Understanding the nitty-gritty of Income Tax is not everyone’s cup of tea as most of us are not aware of the Income Tax slabs that we fall under and the deductions available under those slabs. As every employed individual has to pay a certain amount of tax to the government, it wouldn’t hurt to have some understanding of the system. We’re here to help you figure it out.
We’re going to tell you about the different tax slabs that have been set by the government and you can calculate your tax accordingly.
What’s Income Tax?
Income Tax is that percentage of your income that needs to be paid to the government to fund infrastructural development, salaries of central and state government employees, and for funding various other activities.
Income Tax is calculated on the annual income of a person. Typically a financial year starts on the 1st of April and ends on the 31st of March of the next calendar year. The year in which income is earned is called the financial year and the year it is taxed is known as the assessment year. The current assessment year is 2017-18.
Income Tax Slabs
As per the Income Tax slabs for the financial year 2016-2017, (i.e. assessment year 2017-2018) here are the updated tax slabs:
|TAX SLABS||TAX RATES|
|Total income upto Rs. 2,50,000.||NIL|
|Total income between Rs. 2,50,000 and Rs.5, 00,000.||5%.|
|Total income greater than Rs. 5, 00,000 but less than Rs. 10,00,000.||20%|
|Total income higher than Rs. 10,00,000.||30%|
|Total income higher than Rs. 50,00,000||30% + 10% surcharge|
|Total income higher than Rs. 1 crore||30% + 15% surcharge|
Here are some key highlights of the Union Budget for the common man.
5% tax will be levied for income between Rs. 2,50,000 and Rs. 5,00,000.
No tax will be applicable for income up to Rs. 3,00,000, for senior citizens of over 60 years.
The government has banned cash transactions above a value of Rs. 3,00,000.
First time tax payers will not be scrutinised unless special circumstances are involved.
Highlights of the Union Budget for start ups
The Government has announced a 5% decrease in the tax rate for companies showing turnover of up to Rs. 50 crore.
It is estimated that 96% of Indian companies will benefit from the tax reduction.
The Stand Up India scheme is due to be launched in April 2017 and will encourage and support women entrepreneurs.
Highlights of the Union Budget for Digital Economy
A referral bonus has been announced for individuals with cashback schemes for merchants in an effort to promote the use of the BHIM payments app.
The government is aiming for a target of 2,500 crores in digital transactions for the FY 2017-18 through the adoption of United Payments Interface (UPI), USSD, Aadhaar Pay, IMPS and Debit Card transactions.
We hope that this information about the different Income Tax slabs helps you understand your tax deductions a little better and that it will help you plan your tax savings accordingly.
Have something to say about the new tax breaks? Leave a comment in the comments section below.