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The income tax slab defines the limit beyond which a specific tax is rate is applied on the income. It also encompasses the deductions which are made according to the applied rate.
The Income Tax Act, 1961, upholds provisions for determining the tax liability, taxable income etc. These provisions are extended uniformly for the entire nation. Income tax slabs are applicable on the basis of the factors mentioned below:
Income of assessee
Residential status of the assessee
Assessment year
Rate of tax
Charge of income tax
Maximum amount or threshold limit till income is not chargeable/taxable
Gross income
Any resident individual with a regular source of income
A Hindu Undivided Family (HUF)
A company
A firm
An Association of Persons (AOP) or a Body of Individuals (BOI) whether incorporated or not
Any local authority
According to the Union budget of 2018, the income tax will be assessed in different categories as per the below slabs.
Income Tax Slab for Resident Individuals & Non-Resident Indians
Income Threshold | Tax Rate Applicable |
Up to ₹ 2,50,000 | NIL |
₹2,50,000 to ₹5,00,000 | 5% |
Additional Components
Surcharge: The surcharge is applied at 10% of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then a 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
If you have a net taxable income up to Rs. 5 lacks, then according to the interim budget 2019 you are eligible for a full tax rebate.
Hindu Undivided Families (HUFs)
Income Threshold | Tax Rate Applicable |
Up to ₹ 2,50,000 | Nil |
₹ 2,50,000 to ₹ 5,00,000 | 5% |
₹ 5,00,000 to ₹ 10,00,000 | 20% |
Additional Components
Surcharge: The surcharge is applied at 10% of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Income Threshold | Tax Rate Applicable |
Up to ₹ 2,50,000 | Nil |
₹ 2,50,000 to ₹ 5,00,000 | 5% |
₹ 5,00,000 to ₹ 10,00,000 | 20% |
Additional Components
Surcharge: The surcharge is applied at 10% of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Education Cess: It will be charged an extra 2% rate on the income tax amount plus the applicable surcharge.
Secondary & Higher Education Cess: It will be charged an extra 1% on the income tax amount plus a surcharge.
Senior Citizens
Income Threshold | Tax Rate Applicable |
Up to ₹ 3,00,000 | Nil |
₹ 3,00,000 to ₹ 5,00,000 | 5% |
Additional Components
Surcharge: The surcharge is applied at 10 % of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Super Senior Citizens
Income Threshold | Tax Rate Applicable |
Up to ₹ 5,00,000 | No tax |
₹ 5,00,000 to ₹ 10,00,000 | 20% |
Additional Components
Surcharge: The surcharge is applied at 10% of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Partnership Firms
For any Partnership Firms & Limited Liability Partnerships (LLP) the applicable tax rate is flat 30%.
Additional Components
Surcharge: The surcharge is applied at 12 % of the income tax if the income exceeds ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Local Entity / Authorities
For local entities and authorities, the applicable tax rate is flat 30%.
Additional Components
Surcharge: The surcharge is applied at 12 % of the income tax if the income exceeds ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Domestic Entity Companies
For Domestic companies, the applicable tax rate is flat 30%. The company is liable to pay taxes at 25% if the gross receipt of the company does not go beyond ₹ 250 crores in the previous year.
Additional components:
Surcharge: A surcharge of 7% is applicable over the income tax amount if the income of the company is between ₹ 1 crore and ₹ 10 crores. A surcharge of 12% rate is charged is the amount exceeds ₹ 10 crores.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Foreign Entity / Companies
Nature of Income | Tax Rate |
If any Foreign Company operating in India receives income as royalty compensated by the Government of India against the agreements executed with the Indian concern (after 31st March 1961, and prior to 1st April 1976) | 50% |
If any Foreign Company operating in India receives income as fees for any technical services provided as per the agreements executed with an Indian concern (after 29th February 1964, and prior to 1st April 1976) | 50% |
Any other additional income earned by the Foreign Company operating in India |
Additional Components
Surcharge: A surcharge of 2% is applicable to the income tax amount if the income of the company is between ₹ 1 crore and ₹ 10 crores. A surcharge at 5% rate is charged is the amount exceeds ₹ 10 crores
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Co-operative Societies
Urban / Semi-Urban/ Rural excluding Self Help Group (SHG) and Agricultural Societies.
Income Threshold |
Tax Rate Applicable
Up to ₹ 10,000
10%
₹ 10,000 to ₹ 20,000
20%
Over ₹ 20,000
30%
Additional Components:
₹5,00,000 to ₹10,00,000
20% |
Over ₹10,00,000 | 30% |
Over ₹ 10,00,000 | 30% |
Over ₹ 10,00,000 | 30% |
₹ 5,00,000 to ₹ 10,00,000
20% |
Over ₹ 10,00,000 | 30% |
30% |
40% |
*T&C Apply
Surcharge: The surcharge is applied at 12 % of the income tax if the income exceeds ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Income Tax Slab for individuals less than 60 years of age and HUF
Income range per annum | Tax Rate FY 2019-20, AY 2020-21 | Tax Rate FY 2018-19, AY 2019-20 |
Up to Rs. 2.5 lakhs | No Tax | No Tax |
Above Rs. 2.5 lakhs to Rs. 5 lakhs | 5% + 4% cess | 5% + 4% cess |
Above Rs. 5 lakhs to Rs. 10 lakhs | 20% + 4% cess | 20% + 4% cess |
Above Rs. 10 lakhs to Rs. 50 lakhs | 30% + 4% cess | 30% + 4% cess |
Above Rs. 50 lakhs to Rs. 1 crore | 30% + 10% surcharge + 4% cess | 30% + 10% surcharge + 4% cess |
Above Rs. 1 crore | 30% +15% surcharge + 4% cess | 30% +15% surcharge + 4% cess |
Rebate under section 87(A) | 100% tax rebate subject to maximum of Rs. 12,500 available to resident individual whose net taxable income does not exceed Rs. 5 lakhs | 100% tax rebate subject to maximum of Rs. 2,500 available to resident individual whose net taxable income does not exceed Rs. 3.5 lakhs |
Tax Rebate for Middle Class: As per section 87A of the Income Tax Act, 1961, those individuals which have a net taxable income up to Rs.5 lakh has been given full tax rebate.
Standard Deduction Limit: It has been increased from Rs 40,000 to Rs.50,000 for salaried employees.
TDS Threshold on Rental Income: It has been increased from Rs.1.8 lakh to Rs. 2.4 lakh. There has also been an increase from 1 year to 2 years for income tax exemption from notional rent for unsold properties.
TDS Limit on Interest Income: No TDS deduction on interest income earned from banks or post office deposits up to Rs. 40,000 annually.
Income Tax Slabs on Dividend
Based on the type of entity which is declaring the dividend income, dividend income is taxed too.
Source of Dividend | Tax Rate for Individuals/HUFs | Income Tax Section |
if aggregate dividend income received during the year is less than Rs. 10 lakh | Nil | Section 10(34) |
if aggregate dividend income received during the year is more than Rs. 10 lakh | 10% | Section 115BBDA |
Income Tax Slab For NRI
Taxable Income | Tax Rate |
Up to Rs. 2,50,000 | Nil |
Rs. 2,50,000 to Rs 5,00,000 | 5% |
Rs. 5,00,000 to Rs. 10,00,000 | 20% |
Health and Education Cess at 4% rate on the amount of computed tax which is inclusive of surcharge.
Income Tax Slab for Expats
Taxable Income | Tax Rate |
Up to Rs. 2,50,000 | Nil |
Rs. 2,50,000 to Rs 5,00,000 | 5% |
Rs. 5,00,000 to Rs. 10,00,000 | 20% |
Above Rs. 10,00,000 | 30% |
Education cess and Surcharge (if any) payable | 3% |
Income Tax Slab for Freelancers
The income tax slab rates as same for all individuals. For Freelancers, the tax slab and rates are as follows :
Income Threshold | Tax rate applicable |
Up to ₹ 2,50,000 | NIL |
₹ 2,50,000 to ₹ 5,00,000 | 5% |
₹ 5,00,000 to ₹ 10,00,000 | 20% |
Over ₹ 10,00,000 | 30% |
Additional Components
Surcharge: The surcharge is applied at 10 % of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Income Tax Slab For Doctors
Income Threshold | Tax rate applicable |
Up to ₹ 2,50,000 | NIL |
₹ 2,50,000 to ₹ 5,00,000 | 5% |
₹ 5,00,000 to ₹ 10,00,000 | 20% |
Over ₹ 10,00,000 | 30% |
Additional Components
Surcharge: The surcharge is applied at 10% of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
Health and Education Cess: “Health and Education Cess” will replace “Education Cess” and “Secondary and Higher Education Cess” at 4% rate on the amount of computed tax which is inclusive of surcharge.
Income Tax slab for Pensioners
Income Tax Slabs | Tax Rate | Health and Education Cess |
Income up to Rs 3,00,000* | No tax |
|
Income from Rs 3,00,000 – Rs 5,00,000 | 5% | 4% of Income Tax |
Income from Rs 5,00,000 – 10,00,000 | 20% | 4% of Income Tax |
Income more than Rs 10,00,000 | 30% | 4% of Income Tax |
Surcharge: The surcharge is applied at 10 % of the income tax if the income exceeds ₹ 50 lakhs but is less than ₹ 1 crore. However, if income exceeds ₹ 1 crore, then 15% surcharge is applied on income tax on the amount which is exceeding ₹ 1 crore.
