Income Tax Rates for Financial Year 20-21 & Financial Year 21-22

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Introduction

We are heading towards the new Financial Year 21-22. In this article you will get to know about Tax Rates, Surcharge, Health & Education Cess, Special rates, and rebate/relief applicable to various categories of Individuals (Resident & Non-Resident), HUF, Firms/LLP, Companies, Co-operative Society, Local Authority, AOP, BOI, artificial juridical persons for income liable to tax in the Financial Year 2020-21 (The assessment Year 2021-22) and Financial Year 2021-22 (The assessment Year 2022-23).

As per the Budget 2021 updates, there is no change in Tax Rates. Hence Tax Rates applicable to both the assessment year are same.

1. Income Tax Rates for FY 2020-21 & 2021-22 applicable to Individuals (Resident / Non Resident)

a. Income Tax

Net Income RangeRate of Income Tax
1.1 Individuals (Excluding senior citizen) 
Up to Rs. 2,50,000NA
Rs. 2,50,000 to Rs. 5,00,0005%
Rs. 5,00,000 to Rs. 10,00,00020%
Above Rs. 10,00,00030%
  
1.2 Senior Citizen 
Up to Rs. 3,00,000NA
Rs. 3,00,000 to Rs. 5,00,0005%
Rs. 5,00,000 to Rs. 10,00,00020%
Above Rs. 10,00,00030%
1.3 Super Senior Citizen 
Up to Rs. 5,00,000NA
Rs. 5,00,000 to Rs. 10,00,00020%
Above Rs. 10,00,00030%

b. Surcharge: Following are the rates of Surcharge which is levied on the amount of income tax if the total income of an assessee exceeds specified limits:-​

Range of Income

Surcharge Rate

Rs. 50 Lakhs to Rs. 1 Crore

10%

Rs. 1 Crore to Rs. 2 Crores

15%

Rs. 2 Crores to Rs. 5 Crores

25%

Rs. 5 crores to Rs. 10 Crores

37%

Exceeding Rs. 10 Crores

37%

Note A: The access surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112A, and 115AD. Hence, the maximum of 15 % rate of surcharge on tax payable is applicable in such case.

Note B: Marginal relief is also provided from surcharge as following-

Net Income RangeMarginal Relief
ExceedsDo not exceeds
50 Lakh1 CroreThe total amount payable as income tax and surcharge must not exceed the amount payable as tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs
1 Crore2 CroreThe total amount payable as income tax and surcharge must not exceed the amount payable as tax on total income of Rs 1 crore by more than the amount of income that exceeds Rs 1 crore
2 Crore5 CroreThe total amount payable as income tax and surcharge must not exceed the amount payable as tax on total income of Rs 2 crore by more than the amount of income that exceeds Rs 2 crore
5 CroreNAThe total amount payable as income tax and surcharge must not exceed the amount payable as tax on total income of Rs 5 crore by more than the amount of income that exceeds Rs 5 crore

 
Note C: Health and Education Cess: 4% education cess is levied on the cumulative amount of income tax & surcharge.

Note D: Rebate u/s.87A

A resident individual with net income less than Rs. 5,00,000 can avail the benefits of rebate under section 87A. It is deductible from income-tax before calculating education cess. 100 % of income-tax or Rs. 12,500, whichever is less is given as the amount of rebate from the income tax.

2. Income Tax Rates for FY 2020-21 & FY 2021-22 for HUF, AOP, BOI, Other Artificial Juridical Person

 

Net Income Range

Rate of Income Tax

Up to Rs. 2,50,000

NA

Rs. 2,50,000 to Rs. 5,00,000

5%

Rs. 5,00,000 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Surcharge and Health & Education Cess: Rates applicable to Individuals will be the same as given above

3. Special Income Rates for Individual & HUF u/s. 115BAC for FY 2020-21 & FY 2021-22

In the Finance Act, 2020, there is a provision for the Individuals and HUF for making payment of taxes at the following reduced rates from Assessment Year 2021-22 and onwards:

Total Income (Rs)

Rate

Up to 2,50,000

Nil

From 2,50,001 to 5,00,000

5%

From 5,00,001 to 7,50,000

10%

From 7,50,001 to 10,00,000

15%

From 10,00,001 to 12,50,000

20%

From 12,50,001 to 15,00,000

25%

Above 15,00,000

30%

Note 1: Surcharge and Health & Education Cess as well as Rebate u/s.87A: Same as Rates Above 

Note 2: The option to pay tax at lower rates will be available only if the annual income of a taxpayer is computed without claiming specified exemptions or deductions

4. Income Tax Rates applicable to Company for FY 2020-21 & FY 2021-22

4.1 Domestic Company 

Income-tax rates applicable for domestic companies are as follows:

Turnover Criteria

Assessment Year 2021-22

Assessment Year 2022-23

Annual turnover during the previous year 2018-19 must not exceed Rs. 400 Crore

25%

NA

Annual turnover during the previous year 2019-20 must not exceed Rs. 400 Crore

NA

25%

Any other domestic company

30%

30%

Surcharge: the income-tax shall be increased by a surcharge at the below mentioned rate:

Range of Income

Rs. 1 Crore to Rs.10 Crore

Above Rs. 10 Crore

Surcharge Rate

7%

12%

Note: Surcharge may be subject to marginal relief.

Health and Education Cess: The amount of income-tax and the surcharge shall be increased by 4% health and education cess of such income-tax and surcharge. 

Special Tax rates applicable to a domestic company are as follows:-

Domestic Company

Tax Rates

Companies under 115BA

25%

Companies under 115BAA

22%

Companies under 115BAB

15%

Surcharge: Flat 10% surcharge is applicable to companies opting for taxability under Section 115BAA or Section 115BAB irrespective of amount of total income. 

Health and Education Cess: The amount of income-tax and the surcharge shall be increased by 4% health and education cess of such income-tax and surcharge. 

MAT: The domestic company opting for taxability under Section 115BAA & 115BAB is exempted from provision of MAT (Minimum Alternate Tax). However, there is no exemption available for the companies opting under section 115BA. In this case, the provisions of Minimum Alternate Tax (MAT) is applicable. The tax payable cannot be less than 15% (+HEC) of “Book profit” as per section 115JB.

However, 9% MAT is levied in case of a company, being a unit of an International Financial Services Centre and providing income in convertible foreign exchange solely.

4.2 Foreign Company

Nature of Income

Tax Rate

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%

Any other income

40%

Surcharge: The amount of surcharge will be increased by the below-mentioned rate-

Range of Income

Rate of Surcharge

Rs. 1 Crore to Rs. 10 Crore

2%

Above Rs. 10 Crore

5%

However, the surcharge may subject to marginal relief.

Health and Education Cess: The amount of income-tax and the surcharge shall be increased by 4% health and education cess of such income-tax and surcharge.

5. Income Tax Rates for FY 2020-21 & FY 2021-22 for Partnership Firm & LLP

30% tax rate is applicable to Partnership firm (including LLP)

Surcharge: The amount of surcharge will be increased by the below-mentioned rate-

Range of Income

Rate of Surcharge

Exceeds Rs. 1 Crore

12%

However, the surcharge may subject to marginal relief.

Health and Education Cess: The amount of income-tax and the surcharge shall be increased by 4% health and education cess of such income-tax and surcharge. 

6. Income Tax Rates for FY 2020-21 & FY 2021-22 for Local Authority

Local authority is taxable at 30%. 

Range of Income

Rate of Surcharge

Exceeds Rs. 1 Crore

12%

However, the surcharge may subject to marginal relief.

Health and Education Cess: The amount of income-tax and the surcharge shall be increased by 4% health and education cess of such income-tax and surcharge.

7. Income Tax Rates for FY 2020-21 & FY 2021-22 for Co-operative Society

7.1 Normal Rates

Taxable Income

Tax Rate

Up to Rs. 10,000

10%

Rs. 10,000 to Rs. 20,000

20%

Above Rs. 20,000

30%

Surcharge: The amount of surcharge will be increased by the below-mentioned rate-

Range of Income

Rate of Surcharge

Exceeds Rs. 1 Crore

12%

However, the surcharge may subject to marginal relief.

Health and Education Cess: The amount of income-tax and the surcharge shall be increased by 4% health and education cess of such income-tax and surcharge. 

7.2 Special tax rates applicable to Co-operative societies

Taxable Income

Tax Rate

Any Income

22%

Disclaimer:

The contents of this article are only for reference purpose & do not opt for any legal advice. The facts and figures are based on the latest budget updated in 2021, but the readers are advised to refer to relative documents before acting upon the above article. 

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