WHAT DOES INCOME TAX SLAB MEAN?

Indian Central Government levies tax on individual taxpayers on the idea of a block system. Block system means completely different tax rates are prescribed for various ranges of financial gain. It means that the tax rates keep increasing with a rise within the financial gain of the taxpayer. This sort of taxation permits progressive and honest tax systems within the country. Such revenue enhancement slabs tend to bear an amendment throughout each budget. These block rates are completely different for various classes of taxpayers. Income tax has been classified into 3 classes of “individual“ taxpayers such as:

  • Individuals (aged but of sixty years) not excluding residents and non-residents
  • Resident Senior voters (60 to eighty years of age)
  • Resident Super senior voters (more than eighty years)

In this article tax consultant in Chennai– Phoenix tax discusses the revised income tax regime for the financial year 2021-2022 and prevailing tax rates.

REVISED INCOME TAX REGIME FOR FY 2021-2022:

By inserting a new section 115BAC, the income tax department has introduced a new tax regime in the 2020  budget. In this new regime, taxpayers have a choice to select either to pay tax at lower rates as per the new tax regime on the condition that they forgo sure permissible exemptions and deductions offered beneath tax, or to still pay taxes beneath the prevailing tax rates. The taxpayer will avail rebates and exemptions by staying within the previous regime and paying tax at the prevailing higher rate.

New tax regime block rates aren’t differentiated according to the age group. However, beneath the previous tax regime the fundamental financial gain threshold exempt from tax for the senior citizens (aged sixty to eighty years) and super senior voters (aged above eighty years) is Rs. three lakh and Rs. five lakh respectively.

However, beneath the new tax regime a person cannot claim up to seventy taxation deductions whereas calculative taxes. Hence, every body should create his/her own calculation as per previous and new tax regime and calculate that one is a helpful supported variety of investments created and returns attained on those investments.

TAX SLAB FOR NEW REGIME FY 2021-2022

INCOME CATEGORYTAX SLAB
Upto 2.5 lakhsNIL
Rs. 2.5 lakhs -Rs. 3 lakhs5% (tax rebate is available under sec 87)
Rs. 3 lakhs – Rs 5 lakhs5% (tax rebate is available under sec 87)
Rs. 5 lakhs – Rs. 7.5 lakhs10%
Rs. 7.5 lakhs – Rs. 10 lakhs15%
Rs. 10 lakhs – Rs. 12.50 lakhs20%
Rs. 12.50 lakhs – Rs. 15 lakhs25%
>Rs. 15 lakhs30%

POINTS TO PONDER:

  • Please note that the tax rates within the New tax regime is the same for all classes of people, i.e people & HUF upto sixty years, Senior voters higher than sixty years upto eighty years , and Super senior voters higher than eighty years. Thence no magnified basic exemption limit profit is going to be obtainable to senior and super senior voters within the New Tax regime.
  • Individuals with net assessable financial gain less than or equal to Rs. 5 lakhs are going to be eligible for tax rebate u/s 87A i.e liabilities are going to be zero for such individuals in each – New and old/existing tax regimes.
  • Basic exemption limit for NRIs is of Rs. 2.5 lakhs regardless of age.
  • Additional Health and Education cess at the rate of 4% will be supplementary to the tax liability in all cases. (increased from t3% since FY 18-19)
  • Surcharge applicable as per tax rates below all told classes mentioned above:
    • 10% of tax if total financial gain > Rs.50 lakh
    • 15% of tax if total financial gain > Rs.1 crore
    • 25% of tax if total financial gain > Rs.2 crore
    • 37% of tax if total financial gain > Rs.5 crore

SLAB FOR INDIVIDUALS BELOW AGE OF 60 AND HINDU UNDIVIDED FAMILY:

INCOME CATEGORYTAX SLAB
Upto 2.5 lakhsNIL
Rs. 2.5 lakh – Rs. 5 Lakhs5%
Rs 5 lakh – Rs 10 lakhs20%
> Rs 10 lakh30%

Remember:

Income tax exemption limit is up to Rs.2,50,000 for people , HUF below sixty years aged and NRIs for FY 2018-19

An additional 4% Health & education cess are going to be applicable on the tax quantity calculated as higher than.

Surcharge:

10% of tax, wherever total financial gain exceeds Rs.50 lakhs up to Rs.1 crore.

15% of tax, wherever the full financial gain exceeds Rs.1 crore.

INCOME TAX SLABS FOR INDIVIDUALS AGED 60-80 YEARS:

INCOME CATEGORYTAX SLAB
Upto 3 lakhsNIL
Rs. 3 lakh -Rs. 5 lakhs5%
Rs. 5  lakh – Rs. 10 lakhs20%
> Rs 10 lakh30%

NOTE:

  • Income tax exemption limit is up to Rs. 3,00,000 for senior citizens aged higher than sixty years however eighty years for FY 2018-19.
  • An additional 4% Health & education cess are applicable on the tax quantity calculated as higher than.
  • Surcharge applicability::
    • 10% of tax, wherever total financial gain exceeds Rs.50 lakhs up to Rs.1 crore.
    • 15% of tax, wherever the whole financial gain exceeds Rs.1 crore.
    • Invest Currently & Save Upto Rs. 46,800 on Taxes.

TAX SLABS FOR INDIVIDUALS ABOVE 80 YEARS:

INCOME CATEGORYTAX SLAB
Upto 5 lakhsNIL
Rs 5  lakh – Rs 10 lakhs20%
> Rs 10 lakh30%

NOTE:

  • Income tax exemption limit is up to Rs. 5,00,000 for person aged higher than eighty years for FY 2018-19
  • An additional 4% Health & education cess are going to be applicable on the tax quantity calculated as higher than.
  • Surcharge applicability:
    • 10% of taxation, wherever total financial gain exceeds Rs.50 large integer up to Rs.1 crore.
    • 15% of taxation, wherever the full financial gain exceeds Rs.1 crore.
    • Invest currently & Save Up To Rs. 46,800 on Taxes.

DIFFERENCE OF SLABS BETWEEN OLD AND NEW TAX REGIME:

TAX SLABEXISTING SLAB RATES FY 20-21NEW SLAB RATES
INDIVIDUALS <60INDIVIDUALS >60 <80INDIVIDUALS >80FOR ALL INDIVIDUALS & HUF
Rs. 0 – Rs. 2.5 lakhsNILNILNILNIL
Rs. 2.5 lakhs – Rs. 3 lakhs5% (rebate available u/s 87a)NILNIL5% (rebate available u/s 87a)
Rs. 3 lakhs – Rs. 5 lakhs5% (rebate available u/s 87a)5% (rebate available u/s 87a)NIL5% (rebate available u/s 87a)
Rs. 5 lakhs – Rs. 7.5 lakhs20%20%20%10%
Rs. 7.5 lakhs – Rs. 10 lakhs20%20%20%15%
Rs. 10 lakhs – Rs. 12.5 lakhs30%30%30%20%
Rs. 12.5 lakhs – Rs. 15 lakhs30%30%30%25%
> Rs. 15 lakhs30%30%30%30%