Income Tax Rates – AY 2021-22 (FY 2020-21)

Know the Income Tax Rates 

In India, Income Tax (IT) is levied on the income of a taxable person based on pre-decided tax rates. Under the Income Tax Act, the word “Person’ can mean:

• Individual
• Hindu Undivided Family (HUF)
• Company
• Firm
• Association of Persons (AOP)/Body of Individuals (BOI)
• Local authority
• Every artificial juridical person not mentioned above.

The rate of Income Tax varies from person to person. In this article, we will list down the Income Tax rates applicable to:

The Income Tax rates mentioned below are effective for Financial Year (FY) 2020-21 (Assessment Year (AY) 2021-22). That means income earned by the respective person between 1 April 2020 to 31 March 2021 will be taxed at the following rates:

Individuals

1. Individuals (below 60 years of age)

2. Senior Citizens (60 to 80 years)

3. Super Senior Citizens (above 80 years of age)

Points to Remember:

• In Budget 2020, the Government has given Individuals and HUF an option to pay lesser tax on the full income. However, the taxpayers have to forgo multiple deductions to be eligible for the reduced tax rates. The revised tax rate under the new tax regime are:

These new tax rates are applicable to Individuals irrespective of their age.

• The following surcharge is applicable on the income tax calculated:

• A tax rebate under section 87A is allowed to individual taxpayers. The maximum amount of rebate allowed is INR 12,500. This rebate is available only if the total taxable income does not exceed INR 5,00,000.

Hindu Undivided Family including Associations of Persons, Bodies of Individuals, and other Artificial Judicial Persons

The following surcharge is applicable on the income tax calculated:

Domestic Companies

In addition to the above, a surcharge will be applicable on the calculated tax as follows:

Foreign Companies

In addition to the above, a surcharge will be applicable on the calculated tax as follows:

Health and Education Cess is charged at a rate of 4%.

Partnership Firms and LLP

The income of a Partnership Firm/LLP is taxable at a flat rate of 30%. Health and Education Cess will be charged at the rate of 4%. A surcharge of 12% on the calculated income tax will be applicable when the taxable income exceeds INR 1 crore.

Local Authority

The income of a Local Authority is taxable at a flat rate of 30%. Health and Education Cess will be charged at the rate of 4%. A surcharge of 12% on the calculated income tax will be applicable when the taxable income exceeds INR 1 crore.

Co-operative Societies

A surcharge of 12% is applicable when the total taxable income exceeds INR 1 crore. For AY 2021-22 (FY 2020-21), a resident co-operative society has an option to pay tax at 22% under the new tax regime.