This discussion is to discuss Income tax rates and slabs applicable to different class of tax payers. I will list the tax rates applicable to Individuals, Firms, Companies, Partnership firms and Co-operative societies.

Income Tax rates and slabs for Individuals for AY 2017-18

Income tax slabs and rates for AY 2017-18 (FY 2016-17) for Individuals
Category Income Levels Tax Rate
1. Taxable income below Rs. 2,50,000 Nil Tax payable
2. Taxable income above Rs. 2,50,000 but below Rs. 5,00,000 or equals Rs. 5,00,000

Tax needs to be paid at 10% on income exceeding 2,50,000.

Deduction of Rs. 5,000 or 10% of income exceeding 2,50,000. Whichever is lower. This is deduction is as per section 87A of Income Tax Act.

3. Taxable income exceeds Rs. 5,00,000 but below Rs. 10,00,000 or equals Rs. 10,00,000 Rs. 25,000+20% tax on income exceeding 5,00,000
4. Taxable income exceeds Rs. 10,00,000 Rs. 1,25,000 + 30% tax on income exceeding Rs. 10,00,000

 

Above table represents the tax rates applicable to individual tax payers who are not senior citizens. Income Tax Act, 1961 has specified different tax rates for Individuals, Senior citizens and super senior citizens.

Surcharge is also applicable for individual tax payer who has income exceeding Rs. 1 crore. Individuals needs to pay surcharge at 15% on their tax, if income exceeds Rs. 1 crore.

Education Cess needs to be paid at 3% on total tax and surcharge.

Example to calculate tax of an Individual having income of Rs. 1,25,00,000.

Here is an example to show you calculation of income tax that needs to be paid by an Individual tax payer if his income is Rs. 1,25,00,000. I have taken this example so that all kind of tax payers get included in this example. I have considered this taxable amount after all deductions available under chapter VI of Income Tax Act, 1961.

Income Tax calculation example of an Individual Tax Payer
Particulars Amount Tax
Total Taxable Income 1,25,0000  
Tax on first slab   Rs. 25,000 (10% on 2,50,000)
Tax as per second slab   Rs. 1,00,000 (20% on 5,00,000)
Tax as per third slab   Rs. 34,50,000 (30% on residual income)
Total Tax   Rs. 35,75,000
Surcharge @ 15% on total Tax   Rs. 5,36,250
Total Tax + Surcharge   Rs. 41,11,250
Education cess @ 3% on above   Rs. 1,23,338
Total Tax Payable by Tax Payer   Rs. 42,34,588

This example is explained without considering advance tax and TDS implications.

Income Tax rates applicable for AY 2017-18 for Senior citizens

Senior citizens are individuals who have crossed age of 60. Though overall tax rates for senior citizens are similar to tax rates of Individuals except the first category, where instead of Rs. 2,50,000, Rs. 3,00,000 is the basic exemption limit.

Income Tax rates for senior citizens (AY 2017-18, FY 2016-17)
Category Income Levels Tax Rate
1. Taxable income below Rs. 3,00,000 Nil Tax payable
2. Taxable income above Rs. 3,00,000 but below Rs. 5,00,000 or equals Rs. 5,00,000

Tax needs to be paid at 10% on income exceeding 3,00,000.

Deduction of Rs. 5,000 or 10% of income exceeding 2,50,000. Whichever is lower. (Section 87A of Income Tax Act, 1961)

3. Taxable income exceeds Rs. 5,00,000 but below Rs. 10,00,000 or equals Rs. 10,00,000 Rs. 20,000+20% tax on income exceeding 5,00,000
4. Taxable income exceeds Rs. 10,00,000 Rs. 1,20,000 + 30% tax on income exceeding Rs. 10,00,000

 

Surcharge and Education cess is applicable similar to Individuals.

Income Tax rates for Super senior citizens (aged above 80) for AY 2017-18 (FY 2016-17)

Super senior tax payers gets additional benefit of Rs. 25,000 over Individuals and Rs. 20,000 over senior citizens.

Income Tax Rates for super senior citizens (AY 2017-18)
Category Income Levels Tax Rate
1. Taxable income below Rs. 5,00,000 Nil Tax payable
3. Taxable income exceeds Rs. 5,00,000 but below Rs. 10,00,000 or equals Rs. 10,00,000 20% tax on income exceeding 5,00,000
4. Taxable income exceeds Rs. 10,00,000 Rs. 1,00,000 + 30% tax on income exceeding Rs. 10,00,000

 

Surcharge and Education cess is applicable similar to Individuals.

Income Tax rates for Non Resident Tax payers AY 2017-18

Income tax rates for a NRI tax payer and individuals is same including surcharge and education cess. You can refer the above table for calculating the income tax of a NRI for assessment year 2017-18 and Financial Year 2016-17.

Income Tax Rates for Hindu Undivided Family (HUF), Association of Persons (AOP) and Body of Individuals (BOI) for AY 2017-18 and FY 2016-17

Again for all these tax payers, you can follow the same table applicable to Individual Tax Payers. Surcharge and Education cess is applicable similar to individual tax payers.

Income Tax rates for a Co-operative society for AY 2017-18 and FY 2016-17

Co-operative societies are also taxable as per Income Tax Act, 1961. Below table list down the tax rates applicable to Co-operative societies.

Income Tax rates applicable to Co-operative society (AY 2017-18)
Category Income Levels Tax Rate
1. Taxable income below or equals Rs. 10,000 10%
3. Above Rs. 10,000 but does not exceeds Rs. 20,000 Rs. 1,000 + 20% on income exceeding Rs. 10,000.
4. Above Rs. 20,000 Rs. 3,000 + 30% tax on income exceeding Rs. 20,000.

 

Surcharge is applicable at 12% if income exceeds Rs. 1 Crore. Education cess is also payable at 3% on tax plus surcharge.

Income Tax rate for partnership firms for AY 2017-18

Partnership firms are taxed at flat 30% on taxable income. Surcharge 12% and education cess at 3% is also applicable.

Income Tax rates for Indian/Domestic companies for AY 2017-18

This year in budget, Finance Minister provided different rates for companies.

  1. Company having turnover more than Rs. 5 crore is to be taxed at 30%,
  2. Company with turnover less than or equal to Rs. 5 crore is to be taxed at 29%.

Surcharge is also applicable for companies at below rates:

  1. 7% surcharge in case taxable income exceeds Rs. 1 crore but does not exceed Rs. 10 crore.
  2. 12% in case taxable income increases Rs. 10 crore.

Posted 1 year, 10 months ago by Rahul Rai


What about foreign companies? What is the tax rate for foreign companies?

Is surcharge applicable to them and how much?

Posted 1 year, 9 months ago by anonymous user


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