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 |
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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 |
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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% |
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:
- 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) |
- 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 | 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.
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.
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 |
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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% |
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
- What is a financial year?
- What is an assessment year?
- Who all are liable to pay income tax?
- What is the minimum exemption limit on income of salaried persons?
- What is meant by exempt income?
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.
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.
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.
The minimum exemption limit on income of salaried persons is Rs.2.5 lakh.
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.
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