When it comes to income tax planning and filing a tax return, is important to know which tax slab you are in. Remember that the tax rate on income from which your income will fall is the rate at which your income will be taxed. The tax rate will change as income at different levels or in different bands known as income tax slab rates.
Income Tax Slabs 2019-2020
Below are the income tax slabs for people below the age of 60 years for the financial year 2019-2020:
|Income Slabs||Income Tax Rates Applicable to Each Slab|
|Up to Rs 2.5 lakh||Nil|
|Rs 2,50,001 to Rs 5,00,000||5% of (Total income minus Rs 2,50,000)|
|Rs 5,00,001 to Rs 10,00,000||Rs 12,500 + 20% of (Total income minus Rs 5 lakh)|
|Above Rs 10 lakh||Rs 1,12,500 + 30% of (Total income minus Rs 10 lakh)|
New Taxpayers note that addition is applicable from income above Rs 50 lakh. Health and Education cess at a rate of 4% are added to the income tax payable in all tax slabs. Under section 87A, a standard rebate of Rs 12,500 is eligible for persons with a net taxable income of up to Rs 5 lakh.
Income Tax Calculation for Gross Income of Rs 15 lakh
If your gross income is Rs 15 lakh, then your net taxable income will not necessarily be the same. The first Rs 2.5 lakh from your income of Rs 15 lakh will be exempted from tax as per current income tax rates, there is no tax on income below Rs 2.5 lakh. Besides this, your remaining income of Rs 12.5 lakh still chargeable to tax. The next Rs 2.5 lakh will be taxed at 5% then your current income tax charge will be Rs 12,500 (5% of Rs 2.5 lakh).
The income is still payable for Rs 10 lakh (Rs 12.5 lakh minus Rs 2.5 lakh taxed at 5%). The next Rs 5 lakh of your income will be taxed at a rate of 20% from Rs 10 lakh, then charges will be Rs 1 lakh.
Finally, your total income tax chargeable will be Rs 1,12,500. Remember that your income needs to be taxed at the last rupee. Thus, out of the gross total income of Rs 15 lakh, income up to Rs 10 lakh is only offered to tax. The income now imposed on taxable is Rs 5 lakh. This income of Rs 5 lakh taxed at 30%. In this case, the total income tax liability will be Rs 1.5 lakh.
What is your Income Tax Slab then?
Normally, the income tax slab in which the last rupee of your income is considered to be taxed in which you fall. This means any income above Rs 10 lakh will be taxed at 30%. There will be a surcharge on income tax applied at different levels of income when the income exceeds Rs 50 lakh. You can also check more details regarding the latest Stock marketing updates here.