Before knowing the tax rates, it is very important to understand the terms Financial year (FY) and Assessment Year (AY).

The below-mentioned tax rates/ slab is on the income earned for the period 1 April 2019 to 31 March 2020. FY stands for the 'financial year' which is from 1 April 2019 to 31 March 2020. AY stands for Assessment year which 2020-21.

For individuals, the due date to file the income tax return for the income earned from 1 April 2019 to 31 March 2020 is 31 July 2020. However, this year due to COVID 19 economic relaxations, the due date is pushed to 30 November 2020

Income tax Rates 

Tax Rates for Individuals (below 60)

Tax Rates for Senior Tax Payers between the age of 60 years to 80 years old

Tax Rates for Super Senior Taxpayers above the age of 80 years

Important Notes:

• The income tax rates are applied to the annual income calculated. Thereafter Surcharge and Cess are added to the tax payable.
  • A surcharge is also applicable slab wise. The surcharge is calculated on the Tax amount. If the income is:

1. Above Rs.50,00,000 and up to Rs.1 crore – then 10% surcharge is applicable
2. Above Rs.1 crore and up to Rs.2 crore – then 15% surcharge is applicable.

In the Union Budget 2019-20, a new surcharge on income tax for super-rich individuals has been levied. So, individuals earning:

1. Between Rs.2 crore and up to Rs.5 crore –then 25% surcharge is applicable;
2. For Above Rs.5 crore – then a 37% surcharge is applicable.

• An additional Cess of 4% for Health & Education is applicable to the income tax plus surcharge.
• Section 87A allows tax rebates to Individuals whose total annual income falls below Rs.5,00,000. The rebate is limited to Rs.12,500 or the actual tax amount whichever is lower.

Income Tax Slabs for HUF

The Income Tax Slab for Hindu Undivided Family (HUF) is the same as the Tax slabs for Individuals under the age of 60 years in the year 2019 – 2020.

Income Tax Slabs for Partnership Firms

There is a flat tax rate for Partnership Firms and LLPs (Limited Liability Partnerships) and they are to pay Income Tax at the rate of 30%.

Added to the tax amount is:

1. Surcharge on tax: 12% in cases where the annual income is more than Rs.1 Crore
2. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Local Authorities

Local Authorities to are to be taxed at a flat tax rate of 30%.

Added to the tax amount is:

1. Surcharge on tax: 12% in cases where the annual income is more than Rs.1 Crore
2. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus a surcharge.

Income Tax Slabs for Domestic Companies

Domestic Companies have received a boost. With the turnover raised from 250 crores to 400 crores for a tax rate of 25%. The turnover slab wise tax calculation is:

Added to the tax amount is:

Surcharge on tax:

1. 7% in cases where the annual income is between Rs.1 Crore to Rs.10 Crore
2.  12% in cases where the annual income is more than Rs.10 Crore

Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Foreign Companies

Foreign Companies are taxed at a rate of 40%.

Added to the tax amount is:

1. Surcharge on tax: 2% in cases where the annual income is between Rs.1 Crore to Rs.10 Crore
2. 5% in cases where the annual income is more than Rs.10 Crore
3. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge

Income Tax Slabs for Co-operative Societies

Added to the tax amount is:

1. Surcharge on tax: 12% in cases where the annual income is more than Rs.1 Crore
2. Cess for Health & Education: is at the rate of 4% - calculated on tax amount plus surcharge
3. So, to calculate your tax liability for the year, you should keep a track of your annual income to know what Income slab you will be falling under for the year 2019 – 2020.

Income tax rates for a non-resident - Individuals

Capital Gains Taxation on Mutual Funds/Direct Equity

For Equity Oriented Schemes/Direct Equity

• Long Term Capital Gains (units held for more than 12 months)
• Short Term Capital Gains (units held for 12 months or less)

For non-equity oriented schemes

• Long Term Capital Gains (units held for more than 36 months)
• Short Term Capital Gains (units held for 36 months or less)

* Income-tax at the rate of 10% (without indexation benefit) on long-term capital gains exceeding Rs. 1 lakh provided the transfer of such units is subject to STT.

$ Finance (No.2) Act, 2019 provides for a surcharge at:

• 37% on base tax where income exceeds Rs. 5 crore;
• 25% where income exceeds Rs. 2 crore but does not exceed Rs. 5 crore;
• 15% where income exceeds Rs. 1 crore but does not exceed Rs. 2 crore;
• 10% where income exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore.

Further, "Health and Education Cess" to be levied at the rate of 4% on the aggregate of base tax and surcharge.

@ Surcharge at 7% on base tax is applicable where the income of domestic corporate unit holders exceeds Rs 1 crore but does not exceed 10 crores and at 12% where income exceeds 10 crores. Further, "Health and Education Cess" to be levied at the rate of 4% on the aggregate of base tax and surcharge.

# Short term/ long term capital gain tax (along with applicable Surcharge and "Health and Education Cess") will be deducted at the time of redemption of units in case of NRI investors.

^ Assuming the investor falls into the highest tax bracket.

^^ This rate applies to companies other than companies engaged in manufacturing business who are taxed at a lower rate subject to fulfillment of certain conditions.

^^^ If total turnover or gross receipts during the financial year 2017-18 does not exceed Rs. 400 crores.

Further, the domestic companies are subject to minimum alternate tax not specified in the above tax rates. Transfer of units upon consolidation of mutual fund schemes of two or more schemes of equity oriented fund or two or more schemes of a fund other than equity oriented fund in accordance with SEBI (Mutual Funds) Regulations, 1996 is exempt from capital gains.

Income-tax implications on dividend received by Mutual Fund unitholders

* Securities transaction tax (STT) shall be payable on equity-oriented mutual funds schemes at the time of redemption/switch to the other schemes/sale of units.

** For the purpose of determining the tax payable by the scheme, the amount of distributed income has to be increased to such amount as would, after reduction of tax on such increased amount, be equal to the income distributed by the Mutual Fund. In other words, the amount payable to unitholders is to be grossed up for determining the tax payable, and accordingly, the effective tax rate would be higher. The above-mentioned rate is without considering the grossing up.

Surcharge mentioned in the above table is payable on base tax. Further, "Health and Education Cess" is to be levied at 4% on the aggregate of base tax and surcharge.

Disclaimer - The tax rates mentioned here are from the Finance Act 2019 and can be subject to changes. It is advisable to consult your tax consultant or financial advisor before finalizing your tax returns.