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

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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.

For Individual / Hindu Undivided Family (HUF) / Association of Persons (AOP) / Body of Individuals (BOI) / Artificial Judicial Person
  1. Where income is below ₹ 2,50,000/-
 Nil
2. Where income is between ₹ 2,50,000 – 5,00,000/- 10% of income that exceeds ₹ 2,50,000/-
3. Where total income is between ₹ 5,00,000 and ₹ 10,00,000/- ₹ 25,000 + 20% of income between ₹ 5,00,000 – 10,00,000/-
4. Where income exceeds ₹ 10,00,000/- ₹ 1,25,000 + 30% of income that exceeds ₹ 10,00,000
For Individuals who are residents and of 60 years or above, but less than 80 years
  1. Where income is below ₹ 3,00,000/-
 Nil
2. Where income is between ₹ 3,00,000 – 5,00,000/- 10% of income that exceeds ₹ 3,00,000/-
3. Where total income is between ₹ 5,00,000 and ₹ 10,00,000/- ₹ 20,000 + 20% of income between ₹ 5,00,000 – 10,00,000/-
4. Where income exceeds ₹ 10,00,000/- ₹ 1,20,000 + 30% of income that exceeds ₹ 10,00,000
For Individuals who are residents and of 80 years or more
  1. Where income is below ₹ 5,00,000/-
 Nil
2. Where total income is between ₹ 5,00,000 and ₹ 10,00,000/- 20% of income between ₹ 5,00,000 – 10,00,000/-
3. Where income exceeds ₹ 10,00,000/- ₹ 1,00,000 + 30% of income that exceeds ₹ 10,00,000
For Firms / LLP
  1. On whole of Income
 30%
Local Authority
  1. On Whole of Income
 30%
Co – operative Society
  1. Where income doesn’t exceed ₹ 10,000/-
 10% of total income
2. Where income exceeds ₹ 10,000 but not ₹ 20,000 ₹ 1,000 + 20% of income above ₹ 10,000/-
3. Where income exceeds ₹ 20,000 ₹ 3,000 + 30% of income above ₹ 30,000/-
For Companies
  1. For Domestic Companies
 30% of total income
2. 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 –

  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-

For Individual / HUF / AOP / BOI / Artificial Judicial Person / Co – Operative Societies / Local Authorities / Firms / LLPs
  1. Where income exceeds ₹ 1 Crore
 12% 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.
Domestic Companies
  1. Where income exceeds ₹ 1 Crore but not ₹ 10 Crores
 7% of income tax computed by applying above rates.
2. 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
  1. Where income exceeds ₹ 1 Crore but not ₹ 10 Crores
 2% of income tax computed by applying above rates
2. 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.

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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