This income tax slab is also applicable to Non-Resident Indian, Hindu undivided family (HUF), Association of Persons, Body of Individuals and Artificial Judicial Person. In addition to the tax rate of 10% for upto 5 Lakh income, 20% for income between 5 Lakh – 10 Lakh & 30% for above 10 Lakh of Income. Cess is also charged. The cess is a tax on the tax. For a normal individual, the cess is 3%. Because of this cess the effective tax rates translates into 10.3%, 20.6% and 30.9% according to the slabs.
This income tax slab is also applicable to Non-Resident Indian, Hindu undivided family (HUF), Association of Persons, Body of Individuals and Artificial Judicial Person.
In addition to the tax rate of 10% for upto 5 Lakh income, 20% for income between 5 Lakh – 10 Lakh & 30% for above 10 Lakh of Income. Cess is also charged. The cess is a tax on the tax. For a normal individual, the cess is 3%. Because of this cess the effective tax rates translates into 10.3%, 20.6% and 30.9% according to the slabs.
Effective Tax Rate with Education Cess
Note: That after all the available exemption and deduction your net taxable income comes below 5 lacs then you can also reduce your tax liability by Rs 5000. Calculate this rebate before adding the cess.
The income tax slab for female is same as the male. Since last some years, the government has ended the different taxation on the basis of gender. Earlier females used to get a relaxed tax slab. The females taxpayer were liable to less tax. However, now there is no such distinction. Thus, the women should refer to the tax slab of individuals, given above.
The senior citizen get preferable treatment from the government. They have a different tax slab. The tax slab of senior citizens is relaxed. The tax free income of senior citizen is more than the individual below 60.
Effective Tax Rate of senior Citizens with Education Cess
According to income tax slab the senior citizen gets basic exemption up to the income of Rs 3 lacs. But, because of income tax rebate, the income up to Rs 3.5 lacs gets tax-free.
The senior citizens of above the age of 80 gets maximum tax concession from the government. They get this concession considering increased medical and healthcare expenses.
The super senior citizen can enjoy up to Rs 5 lakh tax-free income.
Effective Tax Rate for Super Senior Citizens with Education Cess
For Cooperative Society
Unlike an individual the Cooperative societies do not get any exemption. It have to pay income tax on the first rupee it earns.Like an individual, it has to pay the education cess as well.
Like an individual, the cooperative societies has different income tax slabs according to the taxable income. Among the business classes, only cooperative society has different tax slabs. All other businesses class pays uniform tax rate.
Any income of the firm is taxable from the beginning. Also the tax rate is highest.Income Tax Slab Rate For the Business Firm
There is no tax slabs. The firm has to pay 30% tax on its total income. This rate is uniform irrespective of the earning. Any income a firm earns is taxable, whether it is rupee one or crores.
Besides this, Education cess and surcharge is also applicable. The total effective tax rate of a firm is 30.9%.
Similar to the firm local authority also pays income tax at the rate of 30%.
After an addition of education cess, the effective tax rates becomes 30.9%
- In the case of a domestic company, income tax is payable at the rate of 30%.
- The domestic company gets relaxation on the surcharge. If the income exceeds Rs 1 crore surcharge rate is 7%. Earlier it was 5%.
- If the income exceeds Rs 10 crore, the surcharge rate is 12%. Earlier it was 10%
- 3% education cess is also charged on the income tax of the domestic company.
For Foreign Company
Foreign company means a company whose control and management are situated wholly outside India. Also, the company has not made the prescribed arrangements for declaration and payment of dividends within India.
- A foreign company has to pay 40% income tax. 3% educations cess is also charged.
- The surcharge is 2% if taxable income exceeds Rs 1 crore but not more than Rs 10 crores.
- The surcharge is 5% if taxable income exceeds 10 crores.
Marginal relief is given to the taxpayer who is liable to pay the surcharge. These are the income taxpayer whose total income exceeds Rs 1 crore. This relief is necessary for a level playing field. To understand the marginal relief, we should go through an example.
Suppose Firm XYZ earns Rs 1 crore taxable income. In this case, his tax would be 30% of total income. It would be Rs 30,00,000
Another firm ABC earns 10,000 more than xyz. Its total income is 1,00,10,000. He has to pay the tax @ 30% plus 12% surcharge, as his income exceeds Rs 1 crore.
The income tax of ABC = 30% of 1,00,10,000 + 3.6% of 1,00,10,000
= 30,03,000 + 3,60,360
Now look at the situation. The Firm ABC only earned Rs 10,000 more but its tax increases by Rs 3,63,360. To avoid this unfair situation government has the provision of marginal relief.
A surcharge can not be more than the excess amount minus tax payable on the excess amount. Take the above example. The firm ABC earns 10,000 more than one crore rupees. The income tax on this excess amount would be Rs 3000. In this example, surcharge can’t be more than Rs 7,000 (10000-3,000). Therefore total income tax of ABC would be 30,00,000 + 7,000= 30,07,000. Note, there would be education cess in addition.