income tax slabs for the financial year 2020-2021

The budget of Financial Year 2020-2021 was presented on 1st February, 2020 by our Finance Minister, Ms. Nirmala Sitharaman and it came effective from 1st April, 2020. According to the effective budget, the salaried employees and HUF eligible to pay tax are given an option to opt between the existing tax regime (See: Income Tax Slabs for the Financial Year 2019-2020) and the new tax regime. However, If the individual opts for the new tax regime, then the taxpayer will have to forego certain existing exemptions. The new tax regime is as follows:

Tax Slab For Individuals for the Financial Year 2020-2021

NEW TAX REGIME OLD TAX REGIME
Income Tax Slab For All Below 60 years 60 years - 80 years Above 80 years
Up to ₹2,50,000 NIL NIL NIL NIL
₹2,50,001 - ₹3,00,000 5% 5% NIL NIL
₹3,00,001 - ₹5,00,000 5% 5% 5% NIL
₹5,00,001 - ₹7,50,000 10% 20% 20% 20%
₹7,50,001 - ₹10,00,000 15% 20% 20% 20%
₹10,00,001 - ₹12,50,000 20% 30% 30% 30%
₹12,50,001 - ₹15,00,000 25% 30% 30% 30%
Above ₹ 15,00,000 30% 30% 30% 30%

Please note that the new tax regime is not differentiated on the basis of age group.

Income Tax Slab for Domestic Companies

A domestic company is taxable at 30%. However, the tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year.

Particulars Section Basic Tax Rate Surcharge MAT
Domestic company engaged in manufacturing / production Section 115BA 25% 7% / 12% 15%
All Domestic companies Section 115BAA 22% 10% N/A
Domestic company engaged in manufacturing/ production Section 115BAB 15% 10% N/A
Any Domestic company Others 25% / 30% 7% / 12% 15%

Income Tax Slabs For Partnership Firm​

Partnership firms are subject to a flat tax rate of 30% on their total income, regardless of the income level. It’s important to note that additional surcharge and health and education cess may also apply as per the applicable tax rules.

Income Tax Slabs for Local Authority

Net income range Income-tax Rates
Up to Rs. 2,50,000 Nil
Rs. 2,50,001- Rs. 5,00,000 5%
Rs. 5,00,001- Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Exemptions granted in the financial year 2020-2021

The income tax deductions still available in the new regime include:

  • Death-cum-retirement benefit;
  • Commutations of pensions;
  • Leave encashment on retirement;
  • Amount received on Voluntary Retirement Scheme (VRS) up to Rs 5 lacs;
  • Employee Provident Fund money;
  • Money received as scholarship for education;
  • Cash received as awards constituted in public interest, and
  • Short-term withdrawals and maturity amount from the National Pension Scheme
  •  

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