Before finance minister Nirmala Sitharaman announces Budget 2020 on February 1 in which she is widely expected to give income tax relief to the middle class for FY 2020-21, let us take a look at the existing income tax rates and slabs for FY 2019-20.
During her first Budget presented in last July, Sitharaman had chosen not to tinker with the income tax slab rates. As compared to the FY 2018-19, there has been some changes in standard deduction and rebates which may affect you tax outgo during the current financial year.
Income tax slab for those below 60 years:
If the total income is not more than ₹2.5 lakh, the rate of tax is nil.
Where the total income is more than ₹2.5 lakh but less than ₹5 lakh, you have to pay 5% income tax by which the amount exceeds ₹2.5 lakh.
For those earning between ₹5 lakh and ₹10 lakh, the tax outgo will be of ₹12,500 plus 20% of the amount by which the total income exceeds ₹5 lakh.
If you are earning more than ₹10 lakh, you have to pay tax of ₹1 lakh plus 30% of the total income exceeding ₹10 lakh.
However, those earning up to ₹5 lakh can claim a rebate of ₹12,500 under Section 87A of the Income Tax Act. This will effectively bring down the tax outgo to zero. However, if your taxable income crosses ₹5 lakh, you are not eligible for the rebate and will have to pay the full amount of tax as per the slab.
A health and education cess of 4% will be added to the total tax outgo besides a surcharge if your income crosses ₹50 lakh.
Income tax for senior citizens:
Senior citizens will not have to pay any tax for income up to ₹3 lakh and for super senior citizens (above 80 years), the exemption is up to ₹5 lakh.
If the total income is more than ₹3 lakh but less than ₹5 lakh, the income tax outgo will be 5% of the amount by which the total income exceeds ₹3 lakh.
For those in between the ₹5 lakh to ₹10 lakh slab, the tax outgo will be ₹10,000 plus 20% of the amount by which the income exceeds ₹5 lakh.
If the total income exceeds ₹10 lakh, the tax outgo will be ₹1.10 lakh plus 30% of the total amount by which the income exceeds ₹10 lakh.