Income tax slab and rate for FY 2019-20 – Understanding new tax rules

New Income Tax Slab and Rate - Key Highlights

Interim budget 2019 proposed no modifications in the tax slabs.
Under section (u/s) 87A, individuals with earnings up to Rs. 5.0 lacs will receive full rebate. Rebate, as per section 87A altered from Rs. 2,500 to Rs. 12,500 or 100% of income tax (either of which is lower) for Indian citizens with earnings less than Rs. 5.0 lacs (earlier it was Rs. 3.5 lacs)
Standard deduction, for pensioners and salaried, increased from Rs. 40,000 to Rs. 50,000
In case an individual owns 2 houses, then tax on notional rent will not be applicable on second house and it can be presented as self-occupied
Tax deducted at source (TDS) limit for co-operative society deposits/post-office/bank has been increased to Rs. 40,000 for a year from the previous Rs. 10,000 per year
Under section 54, exemption permitted on long-term capital gains on selling a residential property in order to purchase 2 residential properties once in lifetime

Though, the Indian government has not made any amendments to the tax slab, however, through the changes made under section 87A it will have the following impact:

Not provide any tax benefit to individuals whose taxable income is in excess of Rs. 5.0 lacs
Individuals with income greater than Rs. 2.5 lacs are still required to file an income tax return for FY2019-20 or AY2020-21 – this aims to keep the number of return filer high

Income tax slab and rate for FY 2019-20 – Understanding new tax rules

Introduction to Income Tax Return

It is mandatory for Indian citizens to file an income tax return every year in case their taxable income is in excess of Rs. 2.5 lacs. In India, the financial year (FY) begins from 1st April and finishes on 31st March of the following year. For instance, the FY2019-20 will begin from 1st April 2019 and ends on 31st March 2020. Also, it must be noted that assessment year (AY) is defined as the year directly succeeding the FY wherein the income of the financial year is evaluated. Hence, in the assessment year (AY) 2020 – 21, the income tax during the period from 1st April 2019 to 31st March 2020 would be evaluated

Understanding New Tax Rules For Financial Year 2019-20

On 1st February 2019, Mr. Piyush Goyal, interim Finance Minister of India (in the absence of Finance Minister - Mr. Arun Jaitley), put forward the 2019 interim budget in the Indian Parliament. In the interim budget, the below mentioned tax provisions were announced with regards to income tax rates and tax slabs:

No income tax on annual taxable earnings up to Rs. 5.0 lacs
In the proposed interim budget, the rebate limit u/s 87A has been augmented from 3.5 lacs previously to Rs. 5.0 lacs. Section 87A offers tax exemption on payment to a resident person. According to the new provision, if a person’s net taxable earnings is up to Rs. 5.0 lacs then he/she will get advantage of Rs. 12,500 or the tax amount, either of which is lower. If an individual is accountable to pay tax up to the rebate limit permitted, then post availing the rebate benefit, no disbursement will be essential to be made for the amount of tax. For availing the entire amount of rebate, the net taxable income must be up to Rs. 5.0 lacs for FY2019-20, or Assessment year (AY) 2020-21
Standard deduction augmented from Rs 40,000 for FY2018-19 to Rs 50,000 for FY2019-20 – this is applicable for salaried class and pensioners
No amendments have been made to the income tax slabs

The elementary exemption limit for an Indian citizen depends on the age of the individual along with his/her residential standing. Based on the age of an individual, each resident individual taxpayer is grouped into three categories:

Resident individuals whose age is less than 60 years
Resident senior citizens whose ages is more than 60 years but less than 80 years
Resident super senior citizens whose age is more than 80 years

Tax rates for individual for FY2019-20
Particulars	Individual (age less than 60 years)	Senior citizens (age 60 years and above)	Super senior citizen (age 80 years and above)
Income up to Rs. 2.5 lacs	Nil	Nil	Nil
Income between Rs. 2.5 lacs and Rs. 3.0 lacs	5%	Nil	Nil
Income between Rs. 3.0 lacs and Rs. 5.0 lacs	5%	5%	Nil
Income between Rs. 5.0 lacs and Rs. 10.0 lacs	20%	20%	20%
Income more than Rs. 10.0 lacs	30%	30%	30%

*A resident individual, whose taxable income is equal to or less than Rs. 5.0 lacs, can claim a tax rebate u/s 87A

The above rates do not cover cess and surcharge:

Health and education cess charged at 4%
Rate of surcharge for individuals with earnings between Rs. 50 lacs to Rs. 1 Cr. is 10% and for individuals with earnings exceeding Rs. 1 Cr. is 15%

Tax Slabs and Age Groups

Income tax slab for resident individual aged less than 60 years (0-59 years) – same tax slab rates will be applicable for both female and male resident taxpayers

Income tax slab for resident individual aged less than 60 years (0-59 years)
Tax slab based on income	Rate of income tax and cess
Income up to Rs. 2,50,000	Nil
Income between Rs. 2,50,001 and Rs. 5,00,000	5% of (net income minus Rs. 2,50,000) plus 4% cess
Income between Rs. 5,00,001 lacs and Rs. 10,00,000	Rs. 12,500 + 20% of (net income minus Rs. 5,00,000) plus 4% cess
Income more than Rs. 10,00,000	Rs. 1,12,500 + 30% of (net income minus 10,00,000) plus 4% cess

Income tax slabs for resident individual whose age is more than 60 years but less than 80 years (Senior Citizen) – same tax slab rates will be applicable for both female and male resident taxpayers

Income tax slab for resident individual aged less than 60 years (0-59 years)
Tax slab based on income	Rate of income tax and cess
Income up to Rs. 3,00,000	Nil
Income between Rs. 3,00,001 and Rs. 5,00,000	5% of (net income minus Rs. 3,00,000) plus 4% cess
Income between Rs. 5,00,001 lacs and Rs. 10,00,000	Rs. 10,000 + 20% of (net income minus Rs. 5,00,000) plus 4% cess
Income more than Rs. 10,00,000	Rs. 1,10,000 + 30% of (net income minus Rs. 10,00,000) plus 4% cess

Income tax slabs for resident individual whose age is more than 80 years (Super Senior Citizen) – same tax slab rates will be applicable for both female and male resident taxpayers

Income tax slab for resident individual whose age is more than 80 years
Tax slab based on income	Rate of income tax and cess
Income up to Rs. 5,00,000	Nil
Income between Rs. 5,00,001 lacs and Rs. 10,00,000	20% of (net income minus Rs. 5,00,000) plus 4% cess
Income more than Rs. 10,00,000	Rs. 1,00,000 + 30% of (net income minus Rs. 10,00,000) plus 4% cess

For non-resident individuals (NRI), the elementary taxation exemption limit is set at Rs. 2,50,000 in a financial year regardless of their age

Understanding the Tax Liability Due to Increase in Cess

In the previous budget, the Indian government augmented cess on income tax for FY2018-19 to 4% as compared to 3% in FY2017-18 across the board for taxpayers. Because of the increase in cess, the amount of tax liability for higher slab individuals (supposing to have an income of Rs. 15.0 lacs) has gone up by Rs. 2,625. Similarly, the middle income tax slab liability has gone up by Rs. 1,125, and the lowest income tax slab liability has increased by Rs. 125

Income tax slab for resident individual aged less than 60 years (0-59 years)
Tax slab based on income	Rate of income tax and cess	Net taxable income	Post budget tax liability	Tax amount increased due to cess
Income up to Rs. 2,50,000	Nil	2,50,000	-	-
Income between Rs. 2,50,001 and Rs. 5,00,000	5% of (net income minus Rs. 2,50,000) plus 4% cess	5,00,000	13,000	125
Income between Rs. 5,00,001 lacs and Rs. 10,00,000	Rs. 12,500 + 20% of (net income minus Rs. 5,00,000) plus 4% cess	10,00,000	1,17,000	1,125
Income more than Rs. 10,00,000	Rs. 1,12,500 + 30% of (net income minus Rs. 10,00,000) plus 4% cess	15,00,000	2,73,000	2,625

Income tax slab for resident individual whose age is more than 60 years but less than 80 years
Tax slab based on income	Rate of income tax and cess	Net taxable income	Post budget tax liability	Tax amount increased due to cess
Income up to Rs. 3,00,000	Nil	3,00,000	-	-
Income between Rs. 3,00,001 and Rs. 5,00,000	5% of (net income minus Rs. 3,00,000) plus 4% cess	5,00,000	10,400	100
Income between Rs. 5,00,001 lacs and Rs. 10,00,000	Rs. 10,000 + 20% of (net income minus Rs. 5,00,000) plus 4% cess	10,00,000	1,14,000	1,100
Income more than Rs. 10,00,000	Rs.1,10,500 + 30% of (net income minus Rs. 10,00,000) plus 4% cess	15,00,000	2,70,400	2,600

Income tax slab for resident individual whose age is more than 80 years
Tax slab based on income	Rate of income tax and cess	Net taxable income	Post budget tax liability	Tax amount increased due to cess
Income up to Rs. 5,00,000	Nil	5,00,000	-	-
Income between Rs. 5,00,001 lacs and Rs. 10,00,000	20% of (net income minus Rs. 5,00,000) plus 4% cess	10,00,000	1,04,000	1,000
Income more than Rs. 10,00,000	Rs. 1,00,000 + 30% of (net income minus Rs. 10,00,000) plus 4% cess	15,00,000	2,60,000	2,500

Tax Rate for Organisations

For a domestic company, income tax rates are:

Tax rate, for a company with turnover less than Rs. 250.0 Cr., is 25%
Tax rate, for a company with turnover more than Rs. 250.0 Cr., is 30%
Surcharge will be charged at 7% if the earnings is in excess of Rs. 1.0 Cr. but less than Rs. 10.0 Cr.; 12% surcharge will be charged if earnings are more than Rs. 10.0 Cr.
Health and Education Cess is charged at 4% cess on income tax comprising surcharge

For a partnership firm, income tax rates are:

A partnership firm’s (comprising LLP) earnings is taxable at 30%
Surcharge will be charged at 12% on income tax if the net earnings exceed Rs. 1.0 Cr.
Health and Education Cess is charged at 4% cess on income tax comprising surcharge

Capital gains tax rate

Capital Gains	Tax Rate
Apart from mutual funds and shares, long-term capital gains from assets	20% plus 4% health education cess
Short-term capital gains on mutual funds, and shares	15% plus 4% health & education cess
Long-term capital gains on mutual funds, and shares	10% plus 4% health & education cess
Long-term capital gains on debt mutual funds	20% plus 4% health & education cess