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Income tax slabs in Detail | Company Vakil

India levies a direct tax on individuals and domestic companies which is called income tax. Income tax slabs in India are based on the rates prescribed every year in the financial budget. Every earning citizen falls into some category of income tax, according to his income. The tax taken from the citizens is used for improvement of defense, infrastructure, and for more efficient economy of the country. It is considered as the most stable sources of income for the government.

To calculate income tax of any individual, and to know in which slab will he fall into, the individual needs to declare his total income and also total deductions from his salary. The record needs to true. Also a person can get exemption from paying income tax, or a part of income tax can be exempted if that person has invested his money into schemes that fall under for exemption.

The income tax slabs are of 3 categories and one for domestic company:

  1. Individuals and Hindu undivided family (HUF) – under 60 years of age.
  2. Senior citizens aged more than 60 and less than 80 years old.
  3. Senior citizens more than 80 years old.
  4. Domestic companies.

(In these categories there are sub divisions too, on the basis of income of individuals)

According to reports of annual financial budget of 2018, there have been as such no changes, but a replacement has been made in health and education cess from 3% in 2017 to 4% in 2018. Also transportation and/or medical reimbursements, a standard deduction of 40,000 has been introduced. This will be for all salaried individuals.

Income tax slabs are as follows-

Individuals and Hindu undivided family (HUF) – under 60 years of age

Annual income Tax rate Health and education cess
Upto Rs. 2.5 lakhs Nil Nil
Rs. 2.5 lakhs to Rs. 5 Lakh 5% 4% of income tax
Rs. 5,00,001 to Rs. 10 lakh 20% 4% of income tax
Above Rs. 10 lakh 30% 4% of income tax

Surcharge of 10% is applicable if income is more than Rs. 50 lakhs but less than Rs. 1 cr and for above Rs.1 cr it is 15% and exemption in this category is of up to Rs. 2.5 lakhs.

Senior citizens aged more than 60 and less than 80 years old

Annual income Tax rate Health and education cess
Upto Rs. 3 lakhs Nil Nil
Rs. 3,00,001 to Rs. 5 Lakh 5% 4% of income tax
Rs. 5,00,001 to Rs. 10 lakh 20% 4% of income tax
Above Rs. 10 lakh 30% 4% of income tax

Surcharge of 10% is applicable if income is more than Rs. 50 lakhs but less than Rs. 1 cr and for above Rs.1 cr it is 15% and exemption in this category is of up to Rs. 3 lakhs.

Senior citizens more than 80 years old

Annual income Tax rate Health and education cess
Upto Rs. 5 lakhs Nil Nil
Rs. 5,00,001 to Rs. 10 lakh 20% 4% of income tax
Above Rs. 10 lakh 30% 4% of income tax

Surcharge of 10% is applicable if income is more than Rs. 50 lakhs but less than Rs. 1 cr and for above Rs.1 cr it is 15% and exemption in this category is of up to Rs. 5 lakhs.

Domestic companies

turnover Tax rate cess
In previous year less than Rs.250 cr 25% 4% of corporate tax
In previous year more than Rs.250 cr 30% 4% of corporate tax

Surcharge of 7% is applicable if income is more than Rs.1 cr but less than Rs. 10 cr and for above Rs.10 cr it is 12%.

One can directly pay the income tax at the end of a financial year or can deduct from one’s income every month. This part of amount deducted from one’s salary is called TDS- tax deducted at source. If this TDS exceeds the amount to be paid as tax, one can apply for tax refund.

There can also be tax exemptions; it can be on anything like, medical expense, education, charity or any investments, mentioned by the government. With these exemptions, deductions, and tax rebates, any person can reduce the income tax for a considerable amount. One important thing to remember in this is that the percentage of tax deductions available for each individual will vary according to the type of investment each makes and reduction will be based on his salary.

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