 to INR 5,00,000 | 5% |
| INR 5,00,001 to INR 7,50,000 | 10% |
| INR 7,50,001 to INR 10,00,000 | 15% |
| INR 10,00,001 to INR 12,50,000 | 20% |
| INR 12,50,001 to INR 15,00,000 | 25% |
| Above INR 15,00,000 | 30% |
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated in the above 3 categories.
Surcharge: 10% of Income Tax when total income exceeds INR 50,00,000 and 15% of income tax when total income exceeds INR 1,00,00,000.
Rebate: An individual (resident) is entitled to rebate under section 87A if his total income does not exceed INR 5,00,000. The amount of rebate shall be 100% of income-tax or INR 12,500, whichever is less.
FAQs
It is the amount that is levied upon the tax payable and not on the income that is generated. In other words, it is a tax that is levied upon the general tax.
For example: if an individual has generated an income of INR 100 over which the tax payable is INR 30, then the surcharge would be 10% of INR 30.
1. Calculate your Gross Total Income (GTI)
2. Reduce the deductions under sections 80C to 80U
3. Calculate your Tax Payable as per Income Tax slabs
4. Deduct the amount of rebate allowed
The Financial Year is the year which begins on 1st April and ends on 31st March. It is the year in which income is earned by the taxpayer. The Assessment Year is a year immediately following the Financial Year. The taxpayer needs to file the Income Tax Return (ITR) not in the year in which he/she earns the income but after the end of that year i.e, in the assessment year.
Hey @TeamQuicko
Can I opt out of New Scheme once opted in???
If I want to opt for the New regime but had told my employer that I am choosing the existing one, can I select new tax regime while filing ITR??
Hey @riya_gupta
An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year.
However, individuals having business income are not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime.
Once they switch back, they will not be allowed to opt for new tax regime again.
Hey @TanyaChopra
If you have opted for old tax regime with your employer for TDS on salary, and plan to opt the new tax regime at the time of filing ITR, then you can do that by filling the new form i.e. 10-IE.
Can full-time traders claim expenses like Broker charges STT, GST + other expenses like computer buy for trading, internet connection bill etc under new tax slabs?
Apart from the tax-saving criteria, which tax slab is better for a first-time taxpayer?
Hey @HarishMehta
If you forget to fill the new form i.e. Form 10-IE, at the time of filing ITR, then you may be disallowed the tax rates available under the new tax regime. The tax department will calculate your income tax liability based on the existing/old tax regime.
Hey @SonalYadav
These budget changes will be applicable from FY 2020-21. From FY 2020-21 it will be up to the taxpayer to select the tax regime based on their Income and Investments situation.
Following are the pros of following a new tax regime:
Following are the cons of following a new tax regime:
Hope this helps!
Hey @HarshitShah
Yes, any individual taxpayer can opt for new tax slabs, there are no restrictions based on type of income earned by a taxpayer.
Under new tax slabs, you will be able to claim all the direct expenses related to your business activity while calculating your taxable income.
Hope this helps!
I have carry forward losses in the previous financial years, is it allowed to claim losses under the new tax regime?