Income Tax Slabs – FY 2017-18 and FY 2016-17

Income Tax Slabs for FY 2017-18 (AY 2018-19)

Income Tax Slabs for FY 2017-18 (AY 2018-19) and FY 2016-17 (AY 2017-18)

 

 

 

 

Given below are the rates at which income is taxed in India for income earned in different slabs, and through various heads of income.

The tax rates and Tax Slabs have been arranged depending on the profile and category of the taxpayer / tax paying entity.

Income Tax Slabs For Individual Tax Payers

Income Tax Slabs For Hindu Undivided Families

Income Tax Slabs For Resident Senior Citizens

Income Tax Slabs For Foreign Companies

News About Income Tax Slabs and Rates

 

View Tax Slabs for FY 2016-17

New Income Tax Slab Rates for FY 2017-18 (AY 2018-19) - Budget 2017

The Finance Minister also announced that income tax for small companies with an annual turnover of Rs.50 crore would be reduced. Income tax has been reduced to 25% from the previous rate of 30%. It was also announced that all individuals who earn less than Rs.5 lakh per year will have to file a one page I-T return form. The revised tax rates are as given below –

Income tax slab for individual tax payers & HUF (less than 60 years old) (both men & women)

Income Tax Slab

Tax Rate

Income up to Rs. 2,50,000*

No Tax

Income from Rs. 2,50,000 – Rs. 5,00,000

5%

Income from Rs. 5,00,000 – 10,00,000

20%

Income more than Rs. 10,00,000

30%

Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs. 1 crore.

Cess: 3% on total of income tax + surcharge.

* Income upto Rs. 2,50,000 is exempt from tax if you are less than 60 years old.

Income tax slab for individual tax payers & HUF (60 years old or more but less than 80 years old) (both men & women)

Income Tax Slab

Tax Rate

Income up to Rs. 3,00,000*

No Tax

Income from Rs. 3,00,000 – Rs. 5,00,000

5%

Income from Rs. 5,00,000 – 10,00,000

20%

Income more than Rs. 10,00,000

30%

Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.

* Income up to Rs. 3,00,000 is exempt from tax if you are more than 60 years but less than 80 years of age.

Income tax slab for super senior citizens (80 years old or more) (both men & women)

Income Tax Slab

Tax Rate

Income up to Rs. 2,50,000*

No Tax

Income up to Rs. 5,00,000*

No Tax

Income from Rs. 5,00,000 – 10,00,000

20%

Income more than Rs. 10,00,000

30%

Surcharge: 10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore. 15% of income tax, where total income exceeds Rs.1 crore.

Cess: 3% on total of income tax + surcharge.

*Income up to Rs. 5,00,000 is exempt from tax if you are more than 80 years old.

Customers should note that the Income Tax Exemption limit per FA 2016 is up to a maximum of Rs.2,50,000 for all individuals and HUF other than those who are covered in Part(II) or Part(III).

 View Tax Slabs for FY 2017-18

Below, you Can find a few tables that list out

Income Tax Slab Rates for FY 2016-17 (AY 2017-18)

 

These income tax slab rates are also applicable for :

FY 2015-16 (AY 2016-17)

FY 2014-15 (AY 2015-16)

  1. Income Tax Slab for Individual Tax Payers :

Income Tax Slab

Rate

Up to Rs.2,50,000

No tax

Rs.2,50,000 to Rs.5,00,000

10%

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

 

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Less:

  • Rebate under Section 87A:For individuals with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
  1. Income Tax Slab for Hindu Undivided Families (HUF) :

Income Tax Slab

Rate

Up to Rs.2,50,000

No tax

Rs.2,50,000 to Rs.5,00,000

10%

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Less:

  • Rebate under Section 87A:For HUFs with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
  1. Income Tax Slab for legal Entities Registered as Associations of Persons :

Income Tax Slab

Rate

Up to Rs.2,50,000

No tax

Rs.2,50,000 to Rs.5,00,000

10%

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Less:

  • Rebate under Section 87A:For Associations of Persons with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
  1. Income Tax Slab for Legal Entities Registered as Bodies of Individuals :

Income Tax Slab

Rate

Up to Rs.2,50,000

No tax

Rs.2,50,000 to Rs.5,00,000

10%

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Less:

  • Rebate under Section 87A:For Bodies of Individuals with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
  1. Income Tax Slab for Other Artificial Judicial Persons :

Income Tax Slab

Rate

Up to Rs.2,50,000

No tax

Rs.2,50,000 to Rs.5,00,000

10%

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Less:

  • Rebate under Section 87A:For Judicial entities with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
  1. For Resident Senior Citizens (Over the Age of 60, and Under the Age of 80 on the last day of the Previous Year) :

Income Tax Slab

Rate

Up to Rs.3,00,000

No tax

Rs.3,00,000 to Rs.5,00,000

10%

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Less:

  • Rebate under Section 87A:For Resident Indian Senior Citizen taxpayers with total income less than Rs.5,00,000 – a total rebate amount of Rs.2,000 or 100% of the income tax (whichever is lesser).
  1. For Resident Super Senior Citizens (who are over the age of 80 as on the last day of the Previous Year) :

Income Tax Slab

Rate

Up to Rs.5,00,000

No tax

Rs.5,00,000 to Rs.10,00,000

20%

Over Rs.10,00,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.
  1. For Partnership Firms:

Partnership Firms and LLPs (Limited Liability Partnerships) are to be taxed at the rate of 30%.

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.
  1. For Local Authorities :

Local Authorities are to be taxed at the rate of 30%.

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.
  1. For Domestic Companies :

Domestic Companies are to be taxed at the rate of 30%.

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 7% of the income tax amount. If income is greater than Rs.10,00,00,000 – 12% of the income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.
  1. For Foreign Companies :

Nature

Rate

If the income received by the Foreign Company is in the form of royalties paid by the Indian Government in relation to agreements made with an Indian concern (after March 31st, 1961, and before April 1st, 1976)

50%

If the income received is in the form of fees for technical services rendered for agreements made with Indian concerns (after February 29th, 1964, and before April 1st, 1976)

50%

Any other income

40%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 2% of the income tax amount. If income is greater than Rs.10,00,00,000 – 5% of the income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.
  1. For Co-operative Societies :

Income Tax Slab

Rate

Up to Rs.10,000

10%

Rs.10,000 to Rs.20,000

20%

Over Rs.20,000

30%

Plus:

  • Surcharge:If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.
  • Education Cess:2% extra – charged on the amount of income tax + surcharge being paid.
  • Secondary and Higher Education Cess:1% extra – charged on the amount of income tax + surcharge being paid.

Innocent mistakes Honest taxpayers usually make

ITax

  1. Not reporting interest income
    Though interest earned from fixed deposits, recurring deposits, even tax-saving bank deposits and infrastructure bonds, is fully taxable, people often do not report any interest income below Rs 10,000. The exemption of Rs 10,000 a year under Section 80TTA applies only to the interest earned on the balance in a savings bank account. Even so, you are supposed to declare it in ITR and then claim the deduction. Please click on the following link for Sec. 80TTA : " Deduction under Section 80TTa – Interest on Savings Account"

Another common misassumption is that one need not pay tax as TDS has been deducted on the income. What people forget is that the tax deducted by the bank at source is at a flat rate of 10%. However, tax slabs may vary. So, if you fall in a higher tax slab, your liability may be more and you will have to pay the balance while filing returns. "Many people forget to re-calculate their liability and end up with a notice, paying higher taxes with interest and penalties," says Archit Gupta, Founder and CEO, ClearTax.com.

The department can catch such mistakes by matching your ITR with Form 26AS. The taxman also digs deeper, going beyond TDS. It tracks the deposits and interest income where TDS has not been deducted, that is, where you have submitted Form 15 G/H. The penalty is more severe (up to 200% of the tax evaded) as it is not a mis-calculation, but concealment of income.

2. Overlooking clubbing of income

Many people invest in the names of spouse or minor children. There is no limit to the amount you can give your spouse, but if you invest the gifted money, Section 64 of the Income Tax Act, a provision for clubbing income, comes into play. Under this, any earning from the gifted amount is added to your taxable income. "It doesn't matter if your spouse has an income or not. The money will be clubbed with your income," says Tapati Ghose, Partner, Deloitte Haskins & Sells LLP. For a minor child, the earning is treated as income of the parent who earns more. You also get an exemption of Rs 1,500 a year, per child, up to a maximum of two kids. If you want to escape tax, invest the gifted money in a tax-free option, such as the PPF or ELSS scheme. Or invest in the name of your parents or a major child, where clubbing provision does not come into play. Please click on the following link for Sec 64 of IT Act: "Clubbing of income under Income Tax Act 1961 with FAQ's"

3. Not filing returns
If you think you don't need to file returns because you don't have a tax liability, you are mistaken. This exemption is only for those with an annual gross income below the basic exemption level of Rs 2.5 lakh. Anyone with an income above this has to file a return. The basic exemption is Rs 2.5 lakh per year for people below 60 years, Rs 3 lakh for senior citizens above 60, and Rs 5 lakh for very senior citizens above 80. The rest, including NRIs, have to comply. If you fail to file your return in time, the assessing officer may levy a penalty of Rs 5,000 under Section 271F. Please click on the following links for Sec. 271F: "Penalty u/s 271F for belated returns"

Besides, the limits are for gross incomes, that is, the income before deductions and tax breaks. So, if your annual income is Rs 4 lakh and you invest Rs 1.5 under Section 80C, your tax liability will be zero. However, you are required to file your ITR. Similarly, if you have paid tax as TDS or advance tax, you will need to file the return.

Many salaried people, who earn less than Rs 5 lakh, don't file an ITR. The confusion is because of an ad hoc rule introduced in 2011-12, where salaried individuals with taxable incomes of Rs 5 lakh or less, and earning less than Rs 10,000 as interest from savings account, with no refund due, were exempt from filing returns. However, this rule has long been withdrawn.

4. Missing income from old job
Whether you received a single cheque from a part-time freelance assignment, or salary was credited regularly to your account, every single paisa has to be reported. If you fail to inform your current employer about a job change, there is a chance that lesser tax will be deducted from your salary than you are liable to pay. However, this discrepancy will be immediately reflected when you file your return. You may have to pay higher tax as duplicate benefits will be rolled back. Do not try to escape it as defaulters have to pay the balance tax along with interest at the rate of 1% per month for delay as penalty.

  1. Not reporting tax-free income
    Tax-free does not mean it is not your income. All your earnings are included, be it the interest earned on PPF, tax-free bonds, or capital gains from stocks and gifts from specified relatives. "Even if you are not liable to pay any tax on these incomes, all your interest income has to be reported in the ITR," says Gupta. You can later claim exemption for it under various sections.
    Source: Economic Times, http://www.incometaxindia.gov.in & Tax Guru.in

Income Tax Slabs for FY 2016-17

UPDATE - There is change in the personal income tax slabs for the next financial year (FY 2016-17), the government has provided some other benefits:

1. Additional Rs. 50,000 per annum interest deduction for loans upto 35 lacs sanctioned in FY 2016-17 for first time buyers where house costs doesn't exceed 50 lacs.

2. Increase the limit of deduction of rent paid from Rs. 24,000 to Rs. 60,000.

3. Increasing the ceiling of tax rebate from Rs. 2.000 to Rs. 5,000 for individuals earning less than 5 lacs per annum

Additional Income Tax Details

While making no change in personal Income Tax slabs in the Union Budget 2016-17, Finance Minister Arun Jaitley on Monday announced deduction for additional interests of Rs 50,000 per annum for loans up to Rs 35 lakh sanctioned in 2016-17 for first time home buyers, where house costs does not exceed Rs 50 lakh. Jaitley also proposed to increase the limit of deduction of rent paid from Rs 24,000 per annum to Rs 60,000 spelling respite to those who don’t own any house and live in rented accommodation. For those earning less than Rs 5 lakh per annum, FM announced to raise the ceiling of tax rebate from Rs 2000 to Rs 5000 giving an additional relief of Rs 3000 in their tax liability. No change in Income Tax slabs -First time home buyer – Rs 50,000 deduction for upto Rs 35 lakh loan provided house cost not more than Rs 50 lakh -Reduction of Rs 60,000 per annum for those who don’t own house and pay rent -Penalty to be 50% of tax in income under-reporting cases, 200% in misreporting of facts -National Pension scheme – withdrawal of 40% of corpus at time of retirement tax exempt -National Pension scheme – withdrawal of 40% of corpus at time of retirement tax exempt -FM announces 9 objectives for tax reforms -Tax rebate for those earning less than 5 lahk per annum -Under 5 lakh income – rebate increased from 2000 to 5000 -Corporate Tax – New manufacturing companies registered on/post March 01, 2016 – option of tax 25% surcharge + cess -Lower Corporate tax for small companies at 29% surcharge + cess -National Pension scheme – withdrawal of 40% of corpus at time of retirement tax exempt -Presumptive tax extended for professional earning up to Rs 50 lakh New grading system of imposing penalties - on the basis of under reporting or concealment of income -Excise duty on Tobacco products increased by 10-15% -Net impact of taxation proposals is an increase in Govt revenue by Rs 19,610 cr -Scope of e-assessment to be expanded to 7 mega cities -Income tax department will expand e-sahyog to assist small taxpayers -Income tax dept. will expand e-sahyog to assist small taxpayers: -Start-ups to get 100% tax exemption for 3 years except MAT which will apply from April 2016-2019

 

INCOME TAX RATES for the Financial Year ending March 31, 2016 (i.e. Financial Year 2015-16) - AY 2016-17

Income Tax Slabs & Rates for Assessment Year 2016-17 (FY-2015-16)

Income Tax Slabs & Rates for Assessment Year 2016-17 (FY-2015-16)
------------------------------------------------------------------

Individual resident aged below 60 years (i.e. born on or after 1st April 1956)

Where the taxable income does not exceed Rs. 2,50,000/-. - NIL

Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. - 10% of amount by which the taxable income exceeds Rs. 2,50,000/-. Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 2000/-.

Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. - Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.

Where the taxable income exceeds Rs. 10,00,000/-. - Rs. 125,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

....................................................

Senior Citizen (Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year i.e. born on or after 1st April 1936 but before 1st April 1956)

Where the taxable income does not exceed Rs. 3,00,000/-. - NIL

Where the taxable income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/- - 10% of the amount by which the taxable income exceeds Rs. 3,00,000/-. Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 2000/-.

Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- - Rs. 20,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.

Where the taxable income exceeds Rs. 10,00,000/- - Rs. 120,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

....................................................

Super Senior Citizen (Individual resident who is of the age of 80 years or more at any time during the previous year i.e. born before 1st April 1936)

Where the taxable income does not exceed Rs. 5,00,000/-. - NIL

Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- - 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.

Where the taxable income exceeds Rs. 10,00,000/- - Rs. 100,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

....................................................

Any NRI or HUF or AOP or BOI or AJP

Where the taxable income does not exceed Rs. 2,50,000/-. NIL

Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. 10% of amount by which the taxable income exceeds Rs. 2,50,000/-.

Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-.

Where the taxable income exceeds Rs. 10,00,000/-. Rs. 125,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-.

....................................................

Co-operative Society

Where the taxable income does not exceed Rs. 10,000/-. 10% of the income.

Where the taxable income exceeds Rs. 10,000/- but does not exceed Rs. 20,000/-. Rs. 1,000/- + 20% of income in excess of Rs. 10,000/-.

Where the taxable income exceeds Rs. 20,000/- Rs. 3.000/- + 30% of the amount by which the taxable income exceeds Rs. 20,000/-.

....................................................

Firm

Income Tax : 30% of taxable income.

....................................................

For all the above mentioned cases,

Surcharge : 12% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)

Education Cess : 3% of the total of Income Tax and Surcharge.

....................................................

Local Authority

Income Tax : 30% of taxable income.

Surcharge : 10% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)

Education Cess : 3% of the total of Income Tax and Surcharge.

....................................................

Domestic Company

Income Tax : 30% of taxable income.

Surcharge : The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge

At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
Education Cess : 3% of the total of Income Tax and Surcharge.

....................................................

Company other than a Domestic Company

Income Tax :

@ 50% of on so much of the taxable income as consist of (a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or (b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government.
@ 40% of the balance

Surcharge :

The amount of income tax as computed in accordance with above rates, and after being reduced by the amount of tax rebate shall be increased by a surcharge as under

At the rate of 2% of such income tax, provided that the taxable income exceeds Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 10 crores.

Education Cess : 3% of the total of Income Tax and Surcharge.

Source : K. Murugan - JAIIB/CAIIB Mock Test

INCOME TAX RATES for the Financial Year ending March 31, 2016 (i.e. Financial Year 2015-16) - AY 2016-17

The following INCOME TAX RATES ARE applicable for the Financial Year ending March 31, 2016 (i.e. Financial Year 2015-16) - Assessment Year 2016-17)

Every year the income tax rates are changed and it is important to get the latest income tax rates. We give below the Income Tax Rates and Slabs applicable for the FY 2015-16 or AY 2016-17.   [As there was no change in Income Tax slabs for FY 2015-16 (i.e. AY 2016-17), the following rates were also applicable for FY 2014-15 (AY 2015-16)

Income Range General (non-senior citizens) Category Women (Below 60 years of age)

(This category is abolished from this year and is thus is same as that of  General Category

Senior Citizens (Men and Women above 60 years of age), but below 80 years Very Senior Citizens (Men and Women above 80 years of age)
Upto Rs. 2,50,000 Nil Nil Nil Nil
Rs. 2,50,001 to Rs. 3,00,000 10% * 10% * Nil Nil
Rs. 3,00,001 to Rs. 5,00,000 10% * 10% * 10% * Nil
Rs. 5,00,001 to Rs. 10,00,000 20% 20% 20% 20%
Above Rs. 10,00,000 30% ** 30% ** 30% ** 30%**
         

Thus, we can say :-

  1. The basic exemption limit for individuals (i.e. below 60 years of age) is Rs 2.50 lakhs
  2. The basic exemption limit for Senior citizens (60 years to below 80 years) is : Rs 3.00 lakhs
  3. The basic exemption limit for Very Senior Citizens(80 years and above)  is Rs3.50 lakhs

* A tax rebate of Rs 2,000 from tax calculated will be available for people having an annual income upto Rs 5 lakh.   However, this benefit of Rs2,000 tax credit will not be available if you cross the income range of Rs 5 lakh.  Thus we can say that tax payable in 10% slab will be maximum Rs23,000 (taking into account Rs 2000 tax credit), but for people who fall in income range of Rs5 lakh and above, the tax will be Rs25,000 + 20% tax on income above Rs 5 lakh;

The education cess to continue at 3 percent.

** The Surcharge @  12% for the FY 2015-16 or AS 2016-17 will be payable if the income is above Rs 1 crores).    For the FY 2014-15 it was 10% .

 Major Changes in Budget for FY 2015-16

Particulars Existing Provisions for FY 2014-15OR

AY 2015-16

Changes as per Budget for FY 2015-16 OR

AY 2016-17

Surcharge on taxable income exceeding Rs. 1 Crore for Individuals, Senior Citizens, Very Senior Citizens, HUFs, AOPs, BOIs, artificial juridical persons, firms, cooperative societies and local authorities 10% of Income Tax 12% of Income Tax
Comparison of Benefits under various IT Sections
Exempted amount of transport allowance Rs. 800/- per month Rs. 1,600/- per month
Section 80D - Deduction for Health  Insurance premium Rs. 15,000/- Rs. 25,000/-
Section 80D - Deduction for Health  Insurance premium for Senior Citizens Rs. 20,000/- Rs. 30,000/-
Investment in Sukanya Samriddhi Scheme - Eligible for deduction u/s 80C and any payment from the scheme shall not be liable to tax.
Section 80DDB - Deduction in case of very senior citizens on expenditure on account of specified diseases Rs. 60,000/- Rs. 80,000/-
Section 80DD - Maintenance, including medical treatment of a dependent who is a person with disability Rs. 50,000/- Rs. 75,000/-
Section 80DD - Maintenance, including medical treatment of a dependent who is a person with severe disability Rs. 1,00,000/- Rs. 1,25,000/-
Section 80U - Person with disability Rs. 50,000/- Rs. 75,000/-
Section 80U - Person with severe disability Rs. 1,00,000/- Rs. 1,25,000/-
Section 80CCC - Contribution to provident fund of LIC or IRDA approved insurer Rs. 1,00,000/- Rs. 1,50,000/-
Section 80CCD - Contribution by the employee to National Pension Scheme (NPS) Rs. 1,00,000/- Rs. 1,50,000/-Now under Section 80CCD, a deduction of upto Rs. 50,000  is allowed over and above the limit of Rs. 1.50 lakh under Section 80C  in respect of contributions made to NPS is also allowed.   Thus, now the total deduction that can be claimed under Section 80C+Section 80CCD = Rs 2 lakh.

In case any employer contributes to the NPS scheme on behalf of the employee and the benefit of the same would be availed by the employee, the employee would also be allowed a deduction under Section 80CCD(2) for the amount of contribution made by the employer.

Wealth Tax Has been Abolished in the Budget for 2015-16

Changes that were effected from earlier year ie  the FY 2014-15 (AY 2015-16)

  •        Investment limit under section 80C of the Income-Tax Act raised from Rs.1 lakh to Rs. 1.5 lakh.
  • Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs.1.5 lakh to Rs. 2 lakh.
  • Personal Income-tax exemption limit raised by Rs 50,000/- that is, from Rs. 2 lakh to Rs. 2.5 lakh in the case of individual taxpayers, below the age of 60 years.   

 [Click Here to see the Income Tax Slab Rates for FY 2013-14 or AY 2014-15]

[Click Here to see the Income Tax Slab Rates for FY 2012-13 or AY 2013-14]

Important Rules for filing of Tax Return

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  1. Filing of income tax is compulsory for all individuals whose gross annual income exceeds the maximum amount which is not charageble to income tax (e.g. Rs.3,00,000 for Senior citizens, Rs.2,50,000/- for resident individuals
  2. The last date for filing of income tax return is usually July 31 for individuals (sometimes the same is extended).However, for the FY 2014-15 i.e. Assessment Year 2015-16, the last date has been extended upto 31st August 2015.
  3. The penalty for non filing of income tax return is Rs.5,000/-

(1) Deductions from Taxable Income (Section 80C) :-

VARIOUS INVESTMENTS OPTIONS AVAILABLE TO INDIVIDUALS AND TAX BENEFITS AVAILABLE UNDER EACH OF THEM - Financial Year 2015-16

A new section 80C was introduced (replacing section 88) from the financial year 2005-06.  Under this Section, a deduction of upto Rs.1,50,000/- (wef FY 2014-15)  is allowed from Taxable Income in respect of the investments made in some specified schemes.   The schemes are  similar as were available in Section 88 earlier.  Now there are no sectoral caps and individuals can save in any of the schemes upto Rs.1,50,000/- (now even in PPF it is allowed upto Rs. 150 lac as against only Rs.1 lakh upto March 2014)..  The tax payers can plan their investments / savings so as to achieve their financial goals.   The details of such schemes alongwith some major features of each of these are given below : -

(last reviewed  in July, 2015)

Saving Scheme Sec. under which Tax Benefit available Return Tax benefits for earnings (i.e. interest received / dividend received) Lock in Period and other Remarks
National Saving Certificates -  ( NSC scheme  ) Section 80C 8.50% for VIII Series 5 Year NSCs; and  8.80% for 10 year NSCs for FY 2015-16 Taxable 5 years (reduced wef  Dec 2011 from 6 years to 5 years for new investments).  The yield on these NSCs will now be revised every year and will be 25 bps above the 5 year government bond yields
Equity Linked Savings Schemes (ELSS) Section 80C Varies from year to year  (Market linked) Dividend is tax free 3 years
Life Insurance Policies Section 80C Varies from year to year Varies from scheme to scheme Varies from scheme to scheme
Unit Linked Insurance Plan (ULIP) Section 80C Varies from year to year Varies from scheme to scheme Varies from scheme to scheme (15 to 20 years)
Infrastructure Bonds (NO LONGER AVAILABLE FOR FRESH INVESTMENT) Section 80C Varies from issue to issue. These were around 8%+ in Dec 2011.   These have lost their charm as Additional Tax rebate of Rs 20,000 is NOT given now from FY 2012-13 onwards.  Taxable 3 to 5 years
Contribution to EPF / GPF / Voluntary PF Section 80C 8.75% on EPF for 2013-14 (announced in August 2013) Interest earned is tax free Till retirement (loans are permitted only after 5 years)
Insurance Policies Section 80C 6 to 7% only Earnings are tax free in most of the cases Locked till maturity
ULIPS Section 80C Market linked Earnings are tax free Partial withdrawal allowed
Public Provident Fund (PPF) Section 80C 8.70% for FY 2015-16 Interest earned is tax free 15 years and extendable.  Withdrawals allowed after 7 years.  Yield on PPF will vary and will be fixed at 25 basis point above the 10 year government bonds.
NPS Section 80C Market Linked Interest earned is tax free Withdrawal not permitted before maturity
Tuition Fees including admission fees or college fees paid for full time education of any two children of the assessee. Section 80C Not applicable Not applicable Not applicable
Repayment of Housing Loan (Principal) Section 80C Not applicable Not applicable Not applicable
Bank Tax Saving Fixed Deposits Schemes - 5 Years Section 80C Varies  from bank to bank (around 7.50% - 8.75%) Taxable 5 Years
Senior Citizens Savings Scheme 2004 (from financial year 2007-08) Section 80C 9.30% for FY 2015-16 Taxable As per the guidelines issued in December 2011, there will be spread of 100 basis points above the 5 year bonds yields for this scheme.
Post Office Time Deposit Account (from financial 2007-08) Section 80C 8.50% for five year Time Deposit Taxable  
 

PS Note : Now some of the above investments (like PPF and  5 Year Senior Citizens Saving Schemes etc.) are linked to the benchmark of 10 year / 5 Year  government bond yields, and thus the return on these investments will vary as and when the yield on government bonds changes.    Therefore, now remember that you will not have fixed rate of return on these investments.    On the other hand, for other Small Saving schemes GoI will advise before 1st April every year, the rates applicable for those schemes for the next FY.  Such instruments will continue to have same return for the whole tenure of the investment.  [For clarification see below the notification which is self explanatory]

 

Deductions Allowed In Sections Beyond 80 C :

(1) Deductions Under Section 80CCC(1) :

Under this section, the contributions by individuals towards "Pension" schemes of LIC or any other Insurance company, is allowed as deduction of Rs.10,000/-.  However, as provided under section 80CCE, the aggregate deduction u/s 80C, and u/s 80CCC and 80CCD can not exceed Rs.1,50,000/-.  Thus effectively, now these are covered under the maximum limit of  Rs.1,50,000/- under section 80C.

(2) Deductions Under Section 80 D :

  • Basic Deduction under Section 80D,   Mediclaim premium paid for Self, Spouse or dependant children has now been raised to Rs 25,000 wef FY 2015-16. 
  • The deduction for senior citizens is raised from Rs 20,000 to Rs 30,000.   For uninsured super senior citizens (more than 80 years old) medical expenditure incurred up to Rs 30,000 shall be allowed as a deduction under section 80D.  However, total deduction for health insurance premium and medical expenses for parents shall be limited to Rs 30,000.

However, there are a few conditions:

  • You can not claim tax benefit on health insurance premium paid for your in-laws;
  • Proof of payment of premium has to be furnished, in order to avail the tax benefit
  • The health insurance premium must be paid from taxable income of that year only if you want to claim a deduction.   Thus, if one has paid the premium from ones savings or from gifts of money received, then one is not eligible for tax benefits under this section.

    However, you have to remember that the premium paid by any mode of other than cash is eligible. Note prior to 1st April 2009, premium payment was required to be paid only by cheque.  However, now even the payments through Credit card or other on line  mechanism are allowed.  Thus, now all payment modes except cash payment are accepted

(3) Deductions Under Section 80 E : 

Under this section, deduction is available for payment of interest on a loan taken for higher education from any financial institution or an approved charitable institution. The loan should be taken for either pursuing a full-time graduate or post-graduate course in engineering, medicine or management, or a post-graduate course in applied science or pure science.
Loan should have been taken for the purpose of pursuing higher studies of Individual , Spouse, Children of Individual or of the student of whom individual is legal Guardian.  Education loan taken for siblings (brother / sister) or other relatives (in-laws, nephew, niece, etc.) would not qualify for section 80E benefit.

The amount of interest paid is eligible for deduction and moreover there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the repayment of principal amount of the loan.    Deduction shall be allowed in computing the total income in respect of the initial assessment year* and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.  The tax benefits on education loan are only valid once you start the repayment and moreover they are only available up to eight years. For instance if your loan tenure exceeds eight years, you cannot claim for deductions beyond eight years.

(4) Deductions Under Section 24(b) :

Under this section, interest on borrowed capital for the purpose of house purchase or construction is deductible from taxable income upto Rs.2,00,000/- is deductible from income.  (certain conditions are to be fulfilled)

We have seen that the principal amount in the repayment of a home loan can be added to the 80C limit of Rs1.5 lakh for tax savings.    However, the interest component of home loans is allowed as deduction under Section 24 B for up to Rs2 lakh in case of a self-occupied house. In case the house is in the joint name of your spouse and you (joint loan), each one can avail of Rs2 lakh interest component deduction.   This limit is only for self-occupied house. If you have property which is rented out, you can deduct the full interest paid on the home loan. The rent on the property does become part of your income. If the rent is lesser than the loan interest, it will lower your overall tax liability.

PS  : 1A) Section 80CCF  : Infrastructure Bonds  :  (NOT PERMITTED FROM FY 2012-13) onwards) :

Section 80CCF allowed you to invest an additional Rs. 20,000 in infrastructure bonds, and such an investment was  reduced from your taxable income in addition to the Rs.100,000 deduction you get from the other instruments listed above.   You were to get the tax benefit only in the year in which you have invested in these instruments.   NOW THIS IS NOT ALLOWED

TAX FREE INCOMES :

Some of the incomes are completely exempted from income tax and that too without any upper limit.   The following incomes which are tax free :-

(a) Interest on EPF / GPF / PPF

(b) Interest on GOI Tax Free Bonds / Tax Free Bonds issued with specific stipulation to this effect

(c) Dividends on Shares and Mutual Funds.  Dividend income from companies / Equity Oriented Mutual funds is completely exempt in the hands of investors.  Dividend is also tax free in the hands of investors in case of debt-oriented Mutual Fund schemes.  (However, the Asset Management Company is liable to deduct 22.44% distribution tax in case of non individuals / non HUF investors and 14.025% in case of individuals or HUF investors.)

(d) Capital receipts from Life Insurance policies i.e. sums received either on death of the insured or on maturity of Life insurance plans.  However, in case of life insurance policies issued after March 31, 2004, exemption on maturity payment u/s 10(10D) is available only if premium paid in any year does not exceed 20% of the sum asssured;

  1. e) Interest on Saving Bank accounts in banks upto Rs10,000/- per year (from FY 2012-13 onwards)

(f) Long term capial gains on sale of  shares and equity mutual funds after 01/10/2004, if security transaction is paid / imposed on such transactions.

GIFT TAX :

Gift tax was abolished with effect from October 1, 1998.  The gifts are no longer taxable in the hands of donor or donee.   However, w.e.f. September 1, 2004, any gift received by an individual or HUF will be included in taxable income, if the amount of tax exceeds Rs.25,000/-.   However,  gifts received from any of the following will continue to remain tax free :-

(i) Spouse;

(ii) Brother or sister;

(iii) Brother or sister of the spouse;

(iv) Brother or sister of either of the parents of the individual;

(v) Any lineal ascendant or descendant of the individual

(vi) Any lineal ascendant or descendant of the spouse of the individual

(vii) spouse of the person referred to in (2) or (6) or received on the occasion of marriage or under a will by way of inheritance 

Capital Gains :Capital gains arise when an individual sells at a profit  certain assets like property or shares or mutual funds or bonds etc  The treatment of such income is not the same as income from other sources.    There are two types of capital gains, viz Short Term Capital Gains or Long Term Capital Gains.

(a) Short Term Capital Gains :  Capital gain is considered as Short Term Capital Gain, if immovable property is sold / transferred within three years of acquiring the same.   Similarly, if shares or other financial securities such as mutual funds are sold within one year of purchase, the profit earned is treated as Short Term Capital Gain.

Short term capital gain is included in the gross taxable income and normal tax rates are applicable.  However, w.e.f. 1st October, 2004, the short term capital gains from sale of equity shares or units of equity oriented mutual fund schemes are taxed only at a flat rate of 10%, irrespective of the tax slab on other sources of income, provided securities transaction tax is paid on such sale.

(b) Long Term Capital Gains : Capital gain is considered as the Long Term, if the immovable property is sold after three years from purchse, or financial securties such as shares, deep discount bonds, units of open ended or close ended schemes of mutaula funds are disposed (i.e. sold / redeemed / transferred) after holding the same for more than twelve months, then the gain is considered to be long term capital gain.

Long term capital gains on transfer of listed shares / units of equity oriented mutual funds schemes has been exempted from tax w.e.f. 1st October, 2004, provided securities transaction tax has been paid on such sale.  For assets other than the listed shares / units of mutual funds schemes, tax is payable in respect of long term capital gains at a flat rate of 20% and the amount of gain has to be adjusted for inflation through indexation benefit.

Long term capital gains tax in respect of bonds and debt securities or debt oriented mutual fund schemes listed on stock exchanges is payable at a flat rate of 10% of the capital gains amount. In case an individual wishes to avail the benefits of indexation, then tax has to be paid at normal long term capital gains tax rate of 20%.

Section 54EC of the I-T Act, 1961 : Relief from Capital Gains Tax

You can make good use of this Section to save Taxes specially when you sell some property.   The Income Tax laws provides for taxes on long-term capital gains at 20 per cent for individuals and foreign firms and 30 per cent for domestic companies. However, Section 54EC of the I-T Act, 1961, provides relief from capital gains tax.    Under this Section, gains on transfer of a long-term capital asset can be exempted from tax if the money is invested in bonds of specified institutions such as NABARD, the Rural Electrification Corporation (REC), SIDBI or the National Highway Authority of India.   Such bonds are redeemable after three years.  However,  to save tax, you have  to invest in these bonds within six months from the date of transfer of the original asset.  Thus investing in these bonds will effectively mean that your money is locked in for three years. If you want to buy a new property one or two years after transferring the original asset, you will have to either wait or look for alternative funds.   After the lock-in period or on the maturity of the bonds, the investor is free to put in his money in any kind of asset.   However, the interest on the bond is taxable.

On the other hand, State Bank of India, offers  SBI Capgains Plus Scheme where  lock-in period is absent, a slightly higher interest rate compared to the capital gain tax saving bonds is offered.    The proceeds of the sale of the capital asset can be parked in the fixed deposit scheme under the Capgains Plus plan at an interest rate marginally higher than what bonds under Section 54 EC would fetch. The interest earned will be taxed at prevailing rates.  However, unlike the bonds under 54 EC, the depositor cannot put the money in a different kind of asset. The plan stipulates that re-investment should be made on the specified asset only.   Therefore, this scheme is a boon for people who have sold their property but haven't been able to purchase the property within the stipulated period.    Once a final decision is taken  on the property you want to reinvest in, you can opt for an exit from SBI Plan, but you will need to get a certificate of consent from the assessment officer.

Other Important Links :

 Download FREE Major ITR Forms for Financial Year 2014-15 - ITR1, ITR2, ITR2A, ITR4S - pdf files, Fillable files AND Instructions

 HOW TO MAKE BEST USE OF SECTION 80C  OR Saving Tax By Investing Under  Section 80C

 How to Avoid TDS  Deduction by Banks - HOT TIPS FOR TDS in Banks 

  SOME VERY POPULAR SCHEMES FOR INVESTMENTS (INCLUDING FOR TAX SAVINGS)

 Download PDF files for Form 15G, Form 15H, Form 60, Form 61

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