Income Tax Slab & Calculation - FY 2019-20 - YouTube

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Namaskar, my name is Mukul and you are welcome to the Asset Yogi

Friends, on the 5th of July, the final budget has been presented.

Some amendments have been done to it.

In the interim budget, some changes were proposed in the income tax slabs

Other than that, some changes are there in the final budget

In this video, we will talk about what are the changes in the income tax slabs?

How exactly does the calculation of income tax be done? We will talk about this in this video

I have made two videos in which we have talked about tax savings.

In the first video, we discussed what investment can we make under section 80C

In the second video, we discussed how can we save taxes without investing

If you haven't watched those videos yet, then do watch them

You'll find the link in the description. Many people commented

on those videos that there is no tax on income up to 5 lakhs. But it's not like that.

If your net taxable income is under 5 lakhs then there is no tax for it.

What does this mean?

I will tell you this in detail in this video.

We will take examples also.

With that, the people who come under the higher income tax bracket

The extra surcharge is charged on their income.

The highest effective income tax rate in today's date is 42.74%

So what are these changes?

We will know them in detail in this video.

So stay tuned with the video.

Music

I will take you straight to the blackboard.

First, we will see income tax slabs.

So nothing has changed in the income tax slab

They are exactly the same as they were in the FY 2018-19

There is no tax on income up to 2.5 lakhs. There is zero tax on it.

In the case of senior citizens, this value becomes 3 lakhs.

So there are no taxes up to 3 lakhs.

If we talk about the normal person

So there are no taxes up to 2.5 lakhs.

There is a 5% tax on income from 2.5 lakhs to 5 lakhs.

There is a 20% tax on income

From 5 lakhs to 10 lakhs.

And if your income is above 10 lakhs then you come under the 30% tax bracket.

So we were talking about the net taxable income

5 lakhs, what does that mean?

If your not taxable income is below 5 lakhs

If you come in this bracket, then there will be no tax levied on your income.

But if your income goes above 5 lakhs, your net taxable income

So whatever tax should be levied

Means you were in the bracket 0%, 5%

From 2.5 to 5 lakhs, 5%

And if your income is above 5 lakhs then 20% tax will be imposed

So I will explain this with an example that what the meaning of taxable income is.

We will take a scenario. First, we will see from where your income comes from

So all your income is added. What are the sources of income?

Income from salary, income from property

Income from business, income from capital gains

Or income from other sources means your bank interest

The interest which comes from the FD, all this is calculated in other sources

After this, you will calculate your gross total income

By adding all these categories.

After this, you deduct from gross total income

I have not written the deductions separately. I am taking all the deductions altogether

Because we want to simplify the calculation.

Now, what can be these deductions? These can be the deductions of HRA

They can be the deductions under Section 80C whose limit is 1.5 lakhs

The standard deduction is worth 50,000 in today's date

I have counted those deductions in this.

Or the saving interest from the bank whose limit is 10000. That is included in this.

Or home loans principal and interest

I have included all these things in the deductions

So after gross total income, when you subtract the deductions

After that, your net taxable income comes.

If this net taxable income is below 5 lakhs

Then there is no tax levied on your income. We will see an example

That is what the effect is going to be. In scenario 1, we will assume

if someone's salary is 3,50,000 and there is no income from anywhere.

And we will assume the income from other sources

Including the interest of the bank approximately 50000 Rs

Then what will be the total gross income? It will be 4 lakh Rs.

I will assume the deductions

Let's say this person has saved 1 lakh Rs. So there is a standard deduction of 50000 Rs

You got the deduction on interest of 10000 Rs

The investment of 40000 Rs under 80C is done.

So when you will deduct 1 lakh from 4 lakh

So what is his net taxable income? -It's 3 lakhs Rs.

So the amount of 3 lakhs is below 5 lakhs.

So the tax will not be levied. So in this case, the tax is zero.

Now we will consider scenario 2, assume someone's income is 6 lakhs Rs

And there is no other income

Assume income from other sources is 60,000 Rs

We will consider this FD interest or bank interest.

So the gross total income, in this case, is 6,60,000 Rs

I will assume that the deductions are worth 60000 Rs. We will consider the standard deduction

50000 and 10000 Rs is the interest of saving in the bank

So in this case the net taxable income is 6 lakh Rs

So please pay attention, the net taxable income has gone above 5 lakh Rs

So how much tax will be levied on this?

There is no tax up to 2.5 lakhs Rs

The income from 2.5 to 5 lakhs Rs, -means (5-2.5)×0.05

Means 0.5 %

This much tax will be levied.

How much is this? This is 12500 Rs

So the tax is 12500 Rs for the income of up to 5 lakhs Rs

And for the income above 5 lakhs Rs the tax is 1 lakh Rs.

This means if we say 6-5, -so this is 1 lakh

The tax that will be levied is 0.2 i.e 20% tax

How much is this? This is 20000 Rs

So if we add 20000 and 12500 Rs

So in this case, the total tax levied is 32500 Rs

So see, the person could do the zero tax

He could have saved 32000 Rs straight.

If he had done 1 lakh Rs investment under 80C

Then his net taxable income could have been 5 lakh Rs

Then his tax would be zero.

We will see one more case.

Assume someone's salary is 8 lakh Rs, the income from other sources is 50000 Rs

Then the gross total income will be 8.5 lakh Rs

I will consider total deductions as 3.5 lakh Rs

See, claiming the deduction of 3.5 lakh is not that big a deal

Assume the deduction of HRA approx 2.5 lakh, let's say 50000 Rs is his standard deduction.

He claimed 10000 Rs on the interest of savings.

He may have invested the rest of 40000 Rs in 80C. So, there could be any combination of 3.5 lakhs.

If 3.5 lakh is deducted from 8.5 lakhs, then the net taxable income is 5 lakhs

So there is no tax on the net taxable income of up to 5 lakhs

So his tax will be zero.

So we have compared both the scenarios

In one scenario, a person was earning 660000, his tax was 32500 Rs

In another scenario, we saw the person who was earning 8.5 lakhs

He brought his net taxable income under 5 lakhs

So his tax was zero.

So the point to remember here is that you can do maximum savings

And claim maximum deductions

Because you can do it easily

If your income is 8, 9, or even 10 lakhs, they can claim HRA deductions.

Or they can claim a home loan deduction. When you will claim these deductions

Your net taxable will come under 5 lakhs

And you have to give zero tax.

So we understood this thing here. So we will see the changes of the higher income tax bracket.

So we will understand the calculation of effective tax rates.

We have seen the taxes of lower-income.

There is no tax up to 2.5 lakhs, from 2.5 to 5, there is a 5% tax

From 5 to 10, there is a 20% tax and

The person whose income is above 10 lakh Rs comes under the 30% tax bracket.

But the higher tax bracket that we are seeing

Whose income is above 50 lakhs, an additional surcharge is charged on this

And how much is this surcharge?

Till last year there were only two brackets.

The person whose income was from 50 lakhs to 1 crore, their surcharge was 10%

And for the income above 1 crore, there was a 15% surcharge.

Two brackets are created additionally.

The person whose income is from 2 crores to 5 crores,

An additional surcharge of 25% will be charged on their income.

A 37% surcharge will be charged on the income above 5 crores.

What does this mean? This 10% is charged on this 30%

So the additional surcharge here is 3 %. What will be for 15 % and 30%

This will be 4.5 %. For 25%-30%, this will be 7.5%

And for 37%-30%, it will be approx 11.5%

So what is the total tax and surcharge?

We will talk about this case only.

For the income from 50 lakhs to 1 crore, the surcharge plus tax income is 33%

34.5%, 37.5%, 41.1%

An Education Cess is charged with this.

The education cess of 4% is charged on this amount. So how will it be calculated?

4% of 5% will be 0.2%, 4% of 20% will be 0.8%

And so on. So if we will calculate the total effective tax rate

Then those who are earning from 2.5 lakh to 5 lakh,

For them, it's 5.2%.

After that, 20.8%, then 31.2%

And in this way, you can see the effective tax rate.

There is a very high tax on income above 5 crores.

This is 42.74%.

So these changes are brought in the final budget.

I hope you understood these income tax slabs

How is the calculation of income tax done this year?

I hope you understood this. If you liked this video

Then you can share it with your friends and family members

They will also get information about the income tax slabs and how the calculation is done.

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Till then keep learning, keep earning

And be happy as always