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Income Tax Slabs and Structure

Created on 20 Aug 2018

Wraps up in 4 Min

Read by 3k people

Updated on 19 Feb 2024

In India, there is a three-tier tax structure which comprises of the central government, state government and local municipal bodies. Article 256 of the constitution give teeth to this structure which states that no tax shall be collected except by the authority of law. So basically, taxes are classified into 2 categories i.e. Direct and Indirect taxes. Direct taxes are those whose burden cannot be shifted upon another person, whereas indirect taxes are those where  burden can be shifted to the third person like goods purchased from shopkeeper includes the value of tax paid by a shopkeeper in it.

Now with the introduction of GST, several other taxes like sales tax, excise duty, entertainment tax, octroi, service tax have been clubbed under 1 tax only. GST comprises of 3 parts i.e.

a. Central goods and services tax CGST,

b. State goods and services tax SGST, and

c. Integrated goods and services tax IGST.

Income Tax Slab in India

In India, income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been prescribed for different slabs and such tax rates keep increasing with an increase in the income slab. Such tax slabs tend to undergo a change during every budget.

Further, since the budget of 2018 has not announced any changes in income tax slabs this time, it remains the same as that of last year.

There are three categories of individual taxpayers:

1. Individuals (below the age of 60 years) which includes residents as well as non-residents,

2. Resident Senior citizens (60 years and above but below 80 years of age), and

3. Resident Super senior citizens (above 80 years of age).

Income Tax slab rates can be divided into following categories

a. Individual and HUF,

b. Businesses, and

c. Education Cess and SHEC.

I. For individuals and HUF: -

For financial year 2018-19 cess levied would be 4%. Also, under section 87A government provides a rebate for taxpayers, but this rebate has been reduced from 5000 to 2500 p.a.

a. Individuals below 60 years of age   

Income Tax Slabs

Tax Rate

Health and Education Cess

Income up to Rs 2,50,000*

No tax

 

Income from Rs 2,50,000 – Rs 5,00,000

5%

4% of Income Tax

Income from Rs 5,00,000 – 10,00,000

20%

4% of Income Tax

Income more than Rs 10,00,000

30%

4% of Income Tax

b. Income Tax Slab Rate for Senior Citizens (Age 60 years or more but less than 80 years)

Income Tax Slab

Income Tax Rate

Education Cess

Secondary and Higher Education Cess

 
 
 

Income upto Rs. 3,00,000

Nil

Nil

Nil

 

Income between Rs. 3,00,001 - Rs. 500,000

5% of Income exceeding Rs. 3,00,000

2% of income tax

1% of income tax

 

Income between Rs. 500,001 - Rs. 10,00,000

20% of Income exceeding Rs. 5,00,000

2% of income tax

1% of income tax

 

Income above Rs. 10,00,000

30% of Income exceeding Rs. 10,00,000

2% of income tax

1% of income tax

 

c. Income Tax Slab Rate For Senior Citizens (Age 80 years or more)

Income Tax Slab

Income Tax Rate

Education Cess

Secondary and Higher Education Cess

 
 
 

Income upto Rs. 5,00,000

Nil

Nil

Nil

 

Income between Rs. 500,001 - Rs. 10,00,000

20% of Income exceeding Rs. 5,00,000

2% of income tax

1% of income tax

 

Income above Rs. 10,00,000

30% of Income exceeding Rs. 10,00,000

2% of income tax

1% of income tax

 

II. Slabs for Business

a. For cooperative society

If total income does not exceed 10,000

Tax liability 10% of the income.

if total income exceeds 10,000 but less than 20,000

Tax liability 20% of the amount by which it exceeds 10,000

Where the total income exceeds 20,000

Tax Liability 30% of the amount by which it exceeds 20,000.

 b. For domestic companies

If income is less than 1 crore    Tax liability No surcharge.
If more than 1 but less than 10 crore Tax liability 7%.
More than 10 crore  Tax liability 12%.

The Bottom Line 

These slab rates for individuals and businesses vary year to year and every year during budget these tend to change. A lot depends on the fiscal policy of the country and whether the government in power want to give relief to people or not by way of making deductions in income tax slab rates.

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