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

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.