Income taxpayers make a huge contribution to the functioning of the economy. Though it is painful to part from your hard-earned money, it is necessary for the smooth running of the country.

To avoid confusion, the Income Tax Department has categorized taxpayers into different sections depending on various factors. Categorization maintains uniformity and consistency in tax payment.

What comes under Income Tax?

The income tax is levied on the taxable amount of income of an individual, Hindu undivided family (HUF), business firms and any kind of association of persons. The amount of income primarily decides the income tax block in which the person falls. The income tax is calculated by the Income Tax Department and is collected as advance tax or paid by the taxpayer to the department. There are two types of taxes collected by the government. One is the direct tax which is levied on the income of an individual or a firm. Indirect tax, on the other hand, is levied on goods and services which are passed on to the government by the respective businesses.

Simply, taxable income can be categorized into 5 types.

• Income from Salary:

Salary and pension are included in this income.

• Income from Other Sources:

This includes interest earned from savings in bank accounts.

• Income from Immovable Properties:

Rental income from house or landfalls in this group.

• Income from Capital Gains:

Any income from the sale of all types of capital assets (mutual funds, shares, property) is included here.

• Income from Business and Profession:

This includes income from self- employment or business firm.

Which Tax Slab Do You Fit in?

Income tax slab or tax brackets categorize the different groups of income based on the following factors:

• Status of the taxpayer (an individual, a HUF or a business firm)
• The nature and amount of income
• Age of the taxpayer (less than 60 years/between 60 to 80 years/more than or equal to 80 years)

There is four major income tax slab in India.

• The income of up to Rs. 5 lakhs per annum.
• Income between Rs. 5 lakhs and Rs. 10 lakhs per annum.
• The income of more than Rs. 10 lakhs per annum.

Income Tax Slab Rate for A.Y. 2018-2019 (F.Y -2017-2018)

• Income Tax Slab for Indian Individuals:

Income Tax Rates for Male Individuals (<60 years)

Income up to Rs. 2,50,000 : Zero

• Income from Rs. 2,50,001- Rs. 5,00,000 : five percent
• Income from Rs. 5,00,001- Rs. 10,00,000 : twenty percent
• Income above Rs. 10,00,000 : thirty percent

Rebate can be availed under section 87A. The surcharge, EC, and SHEC will be levied.

Income Tax Rates for Female Individuals (<60 years)

• Income up to Rs. 2,50,000 : Nil
• Income from Rs. 2,50,001- Rs. 5,00,000 : 5%
• Income from Rs. 5,00,001- Rs. 10,00,000 : 20%
• Income above Rs. 10,00,000 : 30%

Rebate can be availed under section 87A. The surcharge, EC and SHEC will be levied.

Income Tax Rates for Male / Female Individuals (>60 years and <80 years)

• Income up to Rs. 3,00,000 : Nil
• Income from Rs. 3,00,001- Rs. 5,00,000 : 5%
• Income from Rs. 5,00,001- Rs. 10,00,000 : 20%
• Income above Rs. 10,00,000 : 30%

Rebate can be availed under section 87A. The surcharge, EC and SHEC will be levied.

Income Tax Rate for Male / Female Individuals ( >=80 years)

• Income up to Rs. 5,00,000 : Nil
• Income from Rs. 5,00,001- Rs. 10,00,000 : 20%
• Income above Rs. 10,00,000 : 30%

The surcharge, EC, and SHEC will be levied.

Non-Residents Slabs for Income Tax

• Income up to Rs. 2,50,000 : Nil
• Income from Rs. 2,50,001- Rs. 5,00,000 : 5%
• Income from Rs. 5,00,001- Rs. 10,00,000 : 20%
• Income above Rs. 10,00,000 : 30%

The surcharge, EC, and SHEC will be levied.

Income Tax Blocks for HUF (Hindu Undivided Family)

Income up to Rs. 2,50,000 : Nil

• Income from Rs. 2,50,001- Rs. 5,00,000 : 5%
• Income from Rs. 5,00,001- Rs. 10,00,000 : 20%
• Income above Rs. 10,00,000 : 30%

The surcharge, EC, and SHEC will be levied.

Income Tax Slab for BOI (Body of Individuals) and AOP (Association of Person)

• Income up to Rs. 2,50,000 : Nil
• Income from Rs. 2,50,001- Rs. 5,00,000 : 5%
• Income from Rs. 5,00,001- Rs. 10,00,000 : 20%
• Income above Rs. 10,00,000 : 30%

The surcharge, EC, and SHEC will be levied.

• Income Tax Rate for LLP and Firms

A firm or LLP is taxed at a flat 30%. Additional Surcharge, EC and SHEC are also levied.

• Income Tax Rate for Indian Company

If the gross turnover amount in 2015-2016 is less than Rs. 50 crore, the income tax rate is 25%. In case of turnover exceeding Rs. 50 crore, the tax rate will be 30%.

The surcharge, EC and SHEC will be levied.

• Foreign Company Income Tax Rate

The gross annual turnover of a foreign company in F.Y. 2017-2018 (A.Y. 2018-2019) is directly taxed at 40%.

The surcharge, EC and SHEC will be levied.

• Co-operative Societies income tax rates

The income tax for A.Y 2018-2019 is as follows:

• Income up to Rs. 10000: 10%
• Income from Rs. 10,001- Rs. 20,000 : 20%
• Income above Rs. 20,000 : 30%

The surcharge, EC, and SHEC will be levied.

• Local Authorities income tax rates

Local authorities are taxed at a flat 30% rate. They also have to pay the surcharge, EC and SHEC.

Important Factors Included in Income Tax:

Surcharge:

• Addition rates for individuals/HUF/AOP/BOI are as follows:
  • 10% of your income tax if income total is above Rs. 50 lakhs and up to Rs. 1 crore.
  • 15% of your income tax if income total is above Rs. 1 crore
• Surcharge for firms, Co-operative Societies, and the local authority is 12% of the total income exceeds Rs. 1 crore.
• For the domestic company, the surcharge is levied as 7% for total income between Rs. 1 crore and Rs. 10 crores. For income above Rs. 10 crores, the surcharge is 12%.
• For a foreign company, the surcharge is 2% if income is between Rs. 1 crore and Rs. 10 crore. Income above that calls for a 5% surcharge.

Education Cess and Higher and Secondary Cess (EC & SHEC)

These are calculated at 2% and 1% of total income tax with surcharge, respectively.

Income Tax Slab Section 87A

Segment 87 A of the Income Tax Act says that if a denizen Indian individual’s total income is less than Rs. 3,50,000 then he/she is eligible for a rebate of Rs 2,500 or 100 % income tax, whichever is less.

Income tax calculation involves tax calculation on income, additional surcharge and cess, tax exemptions and deductions. Altogether these will decide the income tax block of the taxpayer.

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