Every year tax payers need to make a note of changes announced in the budget that reflect in the income tax e filing forms. Many filing details remain unchanged whereas there may be changes in a few. Income tax rates for AY 2018-19 apply for FY 2017-18. FY 2017-18 periods was from April 1, 2017, till March 31, 2018. The income tax filing date for FY 2017-18 was extended up to August 31, 2018. Late filers may still file income tax returns, albeit fines may apply.
Income tax rates differ for age groups and income slabs.
The income tax rates are first categorized across age groups then cross-categorized across age group income to generate tax rate slabs. The following paragraphs discuss the income tax rates for age/income slab matrix.
Income Tax Slab Rates for FY 2017-18 (Assessment Year 2018-19)
Income Tax slab rates help you decide whether your income is taxable or not. There are some changes introduced in the income tax slab rates for the financial Year 2017-18 (assessment year AY 2018-19).
Based on the annual income earned by an individual, the following table shows different income tax rates applicable in India. The tax slabs have been arranged by the category and profile of the tax payers.
Income Tax Brackets/Slab for FY 2018-19
Income tax is a tax imposed by the government on the income earned by individuals and businesses. One must file an income tax return to justify his/her income. In this regard, to avail tax advantages to its fullest, it is crucial to understand the existing income tax slab for the fiscal year 2018-19.
Decoding Income Tax Slab
As the source of income is diverse is India, it is not quite possible to charge a single tax rate for all. That is why the government of India has set different tax slabs applicable to different groups of income earners. Each group is liable to pay tax as per the rates imposed. The income tax slab also varies from group to group. Every year, tax slab is revised as per the rules of IT Act, 1961. However, the budget propositions directly impact on income tax slab for each year.
Since the 2018 budget had announced no changes in the income tax slab, the tax slabs remain the same as in the year 2017. Hence, the salaried persons and businessmen didn’t witness any change in the slab. Yet, a 4% increase in Education and Health Cess was introduced. Due to this, the existing income tax slab categories see a nominal increase in the income tax rate. Let’s consider the below table to understand the changes applied after 2018 budget.
Individuals below the age of 60 years:
Income Tax Rates for citizens below 60 years for FY 2017-18, AY 2018-19
The following income tax rates would apply for resident individuals below 60 years as well as HUFs (Hindu Undivided families). The HUF does not fall into any age group, the income tax rates for HUF are same as for individual residents below 60
Income Tax Rate for income below Rs 2.5 lakh a financial year
if you are an individual resident below sixty years of age having a total income below Rs 2.5 lakh in the financial year 2017-18, then no tax is applicable for you. That means your income is totally tax-free.
Income Tax Rate for income between Rs 2.5 lakh to Rs 5 lakh in a financial year
Resident individuals who have total income between Rs 2.5 lakh and Rs 5 lakh in the financial year 2017-18 come under tax rate of 5 %. For example, if the total income is Rs 3, 00,000 then individual/HUF would need to pay 5% of 3, 00,000 or Rs 15000 as income tax. For individuals in this age/income slab 3 % health and education cess on income tax would be levied. So if in the earlier example tax is Rs 15,000, 3 % cess on Rs 15,000 would be Rs 450. The cess would be deducted from the income tax. So the income tax would be Rs 14,500 in this case, further rebates in form may apply.
Income Tax Rate for income between Rs 5 lakh to Rs 10 lakh in a financial year
HUF or resident individuals within sixty years age group having income between Rs 5 lakh to Rs 10 lakh in the financial year 2017-18 would be taxed at the rate of 20%. So if total income is Rs 7.5 lakh in a financial year, then income tax would be 20 % of Rs 7, 50,000 or Rs 1, 50,000. 3% health and education cess on income tax will be applicable for this slab so that cess would be 3% of 1, 50,000 or Rs 4500. The income tax in this example would be Rs 1,50,000 fewer Rs 4,500 or Rs 1,45,500, further rebates in the form may apply.
Income Tax Rate for income above Rs 10 lakh in a financial year
For all resident individuals or HUF who have income above Rs 10 lakh in the financial year 2017-18, the income tax rate will be 30 %. So if total income is Rs 60 lakhs in the financial year, income tax would be 30 % of Rs 60 lakhs or Rs 18, 00,000. There would be a cess of 3 % on the income tax, and that would be 3% of 18, 00,000 or Rs 54,000. For individuals in the age group within 60 years and HUF having income above Rs 50 lakh up to Rs 1 crores, there would be a surcharge of 10 % on the income tax which in this example works out as 10 % of 18, 00,000 or Rs 1, 80,000. The final income tax would be (tax on total income-cess+ surcharge) or Rs 1, 80,000-Rs 54,000 + 1, 80,000=Rs 1, 44,000 in the financial year 2017-18. The surcharge on income tax is 15 % for income above Rs 1 crores in a financial year.
|
Net Income |
Income Tax Rate & Cess |
Net Taxable Income |
Tax Liability After 2018 Budget |
Increased Tax (Rs.) |
|
Up to INR 2.5 Lakh |
NIL |
2,50,000 |
- |
|
|
INR 2.5 Lakh-5 Lakh |
5% + 4% CESS |
5,00,000 |
INR 13,000 |
125 |
|
INR 5 Lakh-10 Lakh |
20% + 4% CESS |
10,00,000 |
INR 1,17,000 |
1,125 |
|
INR 10 Lakh and above |
30% + 4% CESS |
15,00,000 |
INR 2,73,000 |
2,625 |
Income Tax Rate for citizens in the age group of 60years to 80 years for FY 2017-18 and AY 2018-19
Resident individuals in the age group of 60 yrs to 80 years are considered as senior citizens and concession on income tax rates apply for this age group. The income tax rates for the senior citizen age group are slightly different across the three age/income slabs than the income tax rates applicable to individuals below 60 years of age. The following are the income tax rates for different income groups under the senior citizen age group category:
Income Tax Rate for income up to Rs 3 lakhs in a financial year
Senior citizens having a total income below Rs 3 lakhs in the financial year 2017-18 are exempt from income taxes. In other words, the income tax rate for senior citizens having income below Rs 3 lakh in the financial year is zero percent.
Income Tax Rate for income between Rs 3 lakhs to Rs 5 lakhs in a financial year
For resident individuals in the age group of 60 yrs to 80 yrs having total income between Rs 3 lakhs to Rs 5 lakhs in the financial year 2017-18 income tax rate would be 5% of total income. If total income is Rs 3, 50,000 in the financial year, then income tax would be 5% of 3, 50,000 or Rs 17,500 for the financial year 2017-18 and assessment year 2018-19. Tax payer in this slab will be eligible for 3% health and education cess on the income tax amount which in this case would be 3 % of Rs 17,500 or Rs 5250. The final income tax would be Rs 17,500 fewer Rs 5250 or Rs 12,250. Further rebates may apply in the ITR form.
Income Tax Rate for income between Rs 5 lakhs to Rs 10 lakhs in a financial year
Residents in the senior citizen's age group having income between Rs 5 lakhs to Rs 10 lakhs in the financial year 2017-18 and assessment year 2018-19 fall under tax slab rate of 20 %. If total income is Rs 7.5 lakh in the financial year, then income tax on the total income would be 20 % of Rs 7, 50,000 or Rs 1, 50,000. Tax payer in this slab will be eligible for 3 % education and health cess on the income tax which works out to be 3 % of Rs 1, 50,000 or Rs 4500. The income tax after cess would be Rs 1, 45,500.
Income Tax Rate for income above Rs 10 lakhs in a financial year
Senior citizens who have income above Rs 10 lakhs in FY 2017-18 and AY 2018-19 will have income tax rate as 30 %. Thus if total income is Rs 66 lakhs in the financial year, the income tax on total income would work out to be 30 % of Rs 66,00,000 or Rs 19,80,000. Health and education cess on income tax would be 3% of 19, 80,000 or Rs 59,400. Tax payers in this slab having income more than Rs 50 lakh to Rs 1 crore income in the financial year will have to pay a surcharge of 10 % on the income tax amount. If total income is more than Rs 1 crore in the financial year, then surcharge would be 15% of the income tax. In this example, the surcharge would be 10 % of Rs 66, 00,000 or Rs 6,60,000. The income tax less cess plus surcharge would be Rs 19,80,000 less Rs 59,400 plus Rs 6,60,000=Rs 25,80,600.
Individuals of the age of 60 years but less than 80 years
|
Net Income |
Income Tax Rate |
Net Taxable Income |
Tax Liability After 2018 Budget |
Increased Tax (Rs.) |
|
Up to INR 3 Lakh |
NIL |
2,50,000 |
- |
|
|
INR 3 Lakh-5 Lakh |
5% + 4% CESS |
5,00,000 |
INR 10,400 |
100 |
|
INR 5 Lakh-10 Lakh |
20% + 4% CESS |
10,00,000 |
INR 1,14,400 |
1,100 |
|
INR 10 Lakh and above |
30% + 4% CESS |
15,00,000 |
INR 2,70,400 |
2,600 |
Individuals of the age of 80 years and above
Income Tax Rate for citizens above 80 years for FY 2017-18 and AY 2018-19
Resident Indians above the age of 80 years are considered as super senior citizens and are eligible for further concessions in income taxes. The income tax rates for the income slabs in this age group are as for mentioning:
Income Tax Rate for income up to Rs 5 lakh in a financial year:
Super senior citizens who have a total income below Rs 5 lakh in the financial year 2017-18 need not pay any income tax that is the income tax rate for this slab would be zero.
Income Tax Rate for income between Rs 5 lakh and Rs 10 lakh in a financial year:
Octogenarians who have income between Rs 5 lakhs to Rs 10 lakhs in the financial year 2017-18 are eligible for 20 % income tax rate on their total income and 3 % health and education cess on the income tax. The final income tax would be the income tax less the cess amount. Let us consider here an income of Rs 6 lakh a year, then income tax would be 20 % of Rs 6, 00,000 or Rs 1, 20,000 and health and education cess would be 3 % of Rs 1, 20,000 or Rs 36,000. The final income tax would be Rs 1, 20,000 fewer Rs 36,000 which works out to be Rs 84,000.
Income Tax Rate for income above Rs 10 lakh in a financial year:
Tax payers above the age of eighty years having income above Rs 10 lakh in the financial year 2017-18 come under the 30 % income tax rate bracket. 3% health and education cess are applicable to the tax on total income. Income above Rs 50 lakh and up to 1 crore will be charged a surcharge on income tax of 10 %. Income above Rs 1 crore in a financial year will be charged a surcharge of 15 % on the income tax. If we consider here a total income of Rs 60 lakh a year, then tax on total income would be 30 % of Rs 60, 00,000 or Rs 18, 00,000. Cess on income tax would be 3% of 18, 00,000 or Rs 54,000. Surcharge of 10% will be applicable to the income tax and would be 10 % of Rs 18,00,000 or Rs 1,80,000. The income tax after cess and surcharge would work out to be Rs 18, 00,000 fewer Rs 54,000 plus Rs 1, 80,000 equal to Rs 16, 74,000.
|
Net Income |
Income Tax Rate |
Net Taxable Income |
Tax Liability After 2018 Budget |
Increased Tax (Rs.) |
|
Up to INR 5 Lakh |
NIL |
5,00,000 |
- |
|
|
INR 5 Lakh-10 Lakh |
10% + 4% CESS |
10,00,000 |
INR 1,04,000 |
1000 |
|
INR 10 Lakh and above |
30% + 4% CESS |
15,00,000 |
INR 2,60,000 |
2,500 |
The increased tax is applicable from the assessment year 2019-20.
As per the current income tax brackets, the taxation applicable to persons below the age 60 years is as follows:
|
Income |
Tax Applicable |
|
Income up to Rs. 2.5 Lakh |
NIL |
|
Rs. 2.5 Lakh -5 Lakh |
5% |
|
Rs. 5 Lakh-10 Lakh |
20% |
|
Rs. 10 Lakh and above |
30% |
For Senior Citizen (age 60- less than 80)
|
Net Income |
Income Tax Rate |
|
Up to INR 3 Lakh |
NIL |
|
INR 3 Lakh-5 Lakh |
5% |
|
INR 5 Lakh-10 Lakh |
20% |
|
INR 10 Lakh and above |
30% |
For Super Seniors (Age above 80 years)
|
Net Income |
Income Tax Rate |
|
Up to INR 5 Lakh |
NIL |
|
INR 5 Lakh-10 Lakh |
10% |
|
INR 10 Lakh and above |
30% |
Income Tax Slab Rate for Hindu Undivided Families (HUF)
|
Net Income |
Income Tax Rate |
|
Up to INR 2.5 Lakh |
NIL |
|
INR 2.5 Lakh-5 Lakh |
5% |
|
INR 5 Lakh- 10 Lakh |
20% |
|
Above INR 10 Lakh |
30% |
Source: economictimes.com
Income Tax Slabs for Individual Tax Payer (Resident of India or NRI):
|
Level of Income |
Tax Rates |
|
Up to Rs 2,50,000 |
No Tax |
|
Rs 2,50,000 to Rs 5,00,000 |
5% |
|
Rs 5,00,000 to Rs 10,00,000 |
20% |
|
Over Rs 10,00,000 |
30% |
Additions:
10% of the income tax amount is surcharged if the income is in between the range of Rs 50 lakhs to Rs 1 crore.
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
Rebates:
Under Section 87A of the Income Tax Act, salaried individuals are supposed to receive a tax rebate of up to Rs 2500, if they fall under the taxable income slab of up to Rs 3.5 lakhs.
Income Tax Slabs for Hindu Undivided Families (HUF):
|
Level of Income |
Tax Rates |
|
Up to Rs2,50,000 |
No tax |
|
Rs.2,50,000 to Rs.5,00,000 |
5% |
|
Rs.5,00,000 to Rs.10,00,000 |
20% |
|
Over Rs.10,00,000 |
30% |
Additions:
10% of the income tax amount is surcharged if the income is in between the range of Rs 50 lakhs to Rs 1 crore.
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
Rebates:
Under Section 87A of the Income Tax Act, salaried individuals are supposed to receive a tax rebate of up to Rs 2500, if they fall under the taxable income slab of up to Rs 3.5 lakhs.
Income Tax Slabs for legal Entities Registered as Associations of Persons:
|
Level of Income |
Tax Rates |
|
Up to Rs.2,50,000 |
No tax |
|
Rs.2,50,000 to Rs.5,00,000 |
5% |
|
Rs.5,00,000 to Rs.10,00,000 |
20% |
|
Over Rs.10,00,000 |
30% |
Additions:
10% of the income tax amount is surcharged if the income is in between the range of Rs 50 lakhs to Rs 1 crore.
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
Rebates:
Under Section 87A of the Income Tax Act, salaried individuals are supposed to receive a tax rebate of up to Rs 2500, if they fall under the taxable income slab of up to Rs 3.5 lakhs.
Income Tax Slabs for Legal Entities Registered as Bodies of Individuals:
|
Level of Income |
Tax Rates |
|
Up to Rs.2,50,000 |
No tax |
|
Rs.2,50,000 to Rs.5,00,000 |
5% |
|
Rs.5,00,000 to Rs.10,00,000 |
20% |
|
Over Rs.10,00,000 |
30% |
Additions:
10% of the income tax amount is surcharged if the income is in between the range of Rs 50 lakhs to Rs 1 crore.
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
Rebates:
Under Section 87A of the Income Tax Act, salaried individuals are supposed to receive a tax rebate of up to Rs 2500, if they fall under the taxable income slab of up to Rs 3.5 lakhs.
Income Tax Slabs for Other Artificial Judicial Persons:
|
Level of Income |
Tax Rates |
|
Up to Rs.2,50,000 |
No tax |
|
Rs.2,50,000 to Rs.5,00,000 |
5% |
|
Rs.5,00,000 to Rs.10,00,000 |
20% |
|
Over Rs.10,00,000 |
30% |
Additions:
10% of the income tax amount is surcharged if the income is in between the range of Rs 50 lakhs to Rs 1 crore.
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
Rebates:
Under Section 87A of the Income Tax Act, salaried individuals are supposed to receive a tax rebate of up to Rs 2500, if they fall under the taxable income slab of up to Rs 3.5 lakhs.
Income Tax Slab For Resident Senior Citizens (Over the Age of 60 on the last day of the Previous Year):
|
Level of Income |
Tax Rate |
|
Up to Rs.3,00,000 |
No tax |
|
Rs.3,00,000 to Rs.5,00,000 |
5% |
|
Rs.5,00,000 to Rs.10,00,000 |
20% |
|
Over Rs.10,00,000 |
30% |
Additions:
10% of the income tax amount is surcharged if the income is in between the range of Rs 50 lakhs to Rs 1 crore.
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
Rebates:
Under Section 87A of the Income Tax Act, salaried individuals are supposed to receive a tax rebate of up to Rs 2500, if they fall under the taxable income slab of up to Rs 3.5 lakhs.
Income Tax Slab For Resident Super Senior Citizens (Over the age of 80 on the last day of the Previous Year):
|
Level of Income |
Tax 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% |
Additions:
15% of the income tax amount is surcharged if the income is greater than Rs 1 crore.
In addition to the surcharge being paid, 3% extra cess plus surcharge is charged on the total income tax amount.
For Partnership Firms:
The income tax rate for Limited Liability Partnerships (LLPS) and Partnership Firms will be @ 30%.
Additions:
12% of the income tax amount is surcharged if the income is greater than Rs 1,00,00,000 (Subject to marginal relief).
In addition with the surcharged being paid, 2% extra education cess is charges on the income tax amount.
In addition with the surcharge being paid, 1% extra secondary and higher education cess is charged on the income tax amount.
For Local Authorities:
The income tax rate for Local Authorities will be @ 30%.
Additions:
12% of the income tax amount is surcharged if the income is greater than Rs1,00,00,000 (Subject to marginal relief).
In addition with the surcharged being paid, 2% extra education cess is charges on the income tax amount.
In addition with the surcharge being paid, 1% extra secondary and higher education cess is charged on the income tax amount.
For Domestic Companies:
The income tax rate for Domestic Companies will be @ 30%.
Addition:
7% of the income tax amount is surcharged if the income of the salaried individual is greater than Rs1,00,00,000. 12% of the income tax amount is surcharged if the income is greater than Rs10, 00, 00,000 (Subject to marginal relief).
In addition with the surcharged being paid, 2% extra education cess is charges on the income tax amount.
In addition with the surcharge being paid, 1% extra secondary and higher education cess is charged on the income tax amount.
Income Tax Rates for Foreign Companies:
|
Nature of Income |
Tax Rate |
|
As per the agreement made with an Indian concern, in case the income received by foreign firms is in the form of royalties paid by the Indian government rendered according to agreements(After March 31st ,1961 and before April 1st 1076) |
50% |
|
In case the received income is in the form of payment for technical service rendered according to the agreement made with an Indian concern(After February 29th 1964, before April 1st 1976) |
50% |
|
Any other income |
40% |
Additions:
2% of income tax amount is surcharged if the income is higher than Rs 1, 00, 00,000. 5% of the income tax amount is surcharged if the income is greater than Rs 10, 00, 00,000 (Subject to marginal relief).
In addition with the surcharged being paid, 2% extra education cess is charged on the income tax amount.
In addition with the surcharge being paid, 1% extra secondary and higher education cess is charged on the income tax amount.
Income Tax Rates for Co-operative Societies:
|
Level of Income |
Tax Rate |
|
Up to Rs.10,000 |
10% |
|
Rs.10,000 to Rs.20,000 |
20% |
|
Over Rs.20,000 |
30% |
Additions:
12% of the income tax amount is surcharged if the income is greater than Rs1,00,00,000 (Subject to marginal relief).
In addition with the surcharged being paid, 2% extra education cess is charges on the income tax amount.
In addition with the surcharge being paid, 1% extra secondary and higher education cess is charged on the income tax amount.
Budget 2018 Highlights on Income Tax
For Salaried Professionals
- No change in basic income tax brackets
- A standard deduction of INR 40,000 is introduced by replacing the miscellaneous and transport allowance
- Tax on education cess is increased by 4% tax and renamed as Health and Education Cess
- 10% tax on long-term capital gain exceeding Rs 1 Lakh
- Short-term capital gains to continue to be taxed at 15%
For Senior Citizens
- Zero TDS on interest earned from FDs up to Rs 50,000
- Tax exemption on interest from FD, Post Office up to RS 50,000 as per the Section 80TTB
- Premium paid for senior citizen medical insurance is exempted up to Rs. 50,000
- As per Section 80DDB, tax exemption for certain critical illnesses up to Rs. 60,000 in case of senior citizens, up to Rs. 80,000 in case of super senior citizens and Rs. 1 Lakh in case of all senior citizen
Income Tax Rate for FY 2017-18 and AY 2018-19 – FAQs
1.For applying the income tax rate, how to compute the total income?
Ans: Here it should be noted that the income tax rate for all the slabs discussed above is not applied only on the salary income but on the total income. As per the income tax act, individual or HUF must declare all sources of income which include income from salary, income from investments, income from property, income from business, income from capital gains and any other source of income like a lottery win. For each source of income, several deductions and exemptions apply, and these have to be taken into account for calculating taxable income under each income source head (income category).
The taxable income of each source after applying the tax deductions and exemptions are added together to yield the total taxable income. Income tax rate is applied to the total taxable income for income heads which have same slab rates. Different income tax slab rates can also be applicable for specific income head for example long-term capital gains above Rs 1 lakh in a financial year from ELSS will be levied 10 % LGCT tax (indexation may also apply), this tax slab rate is different from the salary income tax slab rates. In case tax slab rates are different for different income source head, then income tax amount is calculated separately for the specific income heads. All the income taxes are added to compute the total income tax amount.
Income tax computation is a simple concept, yet the mode in which deductions, exemptions, and slab tax rates are applied may seem a complex matter. But this is not so while filing income tax using appropriate income tax form the mode becomes sequentially clear and some data is just imported into the income tax form without the tax payer having to fill them manually. It must be noted here that appropriate tax filing form should be used. For example, salaried individuals and HUF should choose ITR-1, and self-employed should choose ITR-4.
2. Tax deducted at source is deducted before or after applying income tax rate?
Ans: Tax Deducted at Source or TDS is deducted from salary by the employer and from bank investment returns by banks. All deductors who deduct tax at source from tax payer must provide form 16 to the tax payer at the end of the financial year. Form 16 can be a useful source for computing the total tax deducted at source for the financial year while filing the income tax returns. More comprehensive information on TDS can be obtained from form 26 AS which is uploaded on the online income tax account of each registered user and can be downloaded by the tax payer.
TDS is income tax paid at source and hence is applied after the application of income tax rates on the income amount(s). So TDS is deducted from the final income tax amount as that is part of tax which has been already paid and need not be paid again. If final income tax amount is more than TDS, a positive amount is obtained which is balance tax amount which the tax payer would need to pay to the government. If this same amount is negative then a rebate is indicated and income tax department would credit the rebate amount into the registered savings account of the tax payer.
