Income Tax Slab

Income Tax slabs are the predetermined rates on the basis of which an individual’s income is assessed. Based on the age bracket and amount and type of income, the tax slabs are divided into 4 broad categories. Out of these, 3 are for individuals.

Income tax slabs are based on a number of factors including the amount of income earned by an individual, the type of income, and the age of the tax-paying individual. Based on these factors, the tax slabs are categorised into 4 broad categories. Out of them, 3 are for individual taxpayers and the fourth one is for domestic companies. The 3 categories of individual taxpayers are as follows:

  • Individuals and Hindu Undivided Family (HUF) who are less than 60 years of age.
  • Senior Citizens whose age is more than 60 years, but less than 80 years.
  • Senior Citizens who are more than 80 years of age.

Income Tax Slabs Applicable for:

1) Individuals and Hindu Undivided Family (HUF) less than 60 years old - Part (I):

Annual Income Tax Rates Health and Education Cess
Up to Rs.2.5 lakh* Nil Nil
Rs.2,50,001-Rs.5 lakh 5% 4% of Income Tax
Rs.5,00,001-Rs.10 lakh 20% 4% of Income Tax
Above Rs.10 lakh 30% 4% of Income Tax

Surcharge: When the total income is Rs.50 lakh or more but less than Rs.1 crore, the surcharge is 10% of the income tax.

Surcharge: When the total income is more than Rs.1 crore, the surcharge is 15% of the income tax.

*For the Financial Year 2018-2019, the income tax exemption limit is up to Rs.2.5 lakh for individual and Hindu Undivided Family (HUF) except those who are covered under Part (II) or Part (III).

2) Senior Citizens who are 60 years old or higher, but less than 80 years old - Part (II):

Annual Income Tax Rates Health and Education Cess
Up to Rs.3 lakh* Nil Nil
Rs.3,00,001-Rs.5 lakh 5% 4% of Income Tax
Rs.5,00,001-Rs.10 lakh 20% 4% of Income Tax
Above Rs.10 lakh 30% 4% of Income Tax

Surcharge: When the total income is Rs.50 lakh or more but less than Rs.1 crore, the surcharge is 10% of the income tax.

Surcharge: When the total income is more than Rs.1 crore, the surcharge is 15% of the income tax.

*For the Financial Year 2018-2019, the income tax exemption limit is upto Rs.3 lakh except for those who are covered under Part (II) or Part (III).

3) Senior Citizens who are 80 years old or more - Part (III):

Annual Income Tax Rates Health and Education Cess
Up to Rs.5 lakh* Nil Nil
Rs.5,00,001-Rs.10 lakh 20% 4% of Income Tax
Above Rs.10 lakh 30% 4% of Income Tax

Surcharge: When the total income is Rs.50 lakh or more but less than Rs.1 crore, the surcharge is 10% of the income tax.

Surcharge: When the total income is more than Rs.1 crore, the surcharge is 15% of the income tax.

*For the Financial Year 2018-2019, the income tax exemption limit is upto Rs.5 lakh except for those who are covered under Part (I) or Part (II).

Tax Deducted at Source (TDS) has to be deducted at applicable rates as mentioned above along with the surcharge and Health and Education Cess.

4) Domestic Companies - Part (IV):

Turnover Particulars Tax Rate
If the gross turnover in the previous year is less than Rs.250 crore 25%
If the gross turnover in the previous year is more than Rs.250 crore 30%
Additional rates which are applicable:

Cess: 4% of the corporate tax

Surcharge: When the taxable income is higher than Rs.1 crore but less than Rs.10 crore, the applicable surcharge will be 7%.

Surcharge: When the taxable income is higher than Rs.10 crore, the applicable surcharge will be 12%.

Income Tax Slabs on Dividend

Depending on the source of the dividend earned, the dividend income received by an individual is taxed.

Dividend Source Tax Rate for Individuals/HUFs Income Tax Section
If the average dividend income earned over the year does not exceed Rs.10 lakh Nil Section 10(34)
If the average dividend income received during the year exceeds Rs.10 lakh 10% Section 115BBDA

Income Tax Slab For Non-Resident Indians (NRIs)

The tax slabs and rates for the Financial Year of 2018-19 are:

Taxable Income Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2.5 lakh up to Rs.5 lakh 5%
From Rs.5 lakh up to Rs.10 lakh 20%
More than Rs.10 lakh 30%

Health and Education Cess – 4%

Income Tax Slab for Expats

The tax slabs and rates for the Financial Year of 2018-19 are:

Taxable Income Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2.5 lakh up to Rs.5 lakh 5%
From Rs.5 lakh up to Rs.10 lakh 20%
More than Rs.10 lakh 30%

Education cess and Surcharge payable (if any) - 3%

Income Tax Slab for Freelancers

The tax slabs and rates applicable to freelancers for the Financial Year of 2018-19 are:

Taxable Income Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2.5 lakh up to Rs.5 lakh 5%
From Rs.5 lakh up to Rs.10 lakh 20%
More than Rs.10 lakh 30%

Additional Components:

  1. Surcharge:
Income Rate Applicable
More than Rs.50 lakh but less than Rs.1 crore 10% of the income tax
More than Rs.1 crore 15% of the income tax (applicable on amounts that are higher than Rs.1 crore)
  1. Health and Education Cess: “Health and Education Cess” will replace the “Secondary and Higher Education Cess” and “Education Cess” and will be charged at the rate of 4% on the tax amount which is calculated (this includes the surcharge as well).

Income Tax Slab For Doctors

The tax slabs and rates applicable to doctors for the Financial Year of 2018-19 are:

Taxable Income Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2.5 lakh up to Rs.5 lakh 5%
From Rs.5 lakh up to Rs.10 lakh 20%
More than Rs.10 lakh 30%

Surcharge:

  • If the total income is more than Rs.50 lakh - 10% of the tax
  • If the total income is more than Rs.1 crore - 15% of the tax
  • Health & Education cess at the rate of 4% of tax along with the surcharge

Income Tax slab for Pensioners

The tax slabs and rates applicable to pensioners for the Financial Year of 2018-19 are:

Income Tax Slabs on Dividend
Income Tax Slabs Tax Rate Health and Education Cess
For income up to Rs.3 lakh No tax -
For income from Rs.3 lakh up to Rs.5 lakh 5% 4% of Income Tax
For income from Rs.5 lakh up to Rs.10 lakh 20% 4% of Income Tax
For income exceeding Rs.10 lakh 30% 4% of Income Tax

Surcharge:

Income Rate Applicable
More than Rs.50 lakh but less than Rs.1 crore 10% of the income tax
More than Rs.1 crore 15% of the income tax (applicable on the amount that is more than Rs.1 crore)

*Exemption limit of Income Tax is up to Rs.3 lakh for Financial Year 2018-19.

Income Tax Slabs For Financial Year 2018 - 2019

The government levies a type of direct tax on individuals’ income from profits or salary. This direct tax is called Income Tax. The proceedings from income tax collected by the government are used for the improvement of infrastructure, defense, and a number of other public purposes. In short, a mammoth part of the development of the country is done with the help of the tax money. income tax is considered to be one of the most stable sources of credit input for the government. It helps in facilitating a plethora of services to the people of the nation. The proceedings from income tax are also used for the payment of the salaries of the government employees.

How is Income Tax calculated?

There are a number of factors which are taken under consideration for the sake of calculating the income tax that is to be levied on an individual. Some of the factors on which the calculation is dependent are the type of income, the amount of income, and age of the taxpayer. In order to calculate the income tax from the salary of a salary-earning individual, he/she will be required to declare the total amount of earning and the total amount of deductions for the respective assessment year. However, there are certain types of investments on which the government allows an individual to draw exemptions. So, if an individual spends a certain amount of money into such prescribed investment schemes, he/she will be eligible to get an exemption on that investment.

Budget 2018

Income tax slabs for Financial Year 2018 - 2019 and Assessment Year 2019 - 2020

In the Indian tax system, a slab system is set on the basis of the tax rates prescribed in the budget. According to the budget, the changes are made and tax is levied on taxpayers pertaining to the individual income slabs. The income tax rates levied on individual taxpayers keep increasing in proportion to the increase in the income slab.

Since the 2018 budget was announced without any changes in the income tax slabs, the rates remain the same as 2017. The income tax rates applicable for salary-earning individuals did not witness any change (with regards to the rates proposed in 2017) in 2018. Nevertheless, a replacement has been introduced for the Education Cess. A 4% Health and Education Cess has replaced the 3% Education Cess from the previous year. In addition to that, for the purpose of transportation and/or medical reimbursements, a standard deduction of Rs 40,000 has been introduced. This standard deduction will be applicable for all salaried individuals.

There are 3 different categories of individual taxpayers and 1 for domestic companies. These categories are listed below:

  • Individuals and Hindu Undivided Family (HUF) less than 60 years old
  • Senior Citizens who are 60 years old or more, but less than 80 years old
  • Senior Citizens who are 80 years old or more
  • Domestic Companies

Based on the categories which are mentioned above, the tables mentioned below contain the different rates which are applicable for the respective categories.

Union Budget 2018

Income Tax Slabs for Financial Year 2017-2018

Income Tax slabs applicable for Individuals and Hindu Undivided Family (HUF) less than 60 years old - Part (I):

Annual Income Tax Rates Health and Education Cess
Up to Rs.2.5 lakh* Nil Nil
Rs.2,50,001-Rs.5 lakh 5% 3% of Income Tax
Rs.5,00,001-Rs.10 lakh 20% 4% of Income Tax
Above Rs.10 lakh 30% 4% of Income Tax

Surcharge: When the total income is Rs.50 lakh or more but less than Rs.1 crore, the surcharge is 10% of the income tax.

Surcharge: When the total income is more than Rs.1 crore, the surcharge is 15% of the income tax.

*For the Financial Year 2017-2018, the income tax exemption limit is upto Rs.2.5 lakh for individual and Hindu Undivided Family (HUF) except those who are covered under Part (II) or Part (III).

Income Tax slabs applicable for Senior Citizens who are 60 years old or more, but less than 80 years old - Part (II):

Annual Income Tax Rates Health and Education Cess
Up to Rs.3 lakh* Nil Nil
Rs.3,00,001-Rs.5 lakh 5% 3% of Income Tax
Rs.5,00,001-Rs.10 lakh 20% 3% of Income Tax
Above Rs.10 lakh 30% 3% of Income Tax

Surcharge: When the total income is Rs.50 lakh or more but less than Rs.1 crore, the surcharge is 10% of the income tax.

Surcharge: When the total income is more than Rs.1 crore, the surcharge is 15% of the income tax.

*For the Financial Year 2017-2018, the income tax exemption limit is upto Rs.3 lakh except for those who are covered under Part (II) or Part (III).

Income Tax slabs applicable for Senior Citizens who are 80 years old or more - Part (III):

Annual Income Tax Rates Health and Education Cess
Up to Rs.5 lakh* Nil Nil
Rs.5,00,001-Rs.10 lakh 20% 3% of Income Tax
Above Rs.10 lakh 30% 3% of Income Tax

Surcharge: When the total income is Rs.50 lakh or more but less than Rs.1 crore, the surcharge is 10% of the income tax.

Surcharge: When the total income is more than Rs.1 crore, the surcharge is 15% of the income tax.

*For the Financial Year 2018-2019, the income tax exemption limit is upto Rs.5 lakh except for those who are covered under Part (I) or Part (II).

Income Tax slabs applicable for Domestic Companies - Part (IV):

Turnover Particulars Tax Rate
If the gross turnover in the previous year  is less than Rs.50 crore 25%
If the gross turnover in the previous year is more than Rs.50 crore 30%
Additional rates which are applicable:

Cess: 3% of the corporate tax

Surcharge: When the taxable income is higher than Rs.1 crore but less than Rs.10 crore, the applicable surcharge will be 7%.

Surcharge: When the taxable income is higher than Rs.10 crore, the applicable surcharge will be 12%.

Frequently Asked Questions

  1. What is a financial year?
  2. The year in which the income is earned by an individual is called a financial year. It is calculated from the 1st of April to the 31st of March of the respective year. For example, financial year 2018 - 2019 refers to the time period between 1 April 2018 and 31 March 2019.

  3. What is an assessment year?
  4. An assessment year is calculated in the succeeding year of a financial year.  Just like a financial year, an assessment year starts from April 1 and ends on March 31. But it is calculated immediately after the end of the financial year. For example, the financial year 2018 - 2019 starts from 1 April 2018 and ends on 31 March 2019. So the assessment year for financial year 2018 - 2019 will be calculated from 1 April 2019 till 31 March 2020. An assessment year is the year in which the income earned in a financial year is assessed.

  5. Who all are liable to pay income tax?
  6. In a financial year, if a person earns an income which is more than the minimum exemption limit, he/she is expected to pay income tax. The implication of the word ‘person’ can be manifold.  A person might be an individual, a BOI (Body of Individuals), a HUF (Hindu Undivided Family), an AOP (Association of Persons), a local authority, a company or an artificial judicial person.

  7. What is the minimum exemption limit on income of salaried persons?
  8. The minimum exemption limit on income of salaried persons is Rs.2.5 lakh.

  9. What is meant by exempt income?
  10. The income on which tax is not charged is called exempt income. As per the provisions of the Income Tax Act, 1961, there are certain incomes on which tax exemption is offered. These incomes are termed as exempt incomes.

News About Income Tax Slabs

  • Tamil Nadu government all praise for GST, calls it transparent and self-policing tax regime

    A minister recently praised the Goods and Services Tax (GST) in a Tamil Nadu government assembly. The minister described the newly implemented tax system as a “transparent and self-policing tax regime”. Commercial Taxes Minister KC Veeramani recalled the year-old rollout of the new central tax regime which subsumed many other taxes and said that GST was a “landmark in the field of indirect tax reforms.”

    The Goods and Services Tax (GST) was introduced with the view of subsuming the different central and state taxes which created a cascading effect of tax. It prevented the cascading effect and paved way for a common national market, Veeramani added. The main objective of GST was to make the Indian products competitive in domestic and international markets and provide the necessary momentum to the growth of the economy. He further said that the abolishment of check-posts has allowed the hassle-free movement of goods across the nation. Veeramani also said that the Commercial Taxes department collected revenues worth Rs.73,148.28 crore in the financial year 2017-18. This collection also includes the GST compensation and IGST settlement advance. He concluded that the revenue collection had seen a growth of 10.51% in spite of the uncertainties in the country in terms of the economy.

    4 July 2018

  • What is standard deduction?

    Standard deduction is basically a benefit that some income tax payers receive, irrespective of the investments made or the expenses they have incurred. In order to claim standard deduction, the assessee need not submit any proof or document.

    Based on Section 16 of the Income Tax Act 1961, a pensioner or salaried individual can claim standard deduction up to Rs.40,000. Standard deduction is available from the financial year 2018-19, and will be applicable from the assessment year 2019-2020.

    19 June 2018

  • GST impact on FMCG: Beneficial, but contentious issues remain

    The fast moving consumer goods (FMCG) in India has grown from $31.6 billion in 2011 to $49 billion in 2016. The fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy. There are 3 main segments in this sector. They are- personal care products, healthcare products, and foods and beverages. The personal care products account for 50% of the entire sector. It is followed by healthcare products which consist of 31% and foods and beverages which consist of 19% of the sector.

    The sector is constantly growing. It is expected to grow at Compound Annual Growth Rate (CAGR) of 20.6% by 2020. This will help the sector reach a worth of $103.7 billion. The fast moving consumer goods (FMCG) saw a growth of 14.8% from October 2017 to December 2017. The expected net revenue growth for the fast moving consumer goods (FMCG) is 11.8% in Q4 March 2018. These statistics conclude that the sector has performed well under the Goods and Services Tax (GST) regime and has witnessed smooth transition.

    15 June 2018

  • GST, demonetisation to improve tax collection, broaden tax base: Moody’s

    The New York-based investors service, the Moody’s Investors Service, said that the reformations brought in India recently, like Goods and Services Tax (GST) and demonetisation will widen the tax base in India and will help towards the improvement of tax collection in course of time.

    Moody’s Investor Service opined that the strong economic growth and stability in the fiscal regime of India will be able to support the effectiveness of the ongoing tax reforms and yield gains in spite of all the uncertainties that have been surrounding the reformations. The unified GST launched on 1 July 2017 had replaced the dual taxation model. The previous taxation model involved imposition of multiple levels of central and state government taxes and thus the ‘one nation, one tax’ was implemented.

    5 June 2018

  • Complete Roll-Out: All states on e-way bill route by June 3

    The anti-evasion system under Goods and Service Tax (GST), popularly known as the e-way bill, will be implemented nationally in India very soon. 8 state governments have recently announced their plans of rolling out the e-way bill or electronic way bill system for transportation of goods within their geographical territory. Presently, e-way bills are required for interstate movement of goods worth Rs.50,000 or more. It is also applicable for intrastate movement of goods in 29 states/union territories. With effect from 1 June 2018, the generation of intrastate e-way bills will be compulsory for Chhattisgarh, Goa, Jammu and Kashmir, Mizoram, Odisha, and Punjab. Tamil Nadu and West Bengal are also implementing the same with effect from 2nd June and 3rd June, respectively.

    4 June 2018

  • All the ITR Forms released for e-filing of income tax returns (ITR)

    As the 31st July deadline of filing the returns is nearing, the Income Tax Department (ITD) has launched and activated all the Income Tax Returns (ITR) forms for e-filing of income tax returns by taxpayers. The new ITR forms were notified by the Central Board of Direct Taxes (CBDT) on 5th April, for the assessment year 2018-19. The forms have been launched by the CBDT gradually since 5th April. There are 7 ITR forms which are available on the official web portal of the Income Tax Department (ITD). These forms are to be filed by the taxpayers according to their eligibility. The 7 ITR forms are ITR- 1, ITR- 2, ITR- 3, ITR- 4, ITR- 5, ITR- 6, and ITR- 7. All the forms have to be filed electronically on the official web portal.

    30 May 2018

  • Catering services provided to offices and industry canteens to attract 18% GST

    The Gujarat Authority for Advance Ruling (AAR) has ruled out that the food services provided to canteens at offices and factories will attract a GST of 18% instead of the prevalent rate of 5%. The AAR is of the opinion that the food services provided at the canteens of offices and factories would be taxable at the rate of 18% under the category of outdoor catering in terms of Sr.7(v) of Notification no. 11/2017 - Central Tax (Rate) dated 28.06.2017.

    Rashmi Hospitality Services Private Limited, a catering service that charges GST at 18% for the service they provide to various factory and industry canteens, considered the service to be an ‘outdoor catering service’. This is when the case was escalated to the AAR.

    28 May 2018

  • GoM in Talks to Incentivise Consumers Making Digital GST Payments

    The Group of Ministers (GoM) in a panel led by Sushil Modi will be carrying out a detailed discussion on the impact of providing concessions in the tax rate. They also plan to study international best practices and the impact on the treasury. The ministers will be preparing for this meeting by collecting data on revenue implication and the various issues raised by different states.

    Prior to scheduling this meeting, the GST council met to discuss incentivizing cheque and digital payments by giving consumers a 2% concession in the GST rate in instances where the GST rate is 3% or more. The concession for each transaction would be limited to Rs.100.

    The discussion drew some concern from Amit Mitra, Finance Minister for West Bengal, who stated that those from low socioeconomic backgrounds might be at a disadvantage since they find cash payments more convenient. The GoM was required to submit their reports to Finance Minister Arun Jaitley within 15 days.

    24 May 2018

  • Accounting Year 2018-19: How to file your income tax return using ITR Form-1 Sahaj

    The e-filing window for income tax returns was recently opened by the Income Tax Department (ITD) for the assessment year 2018-19. This window is open for individuals who are eligible to file the ITR Form-1 (Sahaj). Individuals eligible for filing the ITR Form-1 (Sahaj) are resident individuals who are earning income from salary or from house property or some other sources to the extent of Rs.50 lakh.

    Certain changes have been introduced to ITR Form-1 (Sahaj). They are as follows:

    • It is applicable to Residents only.
    • Complete breakup of the salary is required.
    • All details related to income from house property are to be mentioned.
    • If the ITR is filed after the due date, a fee is applicable under Section 234F.

    The ITR Form-1 (Sahaj) can be filed in one of the two following methods - Offline and Online.

    Offline:

    The ITR Form-1 can be filed offline in paper form and the Income Tax Department (ITD) will issue an acknowledgement against it. However, as per the income tax law, income tax return can be filed in paper form only by:

    1. Super senior citizens. That is people who are 80 years old and above.
    2. Individual/Hindu Undivided Family (HUF) who do not have claims for refund in their returns and whose income is up to Rs.5 lakh only.

    Online:

    The ITR Form-1 (Sahaj) can be filed online as well. You can consider one of the following options to do that:

    1. Preparing and submitting the return online.
    2. Uploading xml by using offline utilities.

    Both can be done by logging in to the official website incometaxindiaefiling.gov.in.

    22 May 2018

  • India Surpasses the Trillion Mark in Tax Collection

    For the first time since the Goods and Services Tax came into being, India has reported a total collection of tax worth Rs.1 lakh crore.

    Of the total revenue that was earned solely for the month of April 2018, the Central GST amount stood at Rs.186.52 billion, the State GST stood at Rs.257.04 billion, and the Integrated GST stood at Rs.505.48 billion. The GST revenue is believed to foster even more as the Government starts tracking the movement of goods and services electronically.

    Multiple new features have also been introduced with the GST scheme. These features include matching of invoices with the improved version of the income tax return forms, revenue charge mechanism, and so on.

    18 May 2018

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