Income tax is levied on the annual income of an individual or an entity. The period under Income Tax Act starts from 1st April and ending on 31st March of the next calendar year. The Income-tax Law classifies the year as (i) Previous year, and (ii) Assessment year.
Income tax on companies is called a corporate tax which is normally levied at a fixed rate. Whilst, a non-corporate assessee other than the firm has to pay income tax based on the slab rate.
Taxes are collected by the Government through three means:
- Voluntary payment by taxpayers into various designated Banks. For example, Advance Tax and Self-Assessment Tax paid by the taxpayers,
- Taxes deducted at source [TDS] from the income of the receiver,
- Taxes collected at source [TCS].
Every year, Finance Act prescribes the income tax rates and TDS/TCS rates effective for the relevant assessment year to the previous year. Further, CBDT is empowered to issue notification and circulars to clarify and notify the rates and their changes.
According to the current income tax laws in India, we have summarized and tabularized all the income tax rates for FY 2020-21 (AY 2021-22) for your easy reference.
Part 1: Income Tax for FY 2020-21
-
1. What is to be included for computing total income?
As per Section 5 of the Income Tax Act, 1961 the following income is included in total income:
-
- Income received or is deemed to be received in India by or on behalf of such person; or
- Income accrued or arise or is deemed to accrued or arise in India; or
- Income accrued or arise outside India during such year.
-
2. What are the Income-tax rates applicable for FY 2020-21?
As per Finance Act, 2020, following are the income tax rates incomes for FY 2020-21 (AY 2021-22):
I. In case of an Individual or HUF or Association of Person or Body of Individual or any other Artificial Juridical Person (other than senior and super senior citizen):
| Net Income Range | Tax Rate |
| Upto Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
II. In case of an individual who is a senior citizen (60 years or more at any time during the previous year):
| Net Income Range | Tax Rate |
| Upto Rs. 3,00,000 | Nil |
| Rs. 3,00,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
III. In case of an Individual who is super senior citizen (80 years or more at any time during the previous year):
| Net Income Range | Tax Rate |
| Upto Rs. 5,00,000 | Nil |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
IV. In case of an Individual or HUF under new regime (only if the total income is computed without claiming specified exemptions or deductions other than mentioned in sub-clauses (a) to (c) of sub-rule (1) and serial no.11 to sub-rule 2 of Rule 2BB*):
| Net Income Range | Tax Rate |
| Upto Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 7,50,000 | 10% |
| Rs. 7,50,001 to Rs. 10,00,000 | 15% |
| Rs. 10,00,001 to Rs. 12,50,000 | 20% |
| Rs. 12,50,001 to Rs. 15,00,000 | 25% |
| Above Rs. 15,00,000 | 30% |
Rebate u/s 87A is available up to 100 percent of income-tax or Rs. 12,500, whichever is less for a resident individuals whose net income does not exceed Rs. 5,00,000.
In the case of (1) to (4), Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.
Surcharge:
| Total Income Range | Tax Rate |
| Upto Rs. 50 lakhs to 1 crore | 10% |
| Rs. 1 crore to Rs. 2 crores | 15% |
| Rs. 2 crores to Rs. 5 crores | 25% |
| Above Rs. 5 crores | 37% |
V. Partnership Firm or LLP or Local Authority:
| Particulars | Tax Rate |
| Income Tax | 30% |
| Surcharge where total income > Rs. 1 crore | 12% |
| Health and Education Cess | 4% |
VI. Co-operative Society:
| Particulars | Tax Rate |
| Upto Rs. 10,000 | 10% |
| Rs. 10,001 to Rs. 20,000 | 20% |
| Above Rs. 20,000 | 30% |
| Surcharge where total income > Rs. 1 crore | 12% |
| Health and Education Cess | 4% |
| Income shall be computed without providing for specified exemption, deduction or incentive available, set-off, or carry forward.
Surcharge Health and Education Cess |
22%
10% 4% |
VII. Domestic Company:
| Particulars | Tax Rate |
| Income Tax on total turnover / gross receipts during PY 2018-19 does not exceed Rs. 400 crores | 25% |
| Income Tax on any other domestic company | 30% |
| Company opting for section 115BA | 25% |
| Minimum Alternate Tax (MAT) | 15% |
| MAT on the company is a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange | 9% |
| Surcharge where total income is Rs. 1 crore < Rs. 10 crores | 7% |
| Surcharge where total income > Rs. 10 crores | 12% |
| Company opting for section 115BAA
Surcharge |
22%
10% |
| Company opting for section 115BAB
Surcharge |
15%
10% |
| Health and Education Cess | 4% |
VIII. Foreign Company:
| Particulars | Tax Rate |
| Income Tax on 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% |
| Income Tax on any other income | 40% |
| Surcharge where total income is Rs. 1 crore < Rs. 10 crores | 2% |
| Surcharge where total income > Rs. 10 crores | 5% |
| Health and Education Cess | 4% |
Part 2: Tax Deducted at Source (TDS):
-
1. What is TDS?
- Tax Deducted at Source concept was introduced in 2004 on the principle of ‘pay as you earn’.
- A person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get a credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
- The onus of deducting tax is on payer (who makes the expenditure) instead of actual taxpayer, that is, assessee under Section 192 to 194 of Income Tax Act, 1961.
- Deductor who deducts tax at source is required to furnish a certificate to the respective deductee specifying the amount deducted as tax along with all the other particulars.
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2. What are the TDS rates applicable?
| Section | Nature of Payment | Threshold limit per annum (INR) | TDS rate
(01/04/2020-13/05/2020) |
Reduced Rate
(14/05/2020- 31/03/2021) |
| 192 | Payment of Salary | slab rate | slab rate | slab rate |
| 192A | Payment of the accumulated balance of Provident Fund | 50,000 | 10% | 10% |
| 193 | Interest on securities | 10,000 | 10% | 7.5% |
| 194 | Dividend
(Applicable only to Company) |
5,000
[earlier 2,500] |
10%
[earlier rates in force] |
7.5% |
| 194A | Income by way of interest other than interest on securities
(modified) [Large co-operative societies are required to deduct tax only when total sales, gross receipts or turnover of Co-operative society exceeds INR 50,00,00,000 and interest credited or paid is above the threshold limit] |
40,000
(Non-senior citizen) 50,000 (Senior citizen) |
10% | 7.5% |
| 194B | Income from winnings from lotteries, crossword puzzles, card games and other games of any sort | 10,000 | 30% | 30% |
| 194BB | Income by way of winnings from horse races | 10,000 | 30% | 30% |
| 194C | Payment to contractor/sub-contractor being:
a) Individual/ HUF b) Other than Individual/HUF |
30,000
(Single payment) 1,00,000 (aggregate payment) |
1%
2% |
0.75%
1.5% |
| 194D | Insurance commission
a) Individual/ HUF b) Other than Individual/ HUF |
15,000 | 5%
10% |
3.75%
10% |
| 194DA | Payment in respect of life insurance policy | 1,00,000 | 5% | 3.75% |
| 194EE | Payment in respect of deposit under National Savings Scheme | 2,500 | 10% | 7.5% |
| 194F | Payment of repurchase of unit by Mutual Fund or Unit Trust of India | – | 20% | 15% |
| 194G | Commission on sale of lottery tickets | 15,000 | 5% | 3.75% |
| 194H | Commission or brokerage | 15,000 | 5% | 3.75% |
| 194I | Rent on:
a) Plant & Machinery b) Land or building or furniture or fitting |
2,40,000
2,40,000 |
2%
10% |
1.5%
7.5% |
| 194IA | Payment on transfer of any immovable property (other than agricultural land) | 50,00,000
|
1% | 0.75% |
| 194IB | Payment of rent by individual/ HUF not liable to tax audit | 50,000 per month | 5% | 3.75% |
| 194IC | Payment of monetary consideration under Joint Development Agreements | – | 10% | 7.5% |
| 194J | Fees for technical or professional services:
a) Fees paid towards technical services or royalty paid for consideration of sale, distribution or exhibition of cinematographic films b) Any other sum |
30,000 | 10%
2% |
7.5%
1.5% |
| 194K | Payment to a resident any income other than capital gains in respect of units (newly inserted section) | 5,000 | 10% | 7.5%
|
| 194LA | Payment of compensation on compulsory acquisition of immovable property | 2,50,000 | 10% | 7.5%
|
| 194LB | Interest income from infrastructure debt fund by non-resident | – | 5% | 5% |
| 194LBA | Any income received or receivable from unit holder by business trust to resident | – | 10% | 7.5%
|
| 194LBB | Income in respect of units of investment fund to a unit holder (other than exempt under section 10(23FBB)) | – | 10% | 7.5%
|
| 194LBC | Income in respect of investment made in a securitization trust to:
a) Individual/HUF b) Other than Individual /HUF |
– | 25%
30% |
18.75%
22.5% |
| 194LC | Payment of interest by an Indian Company or a business trust in respect of:
a) money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds b) by way of issue of long-term infrastructure bonds at any time on or after the 1st day of July, 2012 but before the 1st day of October, 2014 |
– | 5%
4% |
5%
4% |
| 194LD | Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor | – | 5% | 5% |
| 194M | Payment of commission (not being insurance commission), or brokerage or professional fees to individual/ HUF | 50,00,000 | 5% | 3.75% |
| 194N | Cash withdrawal from one or more account:
a) In excess of INR 1,00,00,000 If persons have not filed an Income tax return for three previous years, the cash withdrawal from one or more account i. In excess of INR exceeding INR 20,00,000 ii. In excess of INR exceeding INR 1,00,00,000 (newly inserted section w.e.f. 1st July 2020) |
1,00,00,000
20,00,000
1,00,00,000 |
2%
N.A.
N.A.
|
2%
2%
5% |
| 194O | Payment of certain sums by the e-commerce operator to the e-commerce participant; or
in case of individual/ HUF where the gross amount of such sale or services or both during the previous year does not exceed five lakh rupees (newly inserted section w.e.f. 1st October 2020) |
– | N.A. | 0.75% |
Part 3: Tax Collected at Source (TCS):
1. What is TCS?
- The tax collected at source (TCS) is one of the methods of collection of tax by the government. This method follows the principle ‘Collect as it is being earned’.
- TCS is the tax payable by a seller which he collects from the buyer at the time of sale.
- Section 206C of the Income-tax Act governs the goods on which specific sellers have to collect tax from specific buyers.
- Tax collection at source is implemented to curb tax evasion and also to facilitate proper tax collection in India.
2. What are the TCS rates applicable?
| Section | Type of Goods | Threshold Limit (INR) | Rate
(01/04/2020-13/05/2020) |
Reduced Rate
(14/05/2020 – 31/03/2021) |
| 206C(1) | Alcoholic Liquor for human consumption | – | 1% | 1% |
| 206C(1) | Timber obtained under a forest lease | – | 2.5% | 1.875% |
| 206C(1) | Tendu leaves | – | 5% | 3.75% |
| 206C(1) | Timber wood by any other mode than forest lease | – | 2.5% | 1.875% |
| 206C(1) | A forest produce other than Tendu leaves and timber | – | 2.5% | 1.875% |
| 206C(1) | Scrap | – | 1% | 0.75% |
| 206C(1) | Minerals like lignite, coal and iron ore | – | 1% | 0.75% |
| 206C(1C) | Grant of the lease to the Parking lot, Toll Plaza and Mining and Quarrying | – | 2% | 1.5% |
| 206C(1D) | Bullion that exceeds over INR 2,00,000; or
Jewellery that exceeds over INR 5,00,000 |
– | 1% | 1% |
| 206C(1F) | Sale of the motor vehicle of the value exceeding INR 10,00,000 | – | 1% | 0.75% |
| 206C(1G)(a) | a) Amount remitted outside India through Liberalised Remittance Scheme
b) For non-PAN or Aadhar card cases c) The amount is remitted for pursuing education through a loan obtained from any financial institute (newly inserted section w.e.f 1st October 2020) |
7,00,000 | –
– –
|
5%
10% 0.5% |
| 206C(1G)(b) | a) Selling of overseas tour package
b) For non-PAN or Aadhar card cases (newly inserted section w.e.f 1st October 2020) |
– | –
–
|
5%
10% |
| 206C(1H) | a) Seller whose turnover in immediately preceding financial year exceed INR 10,00,00,000
[except seller of goods on which TCS applicable as per Section 206C (1), 206C (1F) and 206C (1G)] b) For non-PAN or Aadhar card cases (newly inserted section w.e.f 1st October 2020) |
50,00,000 | –
–
|
0.075%
1% |
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