How Income Tax is charged in India?
Income tax in India is charged based on one’s income, more the income more the tax. India has four income slabs or groups.Tax slabs keep on changing from year to year. Over and above tax, surcharge and education cess is also charged. These are announced in budget by the Finance Minister every year.
Income tax for Individuals for the Annual Year 2018-19(Financial year 2017-18)
New Income Tax Slabs for FY 2017-18 (AY 2018-19) have been provided based on the Finance Budget introduced by the Hon’ble Finance Minister on February 01, 2017.
While the income tax slabs have been kept unchanged, some interesting changes have been made which will have an impact on the tax liability of Individuals.
Individuals Below 60 Yrs – Income Tax Slab 2017-18 (AY 2018-19)
| Income Tax Slab | Income Tax Rate |
|---|---|
| Income upto Rs. 2,50,000 | Nil |
| Income between Rs. 2,50,001 – Rs. 500,000 | 5% of Income exceeding Rs. 2,50,000 |
| Income between Rs. 500,001 – Rs. 10,00,000 | Rs. 12,500 + 20% of the amount by which the taxable income exceeds Rs. 5,00,000 |
| Income above Rs. 10,00,000 | Rs. 1,12,500 + 30% of the amount by which the taxable income exceeds Rs. 10,00,000 |
Surcharge :
- 10% of the Income Tax, where taxable income is more than Rs. 50 lacs and upto Rs. 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 50 lacs by more than the amount of increase in taxable income.
- 15% of the Income Tax, where taxable income is more than Rs. 1 crore. However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income of Rs. 1 crore by more than the amount of increase in taxable income.
Education Cess : 3% of the total of Income Tax and Surcharge.
Income Tax Rebate Reduced
The income tax rebate continues but it is reduced now. The income tax rebate came down to 2,500. Last year it was ₹5000. Not only the reduction, the threshold for this rebate also came down. Now, the income upto 3.5 lacs is eligible for this rebate. Earlier, income upto ₹5 lac was eligible for the income tax rebate.
Because of this provision, those who earns up to Rs 3 lacs are not required to pay any tax. Rather, if a person uses the all available deductions, the income up to Rs 5 lacs can become tax-free.
Senior Citizens (60-80 yrs) : Income Tax Slab 2017-18 (AY 2018-19)
To avail the benefit of senior citizen’s income tax slab of 2017-18, one should be born on or after 1st April 1937 but before 1st April 1957. These dates are applicable for the income tax slab rate of the financial year 2017-18.
| Income Tax Slab | Income Tax Rate |
|---|---|
| Income upto Rs. 3,00,000 | Nil |
| Income between Rs. 3,00,001 – Rs. 500,000 | 5% of Income exceeding Rs. 3,00,000 |
| Income between Rs. 500,001 – Rs. 10,00,000 | Rs. 20,000 + 20% of the amount by which the taxable income exceeds Rs. 5,00,000 |
| Income above Rs. 10,00,000 | Rs. 1,20,000 + 30% of the amount by which the taxable income exceeds Rs. 10,00,000 |
Education Cess
Senior citizens are also required to pay education cess similar to other individuals. The 3% cess is charged on the income tax of senior citizens. Due to this the effective income tax slab rate increases.
Super Senior Citizens ( above 80 yrs) : Income Tax Slab 2017-18 (AY 2018-19)
The senior citizens of above the age of 80 gets maximum tax concession from the government. They get this concession considering increased medical and healthcare expenses.
To get the benefit of this income tax slab rate, one should be born before 1st April 1937.
| Income Tax Slab | Income Tax Rate |
|---|---|
| Income upto Rs. 5,00,000 | Nil |
| Income between Rs. 500,001 – Rs. 10,00,000 | 20% of Income exceeding Rs. 5,00,000 |
| Income above Rs. 10,00,000 | Rs. 100,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
Any NRI or HUF or AOP or BOI or AJP
Income Tax :
| Income Slabs | Tax Rates | |
|---|---|---|
| i. | Where the taxable income does not exceed Rs. 2,50,000/-. | NIL |
| ii. | Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. | 5% of amount by which the taxable income exceeds Rs. 2,50,000/-. |
| iii. | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. | Rs. 12,500/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iv. | Where the taxable income exceeds Rs. 10,00,000/-. | Rs. 112,500/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
List of Income Tax Exemptions FY 2017-18 / AY 2018-19 (Chapter VI-A deductions list)
For full details of Income Tax exemptions click the following link:
Sources:
To know about Income tax for Individuals for the Annual Year 2017-18(Financial year 2016-17) and Eligible deductions click the link given below
