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)
| Net Income Range | Rate of Income Tax | Health and Education Cess |
| Up to INR 2,50,000 | Nil | Nil |
| INR 2,50,001 to INR 5,00,000 | 5% | 4% of income tax |
| INR 5,00,001 to INR 10,00,000 | 20% | 4% of income tax |
| INR 10,00,001 and above | 30% | 4% of income tax |
2. Senior Citizens (60 to 80 years)
| Net Income Range | Rate of Income Tax | Health and Education Cess |
| Up to INR 3,00,000 | Nil | Nil |
| INR 3,00,001 to INR 5,00,000 | 5% | 4% of income tax |
| INR 5,00,001 to INR 10,00,000 | 20% | 4% of income tax |
| INR 10,00,001 and above | 30% | 4% of income tax |
3. Super Senior Citizens (above 80 years of age)
| Net Income Range | Rate of Income Tax | Health and Education Cess |
| Up to INR 5,00,000 | Nil | Nil |
| INR 5,00,001 to INR 10,00,001 | 20% | 4% of income tax |
| INR 10,00,001 and above | 30% | 4% of income tax |
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:
| Net Income Range | Rate of Income Tax | Health and Education Cess |
| Up to INR 2,50,000 | Nil | |
| INR 2,50,001 to INR 5,00,000 | 5% | 4% |
| INR 5,00,001 to INR 7,50,000 | 10% | 4% |
| INR 7,50,001 to INR 10,00,000 | 15% | 4% |
| INR 10,00,001 to INR 12,50,000 | 20% | 4% |
| INR 12,50,001 to INR 15,00,000 | 25% | 4% |
| INR 15,00,001 and above | 30% | 4% |
These new tax rates are applicable to Individuals irrespective of their age.
- The following surcharge is applicable on the income tax calculated:
| Income details | Surcharge rate on calculated Income Tax |
| Net income exceeds INR 50 lakhs but does not exceed INR 1 crore | 10% |
| Net income exceeds INR 1 crore but does not exceed INR 2 crores | 15% |
| Net income exceeds INR 2 crores but does not exceed INR 5 crores | 25% |
| Net income exceeds INR 5 crores | 37% |
- 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
| Net Income Range | Rate of Income Tax | Health and Education Cess |
| Up to INR 2,50,000 | Nil | |
| INR 2,50,001 to INR 5,00,000 | 5% | 4% of income tax |
| INR 5,00,001 to INR 10,00,001 | 20% | 4% of income tax |
| INR 10,00,001 and above | 30% | 4% of income tax |
The following surcharge is applicable on the income tax calculated:
| Income details | Surcharge rate on calculated Income Tax |
| Net income exceeds INR 50 lakhs but does not exceed INR 1 crore | 10% |
| Net income exceeds INR 1 crore but does not exceed INR 2 crores | 15% |
| Net income exceeds INR 2 crores but does not exceed INR 5 crores | 25% |
| Net income exceeds INR 5 crores | 37% |
Domestic Companies
| Total Turnover | Rate of Income Tax | Cess |
| If the gross turnover of the company does not exceed INR 400 Crores in the previous year 2018-19 | 25% | 4% of corporate tax |
| Any other domestic company | 30% | 4% of corporate tax |
| If the Company has opted for Section 115BA | 25% | 4% of corporate tax |
| If the Company has opted for Section 115BAA | 22% | 4% of corporate tax |
| If the Company has opted for Section 115BAB | 15% | 4% of corporate tax |
In addition to the above, a surcharge will be applicable on the calculated tax as follows:
| Income details | Surcharge rate on calculated Income Tax |
| Net income exceeds INR 1 crore but does not exceed INR 10 crores | 7% |
| Net income exceeds INR 10 crores | 12% |
Foreign Companies
| Nature of Income | Rate of Income Tax |
| ● Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or
● Fees for rendering technical services in pursuance of an agreement made after February 29, 1964, but before April 1, 1976, and Where such agreement has, in either case, been approved by the Central Government |
50% |
| Any other income | 40% |
In addition to the above, a surcharge will be applicable on the calculated tax as follows:
| Income details | Surcharge rate on calculated Income Tax |
| Net income exceeds INR 1 crore but does not exceed INR 10 crores | 2% |
| Net income exceeds INR 10 crores | 5% |
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
| Net Income Range | Rate of Income Tax | Health and Education Cess |
| Up to INR 10,000 | 10% | 4% of income tax |
| INR 10,001 to INR 20,000 | 20% | 4% of income tax |
| INR 20,001 and above | 30% | 4% of income tax |
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.