The Income Tax rates in India are different for different categories and status of tax payers. The Income Tax rates for Individuals, HUFs, AOP, BOI and Co-operatives are progressive in nature, where a lower tax rate is imposed on low-income earners compared to those with higher income, making it based on the taxpayer's ability to pay. That means it takes a larger percentage from high-income earners than it does from low-income earners. Individuals, HUFs, AOP, BOI and Co-operatives are taxed as per different slab rates ( varies from Nil to 30% ). However, Firms and Companies are taxed on fixed rate basis, except for certain specified incomes.
When income increases a specified limit(s), Surcharge on Income Tax is charged at specified Surcharge rate on Income Tax. The specified limit(s) for charging Surcharge and Surcharge rates are different for different categories of tax payers.
Cess (Health and Education / Education) is charged at specified rate on (Income Tax + Surcharge).
From Assessment Year 2021-22, Individuals and HUFs (including Resident Individual below 60 years of age, Senior Citizen, Very Senior Citizen, Non-resident Individual, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI) and Artificial Judicial Person (AJP) ) will have option for computation of income and income tax liability as per provisions of Section 115BAC. If they opt for Section 115BAC, New Tax Rates (New Regime rates) will be applicable and if they do not opt for Section 115BAC, Existing Tax Rates (Existing Regime) will be applicable.
If an Individual / HUF opts for Section 115BAC, no exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32), of section 10 or section 10AA or section 16 or clause (b) of section 24 (in respect of the property referred to in sub-section (2) of section 23) or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA), of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any of the provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA from income will be available and his / her income tax liability for AY 2021-22 will be calculated accordingly. For more details on Section 115BAC, please refer to the Finance Act No. 12 of 2020
Income Slab | Tax Rate |
---|---|
Upto ₹ 2,50,000/- | NIL |
Above ₹ 2,50,000/- to ₹ 5,00,000/- | 5% of (taxable income - 2,50,000). In case, taxable income is upto Rs. 5 lacs, the tax payable shall be nil on account of Tax Relief u/s 87A View
In case taxable income is upto ₹ 5,00,000/-, income tax chargeable or ₹ 12,500/-, whichever is less.
|
Above ₹ 5,00,000/- to ₹ 7,50,000/- | ₹ 12,500/- + 10% of (total income - 5,00,000) |
Above ₹ 7,50,000/- to ₹ 10,00,000/- | ₹ 37,500/- + 15% of (total income - 7,50,000). |
Above ₹ 10,00,000/- to ₹ 12,50,000/- | ₹ 75,000/- + 20% of (total income - 10,00,000). |
Above ₹ 12,50,000/- to ₹ 15,00,000/- | ₹ 125,000/- + 25% of (total income - 12,50,000). |
Above ₹ 15,00,000/- | ₹ 187,500/- + 30% of (total income - 15,00,000). |
Surcharge ( subject to Marginal Relief ) | 10% of Income Tax, in case taxable income is above ₹ 50 lacs. 15% of Income Tax, in case taxable income is above ₹ 1 crore. 25% of Income Tax, in case taxable income is above ₹ 2 crore. 37% of Income Tax, in case taxable income is above ₹ 5 crore. |
Health & Education Cess | 4% of (Income Tax + Surcharge). |
For more details on Section 115BAC, please refer to the Finance Act No. 12 of 2020 |
Income Slab | Tax Rate |
---|---|
Upto ₹ 2,50,000/- | NIL |
Above ₹ 2,50,000/- to ₹ 5,00,000/- | 5% of (taxable income - 2,50,000). |
Above ₹ 5,00,000/- to ₹ 10,00,000/- | ₹ 12,500/- + 20% of (taxable income - 5,00,000). |
Above ₹ 10,00,000/- | ₹ 112,500/- + 30% (taxable income - 10,00,000) |
Surcharge ( subject to Marginal Relief ) | 10% of Income Tax, in case taxable income is above ₹ 50 lacs. 15% of Income Tax, in case taxable income is above ₹ 1 crore. 25% of Income Tax, in case taxable income is above ₹ 2 crore. 37% of Income Tax, in case taxable income is above ₹ 5 crore. |
Health & Education Cess | 4% of (Income Tax + Surcharge). |
Income Tax | 22% of total income. |
Surcharge | 10% of Income Tax |
Health & Education Cess | 4% of (Income Tax + Surcharge). |
Taxable Income Slab | Income Tax |
Upto ₹ 10,000/-. | 10% of the income. |
₹ 10,000/- to ₹ 20,000/-. | ₹ 1,000/- + 20% of (taxable income - 10,000) |
Above ₹ 20,000/- | ₹ 3,000/- + 30% of (taxable income - 20,000) |
Surcharge ( subject to Marginal Relief ) | 12% of the Income Tax, in case taxable income is above ₹ 1 crore. |
Health & Education Cess | 4% of (Income Tax + Surcharge). |
Income Tax | 30% of taxable income. |
Surcharge ( subject to Marginal Relief ) | 12% of the Income Tax, in case taxable income is above ₹ 1 crore. |
Health & Education Cess | 4% of (Income Tax + Surcharge). |
Nature of Income | Tax Rate |
Royalty received from Government or an Indian concern in pursuance of an agreement made with the in Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government | 50% |
Any other income | 40% |
Surcharge ( subject to Marginal Relief ) | 2% of income tax, in case taxable income is above ₹ 1 crore. 5% of income tax, in case taxable income is above ₹ 10 crores. |
Health & Education Cess | 4% of (Income Tax + Surcharge). |
In case taxable income exceeds ₹ 50 lacs / ₹ 1 crore Surcharge is payable on income tax at applicable rates. If increase in 'Income Tax + Surcharge' is more than the increase income over ₹ 50 lacs / ₹ 1 crore, the 'Surcharge' is reduced by such amount so that the 'Income Tax + Surcharge' become equal to increase in 'Total Taxable Income' over Rs. 50 lacs / 1 Crore respectively. The amount so reduced from 'Surcharge' is 'Marginal Relief on Surcharge'.
Example 1
In case of an individual resident (< 60 years) / HUF / NRI having taxable income of ₹ 50,01,000/- (Not opting computation of Income under proposed Section 115BAC)
1 | Income Tax on income of ₹ 50,01,000/- | 13,12,800 |
2 | Surcharge on income of ₹ 50,01,000/- | 1,31,280 |
3 | Income Tax + Surcharge on income of ₹ 50,01,000/- (1 + 2) | 14,44,080 |
4 | Income Tax on income of ₹ 50 lacs | 13,12,500 |
5 | Surcharge on income of ₹ 50 lacs | 0 |
6 | Income Tax + Surcharge on income of ₹ 50 lacs (4 + 5) | 13,12,500 |
7 | Increase income over ₹ 50 lacs | 1000 |
8 | Income Tax + Surcharge on income of ₹ 50 lacs + Increase income over ₹ 50 lacs | 13,13,500 |
9 | Income Tax and Surcharge payable on income of ₹ 50,01,000/- (Lower of 3 and 8 ) | 13,13,500 |
10 | Marginal Relief on Surcharge [If (3 - 8) is more than '0' (3 - 8), else '0' ] | 1,30,580 |
Example 2
In case of an individual resident (< 60 years) / HUF / NRI having taxable income of ₹ 60 lacs (Not opting computation of Income under proposed Section 115BAC)
1 | Income Tax on income of of ₹ 60 lacs | 16,12,500 |
2 | Surcharge on income of of ₹ 60 lacs | 1,61,250 |
3 | Income Tax + Surcharge on income of of ₹ 60 lacs (1 + 1) | 17,73,750 |
4 | Income Tax on income of ₹ 50 lacs | 13,12,500 |
5 | Surcharge on income of ₹ 50 lacs | 0 |
6 | Income Tax + Surcharge on income of ₹ 50 lacs (4 + 5) | 13,12,500 |
7 | Increase income over ₹ 50 lacs | 10,00,000 |
8 | Income Tax + Surcharge on income of ₹ 50 lacs + Increase income over ₹ 50 lacs | 23,13,500 |
9 | Income Tax and Surcharge payable on income of of ₹ 60 lacs ( Lower of 3 and 8 ) | 17,73,750 |
10 | Marginal Relief on Surcharge [If (3 - 8) is more than '0' (3 - 8), else '0' ] | 0 |
Example 3
In case of an individual resident (< 60 years) / HUF / NRI having taxable income of ₹ 1,00,01,000/- (Not opting computation of Income under proposed Section 115BAC)
1 | Income Tax on income of ₹ 1,00,01,000/- | 28,12,800 |
2 | Surcharge on income of ₹ 1,00,01,000/- | 4,21,920 |
3 | Income Tax + Surcharge on income of ₹ 1,00,01,000/- (1 + 2) | 32,34,720 |
4 | Income Tax on income of ₹ 1 crore | 28,12,500 |
5 | Surcharge on income of ₹ 1 crore | 2,81,500 |
6 | Income Tax + Surcharge on income of ₹ 1 crore (4 + 5) | 30,93,750 |
7 | Increase income over ₹ 1 crore | 1000 |
8 | Income Tax + Surcharge on income of ₹ 1 crore + Increase income over ₹ 1 crore | 30,94,750 |
9 | Income Tax and Surcharge payable on income of ₹ 1,00,01,000/- (Lower of 3 and 8 ) | 30,94,750 |
10 | Marginal Relief on Surcharge [If (3 - 8) is more than '0' (3 - 8), else '0' ] | 1,39,970 |