An income tax is a percentage of money, which is deduced from income by the government, this money will be used for development and growth related activities of the country. According to Indian laws, businesses and individuals must file an income tax return every year to determine whether they owe any taxes or are eligible for a tax refund. Income tax is a key source of funds for the government.
Income tax is applicable for individuals, businesses, corporate, and all other establishments that generate income. The Income Tax Act, 1961 regulates the collection, recovery, and administration of income tax in India. The government requires the tax amount for various purposes ranging from building the infrastructure to paying the state and central government employees. It helps the government in generating a steady source of income that is used for the development of the nation.
The income tax is paid every month from the monthly earnings, but it is calculated on an annual basis. The amount of income tax an individual has to pay depends on many factors.
| Income | Tax Rate |
|---|---|
| Upto Rs 2,50,000 | No Tax |
| 2,50,000 – Rs 5,00,000. | 5 % |
| Rs 5,00,001 – Rs 10,00,000 | 20 % |
| Rs 10,00,001 and above | 30 % |
| Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore. Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore. |
|
| Cess: 3% on total of income tax + surcharge. | |
| *Income tax exemption limit for FY 2017-18 is up to Rs. 2,50,000 for individual & HUF other than those covered below. | |
| Income | Tax Rate |
|---|---|
| Upto Rs 3,00,000 | No Tax |
| 3,00,000 – Rs 5,00,000 | 5 % |
| Rs 5,00,001 – Rs 10,00,000 | 20 % |
| Rs 10,00,001 and above | 30 % |
| Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore. Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore. |
|
| Cess: 3% on total of income tax + surcharge. | |
| *Income tax exemption limit for FY 2017-18 is up to Rs. 3,00,000 | |
| Income | Tax Rate |
|---|---|
| Upto Rs 2,50,000 | No Tax |
| Upto Rs 5,00,000 | No Tax |
| Rs 5,00,001 – Rs 10,00,000 | 20 % |
| Rs 10,00,001 and above | 30 % |
| Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore. Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore. |
|
| Cess: 3% on total of income tax + surcharge. | |
| *Income tax exemption limit for FY 2018-19 is up to Rs. 5,00,000 | |
The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds fifty lakh rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees).
The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).
Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by education cess calculated at the rate of two per cent of such income-tax and surcharge.
Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of one per cent of such income-tax and surcharge.
Rebate under Section 87A: The rebate is available to a resident individual if his total income does not exceed Rs. 3,50,000. The amount of rebate shall be 100% of income-tax or Rs. 2,500, whichever is less.