Income Tax Slabs and Rates AY 2017-18 (FY 2016-17)
It is a fact that income tax is one of the most important sources of revenue for the any government throughout the world and hat is not an exception in case of Indian government. In simple terms, income tax is actually collected from the different sources of income which an individual is earning throughout a year. The collection of income tax in India is done by the CBDT and that is under the IRS. Now, before we delve deep into the factual details of income tax slabs and rates of the financial year 2016-17, there are certain things that need to be known.
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The income tax is actually collected on a yearly basis which is a part of an individual’s income for a certain fiscal year. The max rate of income tax in India is 30%, but education cess is available which enhances the upper limit to a certain extent. The tax payers are categorized into different categories. The primary two categories are Individuals and Hindu United Families and Business entities. Under the Individuals and Hindu United families, there are three categories, they are:
Individuals who are aged up to 60 years, Senior citizens who are above the age of 60 but less than 80 years old, and the third category is super senior citizens who are more than 80 years old.
Within the category of business entity, there are three different divisions, they are:
Domestic company, local authority and firms
Co-operatives and societies
Budget 2016 announcement
On the announcement of the budget of last year, it was mentioned that an individual taxpayer is liable to claim a tax exemption up to an amount of Rs 4, 44,200. But the slab rates were not announced. You can claim rs 4, 94,200 as total tax exemption if you fulfill point number 3.
- Considering the budget of this year, it can be noted that there has been no changes mentioned within the slabs for this year as well. While announcement of the tax exemptions, the sections 80C and 80D were also considered. But the slabs were kept the same.
- Also, one of the most important things to note is, in the year 2013, with the declaration of budget, it was also mentioned that individuals shall have a tax exemption of Rs 2000 if the annual income is less than Rs 5 Lakh. This has been increased to rs 3000 in this Budget. This tax exemption comes under section 87A.
- You can get an additional rs 50 thousand on the interest paid if you get a new home loan for your first home. So in this case your Home Loan interest rate tax exemption limit would be rs 2 lakhs.
- There has been no change in 80C tax exemption
- There has been no change in Tax Slabs
The different considerations of income tax slab rates for the financial year 2016-17
- It needs to be mentioned that when an individual reaches the age of 60 years or 80 years in a certain fiscal year, then from that year, the income tax shall be charged under the senior/super senior citizen category throughout the whole year.
- If the overall income is more than 1crore, then a surcharge of 15% shall be applicable for that individual or business entity.
- The University educational cess is offered at a rate of 2% while in case of secondary and higher secondary education, an exemption of 1% is offered.
For business entities:
For the category of business entities, the tax slabs shall be applicable in the following way:
- For the companies earning an amount of Rs 10000, a tax rate of 10% shall be charged. When the income is within Rs 10000-20000, there shall be a tax charge of 20%, but this shall be applicable only if the income exceeds Rs 10000. On an income of more than Rs 20000, there shall be a tax charge of 30%.
For domestic companies, local authorities and firms:
This category of tax payers is not actually offered with tax charges in a certain income range, but they are charged with taxes in collective format considering the overall earnings. On the total declared income, a tax charge of 30% is given.
- The domestic companies are charged on a collective basis considering the fact that domestic companies do not have a confirmed income or a fixed salary basis income to pay the taxes of a certain range.
- The domestic companies have to pay an amount of 5% surcharge if the income exceeds Rs 1 crore, but less than 10 crore. On the other hand, 10% surcharge is offered to the domestic companies for income of more than Rs 10 crore.
For the foreign companies:
The foreign companies that are established in India have to pay a tax charge of 40% considering all the operating income that is generated in India. For the data mentioned above, the same slab rates have been applicable in the fiscal year 2015-2016 and according to sources; this shall be kept same for the FY 2016-17.
For any other non-domestic companies
- The income tax for the non-domestic companies shall be charged at 50% on the amount of income. This 50% of the tax comprises of royalties that shall be received from the government or any other Indian concern having a registration from government and the fees for attaining the technical services from government or any other Indian concern having a registration from government.
- The surcharges shall be taken as an amount of income tax which shall be computed along with above rates and after being reduced from income tax rebate. The surcharges shall be 2% of the income tax, only if the income is more than 2 crore. While in case of more than 10 crore, the surcharges shall be taken as 5% of the overall income tax.
- An education cess of 3% shall be provided on income tax and surcharges.
The marginal relief within surcharges:
The marginal relief in surcharges is offered to the individual or the companies when the taxable income is more than 1 crore and he becomes liable in paying the surcharges in the prescribed rates mentioned above. But, if the income is limited within 1crore, then, the tax and surcharge will not increase the amount of tax that is payable within the income of 1 Crore.
The TDS deductions
The TDS is a form of direct tax that has been levied by the government while the taxes are deducted during the source of payment. For instance, the salary that is received by any individual after each month is given after deducting the applicable TDS within the amount. This is the reason it is so important to report your income for the next fiscal year in the different tax authorities of your city or state. But, you can rest assured that if you have made wrong payments for tax, then you can claim for refunds within the fiscal year. The IT department is liable for refunding your additional amount that you mistakenly paid. To ensure that additional tax is not paid by mistake, it is essential to maintain the tax filings in order.
Considering higher IT slabs or exemptions on higher interest-A dilemma for government
For the budget of FY 2016-17, there have been a total of 2800 suggestions offered to the Finance Minister requesting for the restructure for income tax slabs, making the interest earned on fixed deposits to be exempt and offer higher allocations in job creation and education. There have been requests for increasing the exemptions of tax for the senior citizens. While a lot of people have asked for the higher investment within section 80C of Income tax, abolishment of service tax and also an increment of medical reimbursement of Rs 15000 is also a good option.
No further subsidized LPG for income above Rs 10 Lakh
It has been announced that for the people having an income of 10 Lakh or more, there shall be no longer subsidized LPG. The decision has been made for limiting the supply of under priced fuel for cutting the subsidies. In the year 2015, it was asked by the government to the individuals who are capable financially, to surrender their subsidies, but not much heed was paid to it, hence this decision has been taken up.
A tabular form of income tax slabs and rates for different categories
For individuals below 60 years (For both male and female)
|SL NO||Details of income||The rates|
|1.||When income is limited within Rs 250000||No tax|
|2.||Income ranges between Rs 250000 to 500000||10% of the overall amount that exceeds Rs 250000|
|3.||Income range from Rs 500000-1000000||Rs 25000 along with 20% of the overall taxable income that exceeds Rs 500000.|
|4.||Income more than Rs 1000000||Rs 125000, along with 30% of overall amount that exceeds Rs 1000000.|
Income Tax Slab For the senior citizens (aged 60-80 years)
|SL NO||Income details||Corresponding rates|
|1.||Income is limited to Rs 300000||No tax|
|2.||Income ranges between Rs 300000-500000||10% of the overall amount that is more than Rs 300000.|
|3.||Income ranges between Rs 500000-1000000||Rs 20000 along with 20% of the overall amount that crosses Rs 500000|
|4.||Income is more than Rs 1000000||Rs 120000 along with 30% of the overall amount that exceeds Rs 1000000.|
Income Tax Slab For Super Senior Citizens (for 80 years and above)
|SL NO||Details of income||Corresponding rates|
|1.||Income is limited to Rs 500000||No tax|
|2.||Income ranges between Rs 500000-1000000||20% of the total amount which crosses over Rs 500000|
|3.||Income is more than Rs 1000000||Rs 100000 along with 30% of the amount that crosses over Rs 1000000|
The only changes that has been made is that People earning less then rs 5 Lakhs will now have to pay Rs 3000 less tax and House rent tax allowance which was called Makan Bhatta for non salaried person has been increased from rs 24 thousand to rs 60 thousand.