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  • Threshold Limits under Income Tax Act

    Individuals who earn income over a certain limit will be charged taxes under the Income Tax Act. The individual, or assessee, as they are called, shall be charged at the rate predetermined by the act for each assessment year. The tax will be determined depending upon the individual’s residential status. The amount of money payable at the end of each assessment year will be based on the total income the individual has earned over the previous financial year. The nature of income is also a deciding factor for income tax as taxes are different for capital income and revenue income. Following is a table displaying the tax slabs for individuals under varying income categories for the assessment year 2015-2016.

    Net income range for individuals who are under 60 years of age

    Net income range for senior citizens

    Net income range for super senior citizens

    Income tax rates

    Up to Rs.250,000

    Up to Rs.300,000

    Up to Rs.500,000

    NIL

    Rs.250,001 to Rs.500,000

    Rs.300,000 to Rs.500,000

    ---

    10%

    Rs.500,001 to Rs.1,000,000

    Rs.500,001 to Rs.1,000,000

    Rs.500,001 to Rs.1,000,000

    20%

    Above Rs.1,000,000

    Above Rs.1,000,000

    Above Rs.1,000,000

    30%

    Senior citizens are those who have completed 60 years of age during the previous year but have not exceeded 80 years of age as on the final day of the previous year. Super senior citizens are those who are 80 years of age or older as of the previous year. As can be seen above, the tax slabs are comparatively easier on senior citizens, but individuals who are under 60 years of age and earn an income under Rs.250,000 will be exempt from tax, while individuals who earn between Rs.250,001 and Rs.500,000 will be charged tax at 10%. Individuals who earn an annual income in excess of Rs.500,000 and under Rs.1,000,000 will be charged 20% on their earnings while individuals who earn more than Rs.1,000,000 will be charged tax at 30%.

    Individuals can claim deductions on taxes too. Following is a TDS (Tax Deducted at Source) table and their limits:

    Particulars

    Threshold Limit

    TDS Rate

    Interest on fixed deposits in HSG, finance companies / banks and 8% taxable bonds

    Rs.10,000

    10%

    Interest on debentures

    Rs.5,000

    10%

    Interest other than interest on securities

    Rs.5,000

    10%

    Insurance commission to agents (domestic companies)

    Rs.5,000

    20%

    Insurance commission to agents (individuals)

    Rs.20,000

    10%

    Winnings from game shows / cross-word / lotteries

    Rs.10,000

    30%

    Winnings from horse races

    Rs.5,000

    30%

    Commission earned on sale of lottery tickets

    Rs.1,000

    10%

    Payments to contractors (per contract)

    Rs.30,000

    1%

    Payment to sub-contractors

    Rs.30,000

    1%

    Payments to advertising agency

    Rs.20,000

    1%

    Commission and brokerage (not including transactions related to shares and securities)

    Rs.5,000

    10%

    Payment of rent

    Rs.180,000

    10%

    Payment of fees to professional technical services

    Rs.30,000

    10%

    Payment of rent on plant and machinery or equipment

    Rs.80,000

    2%

    TDS on survival benefits on life insurance policies

    Rs.100,000

    2%

    Sale of property

    Rs.50,000,000

    1%

    When an individual responsible for paying any income deducts income tax on income when paying the tax, it is referred to as Deduction of Tax at Source (TDS). All individuals, proprietary concerns and Hindu Undivided Families that are carrying on business in India and whose turnover, gross sales or gross receipts in the previous year is in excess of Rs.1 crore (in case of business) or Rs.25 lacs (in case of professionals), will also be eligible for tax deductions under the Income Tax Act.

    TAX
    Forms:
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