Income Tax Slab Rates for FY 2019-20 / AY 2020-21 | Interim-Budget 2019-20 Key Highlights

The Indian Finance Minister has tabled today, the Union General Budget 2019-20 in the Parliament. Below are the latest Income Tax Slab Rates for FY 2019-20 or AY 2020-21. (FY is Financial Year and AY is Assessment Year)

Latest Income Tax Slab Rates FY 2019-20

The income tax slabs & rates are categorized as below;

• Individual resident aged below 60 years.
• Senior Citizen (Individual resident who is of the age of 60 years or more but below the age of 80 years at any time  during the previous year) &.
• Super Senior Citizen (Individual resident who is of the age of 80 years or more at any time during the previous year).

Budget 2019-20 & Personal Finance : Key Highlights 

Below are the latest personal finance proposals that have been made in Budget 2019-20 ;

• Income upto Rs 5,00,000 to be exempt from income tax. Individual taxpayers having taxable annual income up to Rs 5 lakhs will get full tax rebate (u/s 87A) and therefore will not be required to pay any income tax.
  • So those with income up to Rs 5 lakh and another Rs 1.5 lakh in investments (u/s 80c) totaling Rs 6.5 lakh will have to pay no tax. This proposal may benefit nearly Rs 3 crore middle class income earners.
  • I believe that if your taxable income is more than Rs 5 Lakh, this tax rebate is not applicable. So, there is no change/impact for the tax assessees who fall under 20% or 30% Tax Slab Rate.
  • Kindly note that there is no change in Tax Slab Rates.
• The current Standard Deduction of Rs 40,000 for FY 2018-19 is proposed to be increased to Rs 50,000 for FY 2019-20.
• Proposal to not to deduct TDS of up to Rs 40,000 on interest income from Bank / Post office deposits (the current FY 2018-19 TDS threshold limit u/s 194A is Rs 10,000).
• Currently, income tax on notional rent is payable if one has more than one self-occupied house. No tax on notional rent on Second Self-occupied house has been proposed. So, you can now hold 2 Self-occupied properties and don’t have to show the rental income from second SoP as notional rent.
• The benefit of rollover of capital gains under section 54 of the Income Tax Act will be increased from investment in one residential house to two residential houses for a tax payer having capital gains up to Rs 2 crore. This benefit can be availed once in a life time.
• TDS threshold for home rent paid by non-individuals has been increased from Rs 1.8 lakh to Rs 2.4 lakh p.a.
• All income tax returns to be processed within 24 hours and refunds to be issued simultaneously
• Tax scrutiny will also now be done electronically and there will be no interaction between the tax authority and the taxpayer.  

Calculation of Income Tax for FY 2019-20/AY 2020-21 | Illustrations

Let’s now discuss some scenarios on ‘How to calculate the tax on our total income?’

Assessees who are in 30% Tax Slab and below 60 years of age

Let us say your net taxable income (after all deductions like Sec.80C and all) Rs.16,00,000.

• Up to Rs.2,50,000-NIL
• Rs.2,50,001 to Rs.5,00,000-Rs.12,500  @5%.
• Rs.5,00,001 to Rs.10,00,000-Rs.1,00,000 @20%
• Rs.10,00,001 and above (in this case Rs.16,00,000)=Rs.1,80,000 @30%.
• So total tax will be Rs.12,500+Rs.1,00,000+Rs.1,80,000=Rs.2,92,500.

Assessees who are in 20% Tax Slab and below 60 years of age

Let us say your net taxable income (after all deductions like Sec.80C and all) Rs.8,00,000.

• Up to Rs.2,50,000-NIL
• Rs.2,50,001 to Rs.5,00,000-Rs.12,500 @5%.
• Rs.5,00,001 to Rs.8,00,000=Rs.60,000 @20%
• Therefore, the total tax will be Rs.12,500+Rs.40,000=Rs.72,500.

Assessees who are in the lowest Tax Slab and below 60 years of age

Let us say your income is Rs.4,00,000

• Up to Rs.2,50,000-NIL
• Rs.2,50,001 to Rs.4,00,000-Rs.7,500 @5%.
• However, using Sec.87A of IT Act, your tax liability will be ZERO.

An individual who is resident Indian and whose total taxable income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A of up to Rs.12,500 (w.e.f AY 2020-20).

• 4% health and education cess applies to all slabs.
• Surcharge is levied if taxable income is more than Rs 50 lakh.  A Surcharge is levied on the amount of income tax payable and the Health and Education cess of 4 per cent will be levied on the amount of income tax plus surcharge.

Other Key Proposals:

• Govt Proposes to launch Pradhan Mantri Kisaan Samman Nidhi.
  • Farmers with less than 2 hectare land will be given an income support of Rs 6,000 per year as direct transfer in three equal installments.
• Govt proposes to launch ‘Shram Yogi Mandhan’, a Pension scheme of the un-organized sector workers, with monthly income upto Rs 15,000.
  • Under this new pension yojana, an assured monthly pension of Rs 3,000 from the age of 60 years will be provided on a monthly contribution of a small affordable amount during their working age.
  • For instance, an unorganised sector worker joining pension yojana at the age of 29 years will have to contribute only Rs 100 per month till the age of 60 years. An equal contribution (Rs 100) to the Pension scheme will be made by the Govt as well.

Kindly go through the other important tax proposals announced in the Full Budget (July) 2019..

Continue reading :

1. Income Tax Slab Rates for FY 2020-21 / AY 2021-22 | Budget 2020 Key Highlights
2. All in one guide to ‘Budget 2019 Proposals related to Personal Finance’
3. List of Income Tax Deductions for FY 2018-19 / AY 2019-20
4. Rs 50000 Standard Deduction from FY 2019-20 | What is the impact on your Taxable Income?
5. Income Tax Deductions List FY 2019-20 | List of important Income Tax Exemptions for AY 2020-21

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (Post first published on 01-February-2019) 

(This article is based on limited available information, if required, the content will be edited/updated. Kindly note that these proposals may or may not be implemented by the next forming Union Govt.)