2019 The government of India levies an income tax on taxable income of all persons together with individuals, Hindu Undivided Families (HUFs), companies, and firms, association of persons, body of individuals, local authority and any other artificial judicial person. Charge of tax is distinct on each of the persons. The tax is governed by the Indian Income Tax Act, 1961. The Indian Income Tax Department is governed by CBDT and is part of the Department of Revenue under the Ministry of Finance, Govt. of India. Income tax is a important source of funds that the government uses to fund its activities and work for the public.
The Income Tax Department is the major revenue mobilizer for the Government. The total tax revenues of the Central Government greater than before from ₹ 1392.26 billion in 1997-98 to ₹ 5889.09 billion in 2007-08.
Income Tax Slabs & Rates for Assessment Year 2018-19
I. Individual resident aged below 60 years (i.e. born on or after 1st April 1954) or any NRI / HUF / AOP / BOI/ AJP( NRI – Non Resident Individual; HUF – Hindu Undivided Family; AOP – Association of Persons; BOI – Body of Individuals; AJP – Artificial Judicial Person)
| INCOME SLABS | TAX RATES | |
| 1 | Where the total income does not surpassRs. 2, 00,000/-. | NIL |
| 2 | Where the total income surpasses Rs. 2, 00,000/- but does not surpass Rs. 5, 00,000/-. | 10% of amount by which the total income go beyond Rs. 2, 00,000/-. Less: Tax Credit – 10% of taxable income up to a maximum of Rs. 2000/-. |
| 3 | Where the total income exceeds Rs. 5, 00,000/- but does not surpass Rs. 10, 00,000/-. | Rs. 30,000/- + 20% of the amount by which the total income go beyond Rs. 5, 00,000/-. |
| 4 | Where the total income surpasses Rs. 10, 00,000/-. | Rs. 130,000/- + 30% of the amount by which the total income go beyond Rs. 10, 00,000/-. |
Surcharge: surcharge is 10% of the Income Tax, where the total taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable).
Education Cess: it is 3% of the total of Income Tax and Surcharge.
Example:
Mr. X has a total Income of Rs. 11, 00,000. He is of 45 years of age. Calculation of his Tax Liability is as follows:
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|
Income |
Tax |
|
First Rs. 2,00,000 |
NIL |
|
Rs. 2,00,000 to Rs. 5,00,000 |
Rs. 30,000 (10%) |
|
Rs. 5,00,000 to Rs. 10,00,000 |
Rs. 1, 00,000 (20%) |
|
Above Rs. 10,00,000 |
Rs. 30,000 (30%) |
|
Total |
Rs. 1,60,000 |
Surcharge: surcharge of 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
Education Cess: it is 3% of the total of Income Tax and Surcharge.
II. Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year (i.e. born on or after 1st April 1934 but before 1st April 1954).
|
Income Slabs |
Tax Rates |
|
| 1 | Where the total income does not go beyond Rs. 2, 50,000/-. | NIL |
| 2 | Where the total income go beyond Rs. 2,50,000/- but does not exceed Rs. 5,00,000/- | 10% of the amount by which the total income surpasses Rs. 2, 50,000/-. |
| 3 | Where the total income go beyond Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | Rs. 25,000/- + 20% of the amount by which the total income surpasses Rs. 5, 00,000/-. |
| 4 | Where the total income exceeds Rs. 10,00,000/- | Rs. 125,000/- + 30% of the amount by which the total income surpasses Rs. 10, 00,000/-. |
Surcharge: surcharge of10% of the Income Tax, where total taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
Education Cess: it is 3% of the total of Income Tax and Surcharge.
III. Individual resident who is of the age of 80 years or more at any time during the previous year (i.e. born before 1st April 1934).
|
Income Slabs |
Tax Rates |
|
| Where the total income does not surpass Rs. 5,00,000/-. | NIL | |
| 2 | Where the total income surpasses Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | 20% of the amount by which the total income go beyond Rs. 5,00,000/-. |
| 3 | Where the total income surpasses Rs. 10,00,000/- | Rs. 100,000/- + 30% of the amount by which the total income go beyond Rs. 10,00,000/-. |
Surcharge: surcharge of 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
Education Cess: it is 3% of the total of Income Tax and Surcharge.
IV. Co-operative Society
|
Income Slabs |
Tax Rates |
|
| 1 | Where the total income does not surpass Rs. 10,000/-. | 10% of the income. |
| 2 | Where the total income surpasses Rs. 10,000/- but does not exceed Rs. 20,000/-. | Rs. 1,000/- + 20% of income in surplus of Rs. 10,000/-. |
| 3 | Where the total income surpasses Rs. 20,000/- | Rs. 3.000/- + 30% of the amount by which the total income surpasses Rs. 20,000/-. |
Surcharge: surcharge of 10% of the Income Tax, where total taxable income is more than Rs. 1 crore.
Education Cess: it is 3% of the total of Income Tax and Surcharge.
V. Firm
Income Tax: for firms it is 30% of total income.
Surcharge: surcharge is 10% of the Income Tax, where total taxable income is more than Rs. 1 crore.
Education Cess: it is 3% of the total of Income Tax and Surcharge in case of firm.
VI. Local Authority
Income Tax: For Local Authority it is 30% of total income.
Surcharge: surcharge is10% of the Income Tax, where total taxable income is more than Rs. 1 crore.
Education Cess: it is 3% of the total of Income Tax and Surcharge.
VII. Domestic Company
Income Tax: For Domestic company 30% of total income.
Surcharge: The amount of income tax as calculated in agreement with above rates, and after being reduced by the amount of tax rebate shall be increased by a additional charge.
• At the rate of 5% of such income tax, on condition that the total income go beyond Rs. 1 crore.
• At the rate of 10% of such income tax, on condition that the total income go beyond Rs. 10 crores.
Education Cess: it is 3% of the total of Income Tax and Surcharge.
VIII. Company other than a Domestic Company
Income Tax:
• At 50% of on so much of the total income as comprise of (a) royalties received from Government or an Indian concern in fulfillment of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or (b) fees for adaptation technical services received from Government or an Indian concern in fulfillment of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been accepted by the Central Government.
• At 40% of the balance.
Surcharge:
The amount of income tax as calculated in agreement with above rates, and after being abridged by the amount of tax rebate shall be increased by a surcharge as under:
• At the rate of 2% of such income tax, on condition that the total income go beyond Rs. 1 crore.
• At the rate of 5% of such income tax, on condition that the total income exceeds Rs. 10 crores.
Education Cess: it is 3% of the total of Income Tax and Surcharge.
Marginal Relief: When an assessee’s taxable income surpasses Rs. 1 crore, he is accountable to pay Surcharge at agreed rates mentioned above on Income Tax payable by him. However, the amount of Income Tax and Surcharge shall not rise the amount of income tax payable on a taxable income of Rs. 1 crore by further than the amount of increase in taxable income.
Narendra Modi-led BJP government may offer sops to taxpayers
Imagine if the basic tax exemption is elevated up to Rs 3 lakh (additional Rs 50,000 exemption for women and senior citizens), interest on bank deposits is made tax free and there is no tax on pension if you are over 60. The BJP had promised all this and more in its 2009 proposal.
This time the party reduced its promises, expressing them in imprecise statements without mentioning exact measures. Its 2019 policy said that the UPA government has “unleashed tax terrorism” and promised that the BJP will “provide a non-adversarial and favorable tax environment, and justify and make simpler the tax rule”.
Experts have faith that the tax outgo of lower and middle income earners may be reduced this year. Given the current economic state of affairs, there is not really much scope for the government to cut taxes. But the public is spinning under high inflation and some respite might be on cards for lower and middle income groups.
Taxpayers can expect spreading of tax slabs, justification of certain exemption limits and levitating the deduction limit under Section 80C. The additional Rs 1 lakh investment can be specifically reserved for infrastructure bonds and retirement products.
The big challenge before the Narendra Modi government would be to get hitched to these expectations with the reality of the loss in tax collections. Though direct tax collections outdid the revised target of Rs 6, 41,835 crore during tax slabs of 2018-19, they were still about Rs 23,000 crore below the original target. If the government wants to amend taxes or improve deductions this year, it will have to balance the inevitable tax by increasing collections and ensuring stricter compliance.
For taxpayers, this means greater examination of their income. The CBDT has already broadcasted a warning by putting salary slips under the scanner. In October 2018, salaried taxpayers who sought tax exemption for HRA of more than Rs 8,333 a month were asked to mention the PAN of their landlord. The new tax slabs forms notified last month seek a break-up of the exempted income received and capital gains earned by an individual.
Generously, most tax experts don’t think the government will broaden the service tax net or increase the rate. There is no scope for further growing the tax burden on services as they are already besieged with a high tax burden and the impact of the economic slowdown. Others point out that broadening the service tax or increasing its rate will have a tumbling effect on inflation. Any rise in indirect taxes will hit the rich and poor with equal force.
The tax experts and the industry are hopeful that the BJP will keep its statement promise of providing a non-adversarial tax management. With more than Rs 4 lakh crore sealed in income tax disputes alone, the increasing number of disputes is a serious concern to both the industry and the government. The industry faiths the new government would adopt non-adversarial policies.
Tax professionals are also expectant that some of the out-of-date and unfair tax laws will be thrown out. Self-employed professionals should also be able to title HRA exemption like salaried taxpayers. Right now the exemption is stopped at Rs 2,000 per month. Tax laws should not be changed often because it creates confusion without adding any noteworthy benefit.
The Direct Taxes Code introduced in 2013 and then revised in 2014 could not see light of day because the UPA constituents had differing views on the offers. The huge majority with which the NDA has come to supremacy and the fact that BJP alone has crossed the 272-mark specifies that the new government will not face such problems.
The concerns of Prime Minister Narendra Modi would be very diverse now. So, the Goods and Services Tax, which he had opposed as chief minister of Gujarat, might soon come into force.
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