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Cracking the secret of Income Tax Slabs

Income tax slab rates are different for different categories of taxpayers, who are taxed progressively i.e. one with higher income is taxed at a higher rate. The income tax slab rates for FY 2017-18 (AY 2018-19) can be broadly classified into the following categories:

  • Income tax slab for individual taxpayers & HUF (less than 60 years old) (both men & women)
Income Slab Tax Rate
Income up to ₹2,50,000* No Tax
Income from ₹2,50,000 – ₹5,00,000 5%
Income from ₹5,00,000 – ₹10,00,000 20%
Income more than ₹10,00,000 30%
Surcharge: 10% of income tax, where total income is between ₹50 lakhs and ₹1 crore. 15% of income tax, where total income exceeds ₹1 crore.
Cess: 3% on total of income tax + surcharge.
* Income up to ₹2,50,000 is exempt from tax if you are less than 60 years old.

 

Let us take an example to understand this slabbing better:

Mr. X, aged 40 years has a total taxable income of ₹8,00,000. This income has been calculated by including income from all sources such as salary, rental income, and interest income. Deductions under section 80 have also been reduced. He wants to know his tax liability for FY 2017-18 (AY 2018-19).

Income Slab Tax Rate Tax Calculation
Income up to ₹2,50,000 No tax
Income from ₹2,50,000 – ₹5,00,000 5% (₹5,00,000 – ₹2,50,000) ₹12,500
Income from ₹5,00,000 – ₹10,00,000 20% (₹8,00,000 – ₹5,00,000) ₹60,000
Income more than ₹10,00,000 30% Nil
Tax ₹72,500
Add: Cess 3% of ₹72,500 ₹2,175
Total tax payable in FY 2017-18 (AY 2018-19) ₹74,175 (Rounded off figure-₹74180)

 

  • Income tax slab for individual taxpayers & HUF (60 years old or more but less than 80 years old) (both men & women)
Income Slab Tax Rate
Income up to ₹3,00,000* No Tax
Income from ₹3,00,000 – ₹5,00,000 5%
Income from ₹5,00,000 – ₹10,00,000 20%
Income more than ₹10,00,000 30%
Surcharge: 10% of income tax, where total income is between ₹50 lakhs and ₹1 crore. 15% of income tax, where total income exceeds ₹1 crore.
Cess: 3% on total of income tax + surcharge.
* Income up to ₹3,00,000 is exempt from tax if you are more than 60 years but less than 80 years of age.

 

Let us calculate the tax liability for FY 2017-18 (AY 2018-19) of Mr. X once again, assuming that he is 65 years of age.

Income Slab Tax Rate Tax Calculation
Income up to ₹3,00,000 No tax
Income from ₹3,00,000 – ₹5,00,000 5% (₹5,00,000 – ₹3,00,000) ₹10,000
Income from ₹5,00,000 – ₹10,00,000 20% (₹8,00,000 – ₹5,00,000) ₹60,000
Income more than ₹10,00,000 30% Nil
Tax ₹70,000
Add: Cess 3% of ₹72,500 ₹2,100
Total tax payable in FY 2017-18 (AY 2018-19) ₹72,100

 

  • Income tax slab for super senior citizens (80 years old or more) (both men & women)
Income Slab Tax Rate
Income up to ₹2,50,000* No Tax
Income up to ₹5,00,000* No Tax
Income from ₹5,00,000 – ₹10,00,000 20%
Income more than ₹10,00,000 30%
Surcharge: 10% of income tax, where total income is between ₹50 lakhs and ₹1 crore. 15% of income tax, where total income exceeds ₹1 crore.
Cess: 3% on total of income tax + surcharge.
*Income up to ₹5,00,000 is exempt from tax if you are more than 80 years old.

Let us calculate the tax liability for FY 2017-18 (AY 2018-19) of Mr. X once more, assuming that he is 82 years of age.

Income Slab Tax Rate Tax Calculation
Income up to ₹2,50,000 No tax
Income from ₹2,50,000 – ₹5,00,000 No tax
Income from ₹5,00,000 – ₹10,00,000 20% (₹8,00,000 – ₹5,00,000) ₹60,000
Income more than ₹10,00,000 30% Nil
Tax ₹60,000
Add: Cess 3% of ₹72,500 ₹1,800
Total tax payable in FY 2017-18 (AY 2018-19) ₹61,800

 

Note: If you are a Residential Individual and your Total Income Less Deductions (under Section 80) is equal to or less than ₹3,50,000, you are also provided with an income tax rebate up to ₹2,500.

  • Some Incomes are taxed at Special Rates

Although total income is taxable at income tax slab rates mentioned above, some incomes are taxed at special rates, mentioned as under:

Nature Tax Rate
Short-term capital gains from assets (Other than shares & mutual funds) At income tax slab rates listed above
Long-term capital gains from assets (Other than shares & mutual funds) 20%
Short-term capital gains on shares and equity mutual funds 15%
Long-term capital gains on shares and equity mutual funds NIL
Short-term capital gains on debt mutual funds At income tax slab rates listed above
Long-term capital gains on debt mutual funds At 20% with indexation

 

Varun Baid

Varun Baid

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About Me

I’m a Commerce Graduate & CFP Professional, engaged in blogging since 3 years. I’m not affiliated with any financial product. The purpose of writing blog is to spread financial awareness and help people in achieving excellence for money. Please note that the views expressed on this Blog/Comments are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.

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