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Income Tax Slab: A Complete Guide about Tax Slabs in India

  • Highlights

  • Income tax is a direct tax that you pay the government

  • It is calculated as a percentage of your annual income

  • The tax rate varies as per your income tax slab

  • Changes in tax slabs are declared in the Union Budget

Income tax is a direct tax that you pay to the government. It is calculated as a percentage of your annual earnings and is used by the government to fund infrastructural development, pay public sector employees, finance public healthcare and defence departments, and so on. The Central Board of Direct Taxes (CBDT), a body responsible for managing taxes, levies taxes on individuals via a slab-based system. As per this, every taxpayer is liable to pay tax based on the income slab they fall under, at the rate prescribed by the government for each slab.

The income tax rates are progressive in nature, which means that they increase with an increase in your income. Further, the tax slabs in India can change over time depending on the announcements made during the Union Budget or via economic policy declarations. Therefore, it is important that you keep an eye on current developments to be aware of new income tax slabs, if any. To understand the concept of income tax slabs better, start by reading who is liable to pay income tax in India.

An Introduction of Income Tax Slab

Income Tax Slabs for Individual Taxpayers

In India, those earning an income are liable to pay income tax. For the purpose of tax payment, individual taxpayers are categorised as per their age. Further, each of these categories has its own tax slabs. Take a look at the 3 categories below.

  • Resident individuals under 60 years of age

  • Resident senior citizens over 60 years, but below 80 years of age

  • Resident super senior citizens over 80 years of age

Income Tax Slabs for FY 2019–2020 and the Applicable Tax Rates

The Union Budget 2019 made no changes to the income tax slabs in India for FY 2019–2020. Therefore, the current income tax slab rates continue to apply. Below are the income tax rates for regular taxpayers, senior citizens, and super senior citizens.

Income Tax Slabs and Rates for Individual Taxpayers

Income Tax Slab Current tax slab rates
Up to Rs.2,50,000 Nil
Rs.2,50,001 to Rs.5,00,000 5% of total income less Rs.2,50,000
Rs.5,00,001 to Rs.10,00,000 Rs.12,500 + 20% of total income less Rs.5,00,000
Above Rs.10,00,000 Rs.1,12,500 + 30% of total income less Rs.10,00,000

Income Tax Slab for Senior Citizen Taxpayers and Applicate Rates

Income Tax Slab Current tax slab rates
Up to Rs.3,00,000 Nil
Rs.3,00,001 to Rs.5,00,000 5% of total income less Rs.3,00,000
Rs.5,00,001 to Rs.10,00,000 Rs.10,000 + 20% of total income less Rs.5,00,000
Rs.10,00,000 and above Rs.1,10,000 + 30% of total income less Rs.10,00,000

Income Tax Slabs for Super Senior Citizen Taxpayers and Applicate Rates

Income Tax Slab Current tax slab rates
Up to Rs.5,00,000 Nil
Rs.5,00,001 to Rs.10,00,000 20% total income less Rs.5,00,000
Rs.10,00,001 and above Rs.1,00,000 + 30% of total income less Rs.10,00,000

In addition to the income tax due as per your tax slab and the applicable tax rate, you are also required to pay a few other charges. Take a look at what these are below.

  • A health and education cess of 4% on the total amount of tax payable

  • A surcharge of 10% if your income is more than Rs.50 lakh but less than Rs.1 crore

  • A surcharge of 15% if your income is more than Rs.1 crore but less than Rs.2 crore

  • A surcharge of 25% if your income is more than Rs.2 crore but less than Rs.5 crore

  • A surcharge of 37% if your income is more than Rs.5 crore

Irrespective of age, the income tax exemption limit for non-resident individuals (NRIs) is the same as that for resident Indians. This means that NRIs need not pay income tax if their income is less than Rs.2.5 lakh. However, non-resident individual taxpayers are also required to pay surcharges on their income tax as mentioned above. To keep yourself updated, look out for changes and new tax slab rates by tuning into every Union Budget.

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Heads of Income for Tax Purposes

For individual taxpayers, income is categorised into five heads based on its source. These five categories are as follows.

  • Salary Income: Monthly salary and pension

  • Profits or Gains from Profession and Business:: Income earned by self-employed individuals, businessmen, freelancers, contractors, professionals and life insurance agents

  • Income from House Property: Rental income

  • Capital Gains: Gains from selling a residential property, mutual fund units or shares

  • Income from Other Sources: Interest earned from a savings account or a fixed deposit, lottery, etc.

To arrive at your total taxable income for a financial year, you are required to declare all income that you earn under various heads and then subtract any tax deductions that you are eligible for. Post this you can calculate the total tax payable for the year by identifying the rate applicable to you. If the total tax that you pay for a financial year exceeds your tax liability, you can file for an income tax refund online. However, to do this, you are required to e-file your income tax return. To do so with ease, remember the following important dates.

  • 31st January: Last date to declare investments and submit proof of the same

  • 31st March: Last date to invest in vehicles that offer a deduction under Section 80C

  • 31st July: Last date for income tax filing. As per a recent update, the last date to file ITR for FY 2018–2019 has been extended 31 August 2019

  • From October to November: Verifying your income tax return

How to File your ITR Online

Now that you are aware of the latest income tax slab rates and know about the deadlines, take a look at steps income tax filing online.

  • Register yourself on the Income Tax Department website to receive your login ID and password

  • Log in to your e-filing account by entering your user ID, password, date of birth and the CAPTCHA code. In this case your PAN number is your user ID

  • After you have logged in, click on ‘e-filing’ and select the ITR form that applies to you. Thereafter, select the relevant assessment year

  • Now, choose the ‘Prepare And Submit Online’ option. Once you do this, some of your details will get auto-populated. Fill in the other details and verify your entries to ensure accuracy of information

  • After checking the data, click on ‘Preview and Submit’ to proceed

  • At this point, your return will be uploaded. Next, you are required to verify the income tax return via EVC or Aadhaar

Paying income tax regularly contributes to the development of the country and helps you avoid any penalties. So, keep the aforementioned deadlines, income tax slabs and tax rates in mind to be a law-abiding citizen.

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