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.