What are the changes in Tax Slab 2020?

Changes in Tax Slab 2020

The BJP-led Central Government presented an interim budget in February 2019, and the full budget in July 2019. Both these budgets saw changes made to the Income Tax Slab 2020, and it is very important that you have complete information about this because this will affect your budget. Some individuals may, after reading the changes made in the Income Tax Slab, feel a relief; it is also possible, that your income is above average-you are really rich-in which case you will have to pay more tax. The Income Tax Department has mentioned different tax rates for different individuals having varying income levels. In accordance with the guidelines provided by the Government of India, the department aims to promote individuals with less income, as well as ensure that the government gathers enough for the purpose of building the nation; so those who have very high income pay taxes at higher rates.

For the financial year 2019-20, as well as for the financial year 2020-21, in case of an individual resident or non-resident, anybody who has an income up to INR 2,50,000, tax rate is NIL. Anybody who has his income in the tax slab INR 2,50,000 to INR 5,00,000 will be charged 5% tax rate. Anybody who has his income in the tax slab INR 5,00,000 to INR 10,00,000 will be charged 20% tax rate. Anybody who has his income above INR 10,00,000 will be charged 30% tax rate. In case of a resident senior citizen who is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year; for the financial year 2019-20, as well as for the financial year 2020-21, anybody who has an income up to INR 3,00,000, tax rate is NIL. Anybody who has his income in the tax slab INR 3,00,000 to INR 5,00,000 will be charged 5% tax rate. Anybody who has his income in the tax slab INR 5,00,000 to INR 10,00,000 will be charged 20% tax rate. And anybody who has his income above INR 10,00,000 will be charged 30% tax rate.

In case of a resident super senior citizen who is 80 years or more at any time during the previous year for the financial year 2019-20, as well as for the financial year 2020-21, anybody who has an income up to INR 5,00,000, tax rate is NIL. Anybody who has his income in the tax slab INR 5,00,000 to INR 10,00,000 will be charged 20% tax rate. And anybody who has his income above INR 10,00,000 will be charged 30% tax rate. This means that anybody having income less than 2,50,000 will not have to be taxed at all. Where income exceeds Rs. 1 crore, the ‘total amount payable as income-tax and surcharge’ shall not exceed ‘total amount payable as income-tax’ on total income of Rs. 1 crore. The amount of income-tax and the applicable surcharge, further gets increased by health and education cess which are calculated at the rate of four percent of such income-tax and surcharge. In case of surcharge, rebate is available to a resident individual if his total income does not exceed Rs. 3, 50,000. The amount of rebate can either be 100% of income-tax of the individual or Rs. 2,500, whichever is less.

A surcharge is an extra payment of money that an individual tax payer has to pay in addition to the usual payment of his ITR. In addition, a surcharge is levied on the amount of income-tax if total income of an assessee exceeds specified limits. For the assessment year 2019-20 the surcharge rates applicable for different tax slabs are mentioned here. Any income up to INR 50 lakh is free from this surcharge. Anybody who has his income in the tax slab ‘more than INR 50 lakh but up to INR 1 crore’ has to pay 10% surcharge. Anybody who has his income more than INR 1 crore has to pay 15% surcharge. The surcharge is however, subjected to marginal relief. Where income exceeds INR 50 lakhs, the ‘total amount payable as income-tax and surcharge’ cannot not exceed ‘total amount payable as income-tax’ on total income of INR 50 lakhs.

Short-term capital gain covered under Section 111A, long-term capital gain covered under Section 112A, and any other income up to Rs. 50 Lakh will not be subjected to any surcharge. Short-term capital gain covered under Section 111A, long-term capital gain covered under Section 112A, and any other income in the tax slab ‘more than INR 50 lakh but up to INR 1 crore’ is subject to 10% surcharge. Short-term capital gain covered under Section 111A, long-term capital gain covered under Section 112A, and any other income in the tax slab ‘more than INR 1 crore but up to INR 2 crore’ is subject to 15% surcharge. Short-term capital gain covered under Section 111A, long-term capital gain covered under Section 112A more than INR 2 crore but up to INR 5 crore is subject to 15% surcharge. Any other income in the tax slab INR 2 crore to INR 5 crore is subject to 25% surcharge. Short-term capital gain covered under Section 111A, long-term capital gain covered under Section 112A more than INR 5 crore but up to INR 10 crore is subject to 15% surcharge. Any other income in the tax slab ‘more than INR 5 crore but up to INR 10 crore’ is subject to 37% surcharge.

Short-term capital gain covered under Section 111A, long-term capital gain covered under Section 112A more than INR 10 crore is subject to 15% surcharge. Any other income more than INR 10 crore is subject to 37% surcharge. The Finance Act, 2019 has been amended to withdraw the enhanced surcharge, i.e., 25% or 37%, as the case may be, from income chargeable to tax under section 111A and 112A. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%. This surcharge is subject to marginal relief. Where income exceeds Rs. 50 lakhs, the total amount payable as income-tax and surcharge shall not exceed INR 50 lakhs. Where income exceeds Rs. 1 crore, the total amount payable as income-tax and surcharge shall not exceed INR 1 crore. Where income exceeds Rs. 2 crore, the total amount payable as income-tax and surcharge shall not exceed INR 2 crore. Where income exceeds Rs. 5 crore, the total amount payable as income-tax and surcharge shall not exceed INR 5 crore.

These tax rates for different slabs further vary for partnership firms, local authorities, domestic companies, foreign companies and co-operative societies. Changes in direct and indirect taxes have been witnessed in the session 2019-20. The government may further reduce corporate tax rates applicable to domestic companies. The deductions, tax incentives and exemptions provided by the government aim to provide relief to certain sectors where economic growth needs boosting. The government is expected to provide tax relief for individuals to increase the economic growth of the nation. The INR 10 lakh tax slab may be given relief in the next budget. Currently it is subjected to 30% taxation. The high rates of taxation have been criticized for being responsible for the slowing economic growth of India. One such sector that has severely suffered on this account is the automobile sector. Even the Diwali festivities could not add much to the markets. Several companies have suffered heavy losses, and are seeking relief from the government regarding the tax rates. The income tax slabs may be revised soon to restore economic strength of the Indian markets.