Income Tax Slab Rates for FY 2016-17 (AY 2017-18)

Each year Finance minister present Budget in Indian Parliament. The First Schedule of Finance Act has 4 parts.

Part I – It specifies rates applicable for current Assessment Year.

Part II – It specifies the rates for Tax Deductible at Source (TDS) for current Financial Year.

Part III – It specifies rates for calculating income tax for deducting tax from income chargeable under the head of “Salaries” and computation of advance tax.

Part IV – It provides for rules of computing net agricultural income.

Tax rates are different for different individuals. Below are tax rates applicable for FY 2016-17 for different individuals.

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

1. 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-

To reduce the burden on small taxpayers, there is rebate under section 87A. Rebate of ₹ 5,000/- is allowed for small taxpayers whose income doesn’t exceed ₹ 5,00,000/-.

“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 @ 10%. Therefore, his basic tax = 10% of (4,50,000 – 2,50,000)

i.e., 20,000

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

Therefore, his tax liability is of ₹ 20,000 – ₹ 5,000 = ₹ 15,000/-

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 = 25,000 + 20% of (6,50,000 – 5,00,000)

i.e., ₹ 55,000/-

Since, his income is above ₹ 5,00,000, he will not get rebate of ₹ 5,000. Therefore, his tax liability is of ₹ 55,000/-

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