Income tax slabs for FY 2018-19 remain mostly the same as the previous financial year.
Health and Education Cess increased to 4% from 3% in the previous year.
A standard deduction of Rs.40,000 can be claimed for transportation and/or medical reimbursements from Financial Year 2018-19.
The Finance Ministry in the Union Budget for 2018 announced the insertion of Section 80TTB which will govern the tax benefits for senior citizens. We have covered the revised tax benefits later in this article.
For domestic companies, the turnover limit for 25% taxation bracket was increased to Rs.250 crore from Rs. 50 crore in the previous financial year (FY2017-18).
The amount of tax (as a percentage of your income) you must pay is determined by your tax slab. This is applicable for different types of taxpayers -- resident individuals, non-resident individuals, Hindu Undivided Families, associations of people, firms, domestic and foreign companies.
These tax rates are subject to change based proposals in the Union Budget every year. Indian has a progressive tax system based on ‘ability to pay’ – the tax percentage increases incrementally with income. So, the poor pay less or no tax under such a system, while the affluent pay higher taxes.
Read more: Income Tax slabs in India
Tax slabs for FY 2018-19 remain the same as the previous year (FY 2017-18). Some changes that have been incorporated in FY 2018-19 are:
The 3% Education Cess levied in FY18 has been increased to 4% and is called the Health and Education Cess.
A standard deduction of Rs.40,000 can be claimed for transportation and/or medical reimbursements from FY18.
Income | Tax rate |
---|---|
Up to Rs. 2.5 lakh | Nil |
Rs.2.5 lakh to 5 lakh | 5% |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 4% of income tax(for income above Rs. 2.5 lakh) |
Surcharge* | 10% of income tax (For total income between Rs.50 lakh and Rs. 1 crore) 15% of income tax (For income above Rs. 1 crore) |
Surcharge levied should not exceed the amount of income tax payable.
For senior citizens, the income tax exemption limit is up to Rs. 3 lakh, as per the FY 2018-19 tax slabs.
Income | Tax rate |
---|---|
Up to Rs. 3 lakh | Nil |
Rs.3 lakh to 5 lakh | 5% |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 4% of income tax(for income above Rs. 3 lakh) |
Surcharge | 10% of income tax (For total income between Rs.50 lakh and Rs. 1 crore) 15% of income tax (For income above Rs. 1 crore) |
For Super Senior Citizens, total income up to Rs.5 lakh is tax exempt for FY 2018-19.
Income | Tax rate |
---|---|
Up to Rs.5 lakh | Nil |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 4% of income tax(for income above Rs. 5 lakh) |
Surcharge | 10% of income tax (For total income between Rs.50 lakh and Rs. 1 crore) 15% of income tax (For income above Rs. 1 crore) |
In the Union Budget for FY 2018-19, the turn over limit for 25% taxation bracket was increased to Rs.250 crore from Rs. 50 crore in the previous year.
Turn over | Tax rate |
---|---|
Gross turn over < Rs.250 crore | 25% |
Gross turn over > Rs. 250 crore | 30% |
Cess | 4% of corporate tax |
Surcharge | 7% of income tax (For total income between Rs.1 crore and Rs.10 crore) 12% of income tax (For income above Rs.10 crore) |
Income Tax Slabs Rates for Previous Years
In FY 2017-18, the tax rate for income between Rs.2.5 lakh and Rs.5 lakh was reduced to 5% from 10% in FY 2016-17. An additional surcharge of 10% was levied for those with total income exceeding Rs.50 lakh but less than Rs. 1 crore.
Income | Tax rate | Health & Education Cess |
---|---|---|
Up to Rs. 2.5 lakh | Nil | Nil |
Rs.2.5 lakh to 5 lakh | 5% | 3% |
Rs. 5 lakh to Rs. 10 lakh | 20% | 4% |
Rs. 10 lakh and above | 30% | 4% |
Surcharge* | 10% of income tax (For total income between Rs.50 lakh and Rs. 1 crore) 15% of income tax (For income above Rs. 1 crore) |
Income | Tax rate |
---|---|
Up to Rs. 3 lakh | Nil |
Rs.3 lakh to 5 lakh | 5% |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 3% of income tax(for income above Rs. 3 lakh) |
Surcharge | 10% of income tax (For total income between Rs.50 lakh and Rs. 1 crore) 15% of income tax (For income above Rs. 1 crore) |
Income | Tax rate |
---|---|
Up to Rs.5 lakh | Nil |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 3% of income tax(for income above Rs. 5 lakh) |
Surcharge | 10% of income tax (For total income between Rs.50 lakh and Rs. 1 crore) 15% of income tax (For income above Rs. 1 crore) |
Turn over | Tax rate |
---|---|
Gross turn over < Rs.50 crore | 25% |
Gross turn over > Rs. 50 crore | 30% |
Cess | 3% of corporate tax |
Surcharge | 7% of income tax (For total income between Rs.1 crore and Rs.10 crore) 12% of income tax (For income above Rs.10 crore) |
Income | Tax rate |
---|---|
Up to Rs. 2.5 lakh | Nil |
Rs.2.5 lakh to 5 lakh | 10% |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 3% of income tax(for income above Rs. 2.5 lakh) |
Surcharge | 15% of income tax (For income above Rs. 1 crore) |
Income | Tax rate |
---|---|
Up to Rs. 3 lakh | Nil |
Rs.3 lakh to 5 lakh | 10% |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 3% of income tax(for income above Rs. 3 lakh) |
Surcharge | 15% of income tax (For income above Rs. 1 crore) |
Income | Tax rate |
---|---|
Up to Rs.5 lakh | Nil |
Rs. 5 lakh to Rs. 10 lakh | 20% |
Rs. 10 lakh and above | 30% |
Education and Health Cess | 3% of income tax(for income above Rs. 5 lakh) |
Surcharge | 15% of income tax (For income above Rs. 1 crore) |
Turn over | Tax rate |
---|---|
Gross turn over in FY 2014-15 < Rs.5 crore | 29% |
Gross turn over in FY 2014-15 > Rs. 5 crore | 30% |
Cess | 3% of corporate tax |
Surcharge | 7% of income tax (For total income between Rs.1 crore and Rs.10 crore) 12% of income tax (For income above Rs.10 crore) |
It is a period of 12 months that is considered for all tax and accounting purposes. In many countries, the financial year differs from the calendar year. For example, In India, the financial year runs from 1st April of the current calendar year to 31st March of the following calendar year. So, Financial Year 2017-2018 would run from 1st April 2017 to 31st March 2018.
An assessment year follows the financial year beginning in April. After paying the taxes in the fiscal year, you file your tax returns in the assessment year and they are examined for refund claims and other dues in the same assessment year. For example, for the income earned in Financial Year 2017-18, the Assessment year would be called AY 2018-2019 beginning April 1st, 2018.
Cess is a temporary tax levied by the government to raise money from the taxpayers for specific policies. For example, taxpayers earning above Rs. 2.5 lakh per annum have to pay an Education and Health Cess of 4%. For super senior citizens, the cess applies for income above Rs.5 lac.
It is the charges you pay over and above your current income tax to the central government. The purpose of imposing a surcharge is to make the taxation progressive, that is, the wealthy individuals should pay more than those with lower income. Individuals with an income exceeding Rs. 50 lakh but less than Rs.1 crore currently pay a surcharge of 10% and those exceeding Rs 1 crore pay 15% on the net income tax.
Finance Minister Arun Jaitley announced a few key changes in the tax benefits for senior and super senior taxpayers in the 2018 Union Budget for FY 2018-19.
Increase in the tax exemption limit
No TDS on interest income
Higher deduction for health insurance premium
Tax deduction for medical expenditure increased to Rs.1. Lakh
Rs.40,000 standard deduction on pension income