The Indian Budget for the fiscal year 2017-18 has been declared. Those of you who were expecting new income tax slabs have much to cheer about.
The Indian Finance Minister has announced new income tax slabs for FY 2017-18 (AY 2018-19). It will put some more money into the hands of taxpayers.
So, it’s time when you go ahead and do your financial planning.
Here, we have come up with a detailed presentation of India Income Tax Slabs for FY 2017-18 (AY 2018-19) which will show you the tax slabs for different categories of taxpayers.
In India, there are two categories of taxpayers:
- Individuals and HUF
- Businesses
“Individuals and HUF” are made up of following categories:
- Male Individuals below 60 years of Age and HUF
- Female Individuals below 60 years of Age.
- Senior Citizens above 60 years of Age.
- Super Senior Citizens above 80 years of Age.
Whereas, “Businesses” comprises up of:
- Co-operative Society
- Firms, Local Authorities, and Domestic Company
In an important move, the Finance Minister has reduced the income tax for small companies which have an annual turnover of Rs. 50 Crore. As per the Union Budget, the Income Tax has been slashed to 25% from the previous rate of 30%.
He also announced that individuals earning less than Rs. 5 Lakh per year would have to file a one-page I-T return form.
Other important highlights as per the Union Budget with respect to income tax slabs in India include:
- 5% tax for incomes become Rs. 2.5 and 5 Lakhs.
- No tax for incomes up to Rs. 3 Lakhs due to Rs. 2500 rebate.
- The tax benefit of Rs. 12,500 for incomes over Rs. 5 Lakhs.
- No scrutiny for first-time taxpayers, unless special circumstances are involved.
Income Tax Slabs for Individuals & 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 the total income exceeds Rs. 1 Crore.
Cess: 3% on total of income tax + surcharge.
Income tax slab for Individuals & 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 the total income exceeds Rs.1 Crore.
Cess: 3% on total of income tax + surcharge.
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 upto 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 the total income exceeds Rs.1 Crore.
Cess: 3% on total of income tax + surcharge.
So, we see that the finance minister has slashed the income tax rate for individuals in the lowest income tax slab of Rs. 2.5 lakh to Rs. 5 lakh which now stands at 5% for FY 2017-18 (AY 2018-19).
The rebate under Section 87A given to people with income up to Rs. 5 Lakhs is Rs. 2500.
Now, as a result of the rebate under Section 87A and the reduction in the lowest slab income tax rate to 5%, the tax burden for people earning up to Rs. 3 Lakhs would be zero.
Similarly, for those earning from Rs. 3 Lakhs to Rs. 3.5 Lakhs the tax burden would be Rs.2500.
People who are earning Rs. 4.5 Lakhs can reduce their tax liability to zero if they fully utilize the tax break under Section 80C combined with these new proposals.
The new tax proposals also enable persons in the higher income tax slabs to be eligible for this lower tax rate of 5% which is applicable for income between Rs. 2.5 Lakhs to Rs. 5 Lakhs.
The income tax rates for domestic companies for FY 2017-18 (AY 2018-19) having an annual turnover of up to Rs. 50 Crore has been slashed to 25% from 30%. Apart from this change, the other income tax rates remain the same as were in the previous year. Also, for domestic companies having a turnover of more than Rs. 50 Crore, Income tax rate would continue to be levied at 30%.
The surcharge is also applicable in the case of Domestic Companies.
Level of Income and Surcharge
Less than 1 Crore -> No Surcharge
More than Rs. 1 Crore but less than Rs. 10 Crore -> 7%
More than Rs. 10 Crore -> 12%
Education Cess @ 2% and Secondary and Higher Education Cess @ 1% would be applicable on the Total Tax Computed.
This Cess is levied for all categories of taxpayers that have been mentioned above.
