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  • Income Tax Slabs and Rates for FY 2016-17 & AY 2017-18

    Given below are the rates at which income is taxed in India for income earned in different slabs, and through various heads of income.

    The tax rates and Tax Slabs have been arranged depending on the profile and category of the taxpayer / tax paying entity.

    Revised Income Tax Slabs - Budget 2017-18

    In what could be the best possible news of the year for taxpayers, as per the Budget for the fiscal year 2017-18 announced by Finance Minister Arun Jaitley new income tax slabs have been announced.

    The Finance Minister also announced that income tax for small companies with an annual turnover of Rs.50 crore would be reduced. Income tax has been reduced to 25% from the previous rate of 30%. It was also announced that all individuals who earn less than Rs.5 lakh per year will have to file a one page I-T return form. The revised tax rates are as given below -

    Budget 2107
    Income Tax Slab Tax Rate Applicable
    Income up to Rs.2,50,000 No tax
    Income between Rs.2,50,000 to Rs.5,00,000 5%
    Income between Rs.5,00,000 to Rs.10,00,000 20%
    Income over Rs.10,00,000 30%
    Surcharge
    Income between Rs.50 lakh to Rs.1 crore 10% of income tax is chargeable
    Income above Rs.1 crore 15% of income tax is applicable
    Cess applicable is 3% of the total income tax along with surcharge

    Customers should note that the Income Tax Exemption limit per FA 2016 is up to a maximum of Rs.2,50,000 for all individuals and HUF other than those who are covered in Part(II) or Part(III).

    1. Income Tax Slabs for Individual TaxPayers :

    2. Income Tax SlabsRate
      Up to Rs.2,50,000No tax
      Rs.2,50,000 to Rs.5,00,0005%
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%
      Income Tax Slabs and Rates

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

      Less:

      • Rebate under Section 87A: For individuals with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
    3. Income Tax Slabs for Hindu Undivided Families (HUF) :

    4. Income Tax SlabsRate
      Up to Rs.2,50,000No tax
      Rs.2,50,000 to Rs.5,00,00010%
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

      Less:

      • Rebate under Section 87A: For HUFs with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
    5. Income Tax Slabs for legal Entities Registered as Associations of Persons :

    6. Income Tax SlabsRate
      Up to Rs.2,50,000No tax
      Rs.2,50,000 to Rs.5,00,00010%
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

      Less:

      • Rebate under Section 87A: For Associations of Persons with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
    7. Income Tax Slabs for Legal Entities Registered as Bodies of Individuals :

    8. Income Tax SlabsRate
      Up to Rs.2,50,000No tax
      Rs.2,50,000 to Rs.5,00,00010%
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

      Less:

      • Rebate under Section 87A: For Bodies of Individuals with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
    9. Income Tax Slabs for Other Artificial Judicial Persons :
    10. Income Tax SlabsRate
      Up to Rs.2,50,000No tax
      Rs.2,50,000 to Rs.5,00,00010%
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

      Less:

      • Rebate under Section 87A: For Judicial entities with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
    11. For Resident Senior Citizens (Over the Age of 60, and Under the Age of 80 on the last day of the Previous Year):

    12. Income Tax SlabsRate
      Up to Rs.3,00,000No tax
      Rs.3,00,000 to Rs.5,00,00010%
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

      Less:

      • Rebate under Section 87A: For Resident Indian Senior Citizen taxpayers with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
    13. For Resident Super Senior Citizens (who are over the age of 80 as on the last day of the Previous Year):

    14. Income Tax SlabsRate
      Up to Rs.5,00,000No tax
      Rs.5,00,000 to Rs.10,00,00020%
      Over Rs.10,00,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.
    15. For Partnership Firms:

    16. Partnership Firms and LLPs (Limited Liability Partnerships) are to be taxed at the rate of 30%.

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.
    17. For Local Authorities:

    18. Local Authorities are to be taxed at the rate of 30%.

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.
    19. For Domestic Companies:

    20. Domestic Companies are to be taxed at the rate of 30%.

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 7% of the income tax amount. If income is greater than Rs.10,00,00,000 – 12% of the income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.
    21. For Foreign Companies:

    22. NatureRate
      If the income received by the Foreign Company is in the form of royalties paid by the Indian Government in relation to agreements made with an Indian concern (after March 31st, 1961, and before April 1st, 1976)50%
      If the income received is in the form of fees for technical services rendered for agreements made with Indian concerns (after February 29th, 1964, and before April 1st, 1976) 50%
      Any other income40%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 2% of the income tax amount. If income is greater than Rs.10,00,00,000 – 5% of the income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.
    23. For Co-operative Societies:

    24. Income Tax SlabsRate
      Up to Rs.10,00010%
      Rs.10,000 to Rs.20,00020%
      Over Rs.20,00030%

      Plus:

      • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
      • Education Cess: 2% extra – charged on the amount of income tax + surcharge being paid.
      • Secondary and Higher Education Cess: 1% extra – charged on the amount of income tax + surcharge being paid.

    News About Income Tax Slabs and Rates

    • NITI Aayog wants to extend the 10% income tax slab

      Currently, the 3 income tax slabs in India are 10% tax for annual income between Rs.2.5 lakhs to Rs.5 lakhs, 20% tax for annual income between Rs.5 lakhs to Rs.10 lakhs, and 30% tax for annual income over Rs.10 lakhs. NITI Aayog, India’s leading policy think-tank wants to extend the 10% income tax slab from Rs.5 lakhs to Rs.7 lakhs. The tax exemption limit will remain the same at Rs.2.5 lakhs. NITI Aayog also wants the 2017-18 Budget to focus on creating more jobs. The think-tank also wants to increase the spending on social sectors by using extra revenues on the education and health sectors. A 3-year action plan will be presented by NITI Aayog after the release of 2017-18 Union Budget on February 1st.

      16th January 2017

    • Government Looking to Raise the Limit of Tax Exemption

      According to recent reports, the Modi government may be considering increasing the income tax slab from a minimum of Rs.2.5 lakh to Rs.4 lakh per annum. The reduction is being considered in view of the recent demonetization drive so that the public can have more expendable income at hand to increase consumption and boost economy.

      The report says that tax slabs being considered are as follows:

      • 10% income between Rs.4 lakh and Rs.10 lakh

      • 15% income between Rs.10 lakh and Rs.15 lakh

      • 20% income between Rs.15 lakh and Rs.20 Lakh

      • 30% for an income of more than Rs.20 lakh

      According to chartered accountant Vikamsey Nilesh Shivji, the fall in revenue in direct tax would be made up with an increase in indirect tax and compliance. The Central Board of Customs and Excise reported that in financial year 2015-16, indirect taxes grew faster at 24% than direct taxes which increased at a rate of 15% till October.

      19th December 2016

    • New Income Tax Disclosure Norms may be difficult for HNIs and the Ultra-Rich

      Individuals earning more than 50 lakh rupees per annum are required now to declare ‘the acquisition costs of high-value assets like jewelry, flats, land, apparel and other precious metals owned by them. The main motto of the Income Tax Department behind such a rule is to nab tax evaders from the ultra rich category of taxpayers. Mostly, HNIs do not disclose details of all the assets owned by them in order to save on tax payment.

      Critics however, are of the view that it is not necessary for individuals to remember or keep track of all valuables or assets owned by them and in such cases it might become a little too difficult to abide by this new rule of the IT department.

      24th May 2016

    • IT Department introduces New Tax Disclosure Norms for the Ultra-Rich and HNIs

      The Income Tax Department has introduced new income tax disclosure norms under which individuals with a yearly income of more than Rs 50 Lakhs are required to disclose the cost of acquisition of any assets such as property, jewellery, precious metals, apparels etc in their tax return forms for the assessment year 2016-17. However, tax experts are of the opinion that this might make life difficult for the ultra-rich as well as high networth individuals since they might find it hard to keep a track of all the items mentioned by the Income Tax Department. CEO and founder of BigDecisions.com, Manish Shah, stated that many of the individuals in question have assets spread all over India as well as abroad, making it hard for them to keep a record of such items. He also stated that the new norms were introduced to counter tax evasion on the part of those individuals with a high networth who do not declare assets in order to avoid paying tax.

      12th May 2016

    • Revenue Secretary says that raising tax slabs could have resulted in huge loss

      Changing the Income Tax slab would have resulted in huge losses of around Rs.20000 crore. The same has been revealed by the Revenue Secretary Hasmukh Adhia. The secretary revealed that the government had planned to benefit only the small taxpayers as part of the recent budget. There also was the issue of fiscal deficit to be addressed and as such taxpayers in the higher bracket of 20-30 per cent will have to wait.

      Another reason for not changing the slabs is that the effective Rate paid by most taxpayers is less because of various tax exemptions that people take advantage of. He said one of the most positive decisions taken by the government was to hold the fiscal deficit at 3.5 per cent of the GDP and not letting it exceed that figure.

      6th April 2016

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