Income Tax Rate for FY 2017-18 or AY 2018-19

There are many changes in Tax rate. One of the biggest change is that now tax rate for slab of ₹ 2,50,000 – 5,00,000 is @ 5%. Earlier it was 10%. There is also a major change. Now those earning income of over ₹ 50 lakhs and less than ₹ 1 Crore will have to pay Surcharge @ 10%. There is also a relief for small companies. They will now have to pay tax @ 25% instead of 30% if their income is below ₹ 50 lakhs.

Tax rates are different for different individuals. Below are tax rates applicable for FY 2017-18 for different individuals.

These are tax rates only. Final Tax is subject to other conditions. Some other special Tax rates are –

• Long Term Capital Gain Tax, in general, is @ 20%.
• Under Section 115BB, tax rate of 30% is applicable for income from winnings-

1. Any lottery;
2. Crossword puzzle;
3. Race including Horse race;
4. Card Game and any sort of other game;
5. Gambling or betting of any form

There is also surcharge on high income. The rates of Surcharge for AY 2017-18 are-

There is a change in the amount of Rebate under section 87A. Unlike in FY 2016-17, this time Amount is reduced to ₹ 2,500. If the income of a person is below ₹ 5 lakh, he will get a rebate of ₹ 2,000 on his tax liability.

“Education Cess” @ 2% and “Secondary and Higher Education Cess” @ 1% is applicable on Taxes calculated by applying at above rates. This Cess are collected by the government to meet its commitment of providing finance to education.

An Example for calculating tax-

Illustration 1 – Mr. A who is resident in India has income of ₹ 4,50,000/- in FY 2016-17 i.e. AY 2017-18. His age is below 60 years. His Tax will be calculated as-

His Income = ₹ 4,50,000/-

Tax Slab of ₹ 2,50,000 – 5,00,000 is applicable @ 5%. Therefore, his basic tax = 5% of (4,50,000 – 2,50,000)

i.e., 10,000

Since, his income is below ₹ 5,00,000, he will get rebate of ₹ 2,500.

Therefore, his tax liability is of ₹ 10,000 – ₹ 2,500 = ₹ 7,500/-

Illustration 2 – Mr. A who is resident in India has income of ₹ 6,50,000/- in FY 2016-17 i.e. AY 2017-18. His age is below 60 years. His Tax will be calculated as-

His Income = ₹ 6,50,000/-

Tax Slab of ₹ 5,00,000 – 10,00,000 is applicable @ 25,000 + 20% for income above ₹ 5,00,000. Therefore, his basic tax = 12,500 + 20% of (6,50,000 – 5,00,000)

i.e., ₹ 42,500/-

Since, his income is above ₹ 5,00,000, he will not get rebate of ₹ 2,000.

Therefore, his tax liability is of ₹ 42,500/-

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