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.
For Individual / Hindu Undivided Family (HUF) / Association of Persons (AOP) / Body of Individuals (BOI) / Artificial Judicial Person | |
Where income is below ₹ 2,50,000/- | Nil |
Where income is between ₹ 2,50,000 – 5,00,000/- | 5% of income that exceeds ₹ 2,50,000/- |
Where total income is between ₹ 5,00,000 and ₹ 10,00,000/- | ₹ 12,500 + 20% of income between ₹ 5,00,000 – 10,00,000/- |
Where income exceeds ₹ 10,00,000/- | ₹ 1,12,500 + 30% of income that exceeds ₹ 10,00,000 |
For Individuals who are residents and of 60 years or above, but less than 80 years | |
Where income is below ₹ 3,00,000/- | Nil |
Where income is between ₹ 3,00,000 – 5,00,000/- | 5% of income that exceeds ₹ 3,00,000/- |
Where total income is between ₹ 5,00,000 and ₹ 10,00,000/- | ₹ 10,000 + 20% of income between ₹ 5,00,000 – 10,00,000/- |
Where income exceeds ₹ 10,00,000/- | ₹ 1,10,000 + 30% of income that exceeds ₹ 10,00,000 |
For Individuals who are residents and of 80 years or more | |
Where income is below ₹ 5,00,000/- | Nil |
Where total income is between ₹ 5,00,000 and ₹ 10,00,000/- | 20% of income between ₹ 5,00,000 – 10,00,000/- |
Where income exceeds ₹ 10,00,000/- | ₹ 1,00,000 + 30% of income that exceeds ₹ 10,00,000 |
For Firms / LLP | |
On whole of Income | 30% |
Local Authority | |
On Whole of Income | 30% |
Co – operative Society | |
Where income doesn’t exceed ₹ 10,000/- | 10% of total income |
Where income exceeds ₹ 10,000 but not ₹ 20,000 | ₹ 1,000 + 20% of income above ₹ 10,000/- |
Where income exceeds ₹ 20,000 | ₹ 3,000 + 30% of income above ₹ 30,000/- |
For Companies | |
For Domestic Companies | 30% of total income |
For Foreign Companies | 40% of total income |
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-
- Any lottery;
- Crossword puzzle;
- Race including Horse race;
- Card Game and any sort of other game;
- Gambling or betting of any form
There is also surcharge on high income. The rates of Surcharge for AY 2017-18 are-
For Individual / HUF / AOP / BOI / Artificial Judicial Person / Co – Operative Societies / Local Authorities / Firms / LLPs | |
Where income exceeds ₹ 50 Lakhs | 10% of income tax computed by applying above rates |
Where income exceeds ₹ 1 Crore | 15% of income tax computed by applying above rates |
Marginal Relief is available where income exceeds ₹ 1 Crore and Surcharge is Applicable. The amount of Surcharge should not be more than income that exceeds ₹ 1 Crore. There is a similar marginal relief for income above ₹ 50 lakhs if income doesn’t exceed the amount of tax payable as a surcharge of 10%. | |
Domestic Companies | |
Where income exceeds ₹ 1 Crore but not ₹ 10 Crores | 7% of income tax computed by applying above rates. |
Where income exceeds ₹ 10 Crores | 12% of income tax computed by applying above rates. |
Marginal Relief is available. Surcharge at 7% cannot exceed the income above ₹ 1 Crore. Similarly, Surcharge at 12% cannot exceed the income above ₹ 10 Crores. | |
Foreign Companies | |
Where income exceeds ₹ 1 Crore but not ₹ 10 Crores | 2% of income tax computed by applying above rates |
Where income exceeds ₹ 10 Crores | 5% of income tax computed by applying above rates |
Marginal Relief is available. Surcharge at 2% cannot exceed the income above ₹ 1 Crore. Similarly, Surcharge at 5% cannot exceed the income above ₹ 10 Crores. |
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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