How Much Income Tax Am I Liable To Pay? Different Tax Slabs Explained
Welcome to the guide where you will be able to conclude the Tax amount you will be liable to pay as per your tax slab. We have also decoded the surcharges and additional cess so that you are well informed about the new tax regime thoroughly.
What are Income Tax Slabs?
The Income-tax department of India levies taxes based on the slab system. The Amount bracket that an individual falls under decides the rate at which he/she will get taxed.
There are three categories under which one gets taxed as per age:
Individuals: Below the age of 60 years (including residents and non-residents)
Senior citizens: Between the age of 60-80 years
Super senior citizens: Above the age of 80 years
The Tax rates are usually decided annually at the budget.
Know what tax slab do you come under?
The Income-tax department has brought about changes in the tax slab for FY 2020-2021(AY 2021-2022).
With the tax payment deadline extended till 31st December 2021, we have made a tabular comparison between the old tax slabs and the new tax slabs for better understanding in a simplified manner.
Following are the new tax slab rates for individuals below the age of 60 years:
The tax slab rates for Senior citizens i.e above the age of 60 years-80 years remain the same as the new tax rate regime for individuals. There is no further tax relief to senior citizens over normal individuals.
Super Senior citizens are required to pay tax as per the old tax regime show below:
Health and Education cess
The health and education cess was introduced by finance minister Arun Jaitley in budget 2018. The proceeds from health and education cess are used to fund health and education in rural areas. This cess is levied by the government in order to develop a particular service or sector. It is levied over and above the usual direct and indirect taxes. Health and education cess will be added at the rate of 4% to income tax liability in all cases.
Section 87A is a tax rebate for resident individuals which was introduced in the year 2003. Section 87A is an Income tax provision wherein a person whose annual income is less than 5 Lakhs can reduce their tax liability. Individuals who have taxable income upto Rs 5 Lakh will be eligible for tax rebate upto 12,500 under Section 87A.
Surcharge Rate for 2020-2021
Surcharge is an amount that is levied if the assessee exceeds a specified limit on his/her income.
Following are the surcharge Rates for FY 2020-2021
Confused about how to file your taxes before the deadline?
Don’t worry! Our Tax experts at Equiseed Wealth are here to break down the computation for you, for your best understanding. We at Equiseed Wealth will ensure that you get the maximum benefits and save on taxes that have to be paid.
Click on the link below to get connected to our Tax expert at Equiseed Wealth now