Govt cuts income tax rates, income between ₹5-7.5 lakh to be taxed at 10%
Finance Minister Nirmala Sitharaman said that under new personal tax regime, income between ₹5-7.5 lakh will be taxed at 10% compared to 20% now and income of ₹7.5-10 lakh will be taxed at 15% instead of 20%.
Govt cuts income tax rates
Given below are the latest income tax slabs applicable for financial year 2019-20 (assessment year 2020-21).
The basic tax exemption limit for an individual depends on their age and residential status. According to age, resident individual taxpayers are divided into three categories:
1. Resident individuals below the age of 60 years
2. Resident senior citizens above 60 years but below 80 years
3. Resident super senior citizens above the age of 80 years
As per the Budget 2019 announcement, no changes in the income tax slabs and rates have been proposed. A rebate of Rs 12,500 will be available for all taxpayers with taxable income up to Rs 5 lakh. This rebate will be available under Section 87A of the Income Tax Act. Also, standard deduction for financial year 2019-20 would be Rs 50,000.
For non-resident individuals (NRI), the basic exemption limit is of Rs 2.5 lakh in a financial year irrespective of their age. Surcharge as mentioned in the table above will be levied on the taxable income.
In Budget 2018, cess on income tax was increased to 4 per cent for FY 2018-19 onwards from 3 per cent for FY 2017-18 across the board for taxpayers. Due to the hike in cess, the tax liability for the highest slab (assuming an income of Rs 15 lakh) has increased by Rs 2,625. In the middle income tax slab, the tax outgo increases by Rs 1,125, and there is a nominal increase in the tax liability of Rs 125 for lowest income tax slab.
As per the current income tax slabs, taxation of income of resident individuals below 60 years is as follows: Income up to Rs 2.5 lakh is exempt from tax, 5 per cent tax on income between Rs 250,001 to Rs 5 lakh; 20 per cent tax on income between Rs 500,001 and Rs 10 lakh; and 30 per cent tax on income above Rs 10 lakh.
For senior citizens (aged 60 years or above but less than 80 years), income up to Rs 3 lakh is exempt from tax. Income from Rs 300,001 to Rs 5 lakh is taxed at 5 per cent, from Rs 500,001 to Rs 10 lakh at 20 per cent and above Rs 10 lakh at 30 per cent.
For super senior citizens, aged 80 years and above, income up to Rs 5 lakh is exempt from tax. Income from Rs 500,001 to Rs 10 lakh is taxed at 20 per cent and above Rs 10 lakh is taxed at 30 per cent.
After taking the deductions under Section 80 (C) to 80 (U), the tax is payable after adding the cess and surcharge, if applicable.
How is tax liability calculated?
The tax liability is calculated on the income arrived at after availing all the deductions and other tax-exemptions available to the individual.
How to calculate total income?
To calculate your total income, you must add the income received from various sources such as salary, pension, interest received from fixed deposit, recurring deposit, savings account and so on.
How do I know my tax payment details?
Once the tax is deposited by you or any other individual has deducted tax and deposited with the government on your behalf, then total amount of tax deposited against your PAN will be reflected in Form 26AS. You can download the statement from your account on the income tax e-filing website.
How can I pay taxes?
A taxpayer can pay tax offline or online. For offline method, an individual is required to visit the bank branch and pay the tax due along with duly filled challan. Another way is paying taxes online using Net banking facility of any of the authorised banks.
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