Income tax is a direct tax collected by the Central Government and is levied on all income other than agricultural income on a person liable to pay such tax. The income tax on agricultural income is a state matter and only state governments can tax a person on agricultural income.
The Income Tax Act, 1961, is the law governing tax on income of an assessee (person who is liable to pay tax). This legislation comprehensively defines different assessees, the rate of tax applicable to each one and other requirements.
In terms of income tax law, a person liable to pay tax includes the common citizen, association of people, companies (domestic and foreign companies), firms and LLPs. The income of people and companies is computed under different heads and different types of deductions under the income tax law are applicable to different entities.
The heads of income envisaged under income tax law are:
- Income from salary
- Income from house property
- Income from business and profession
- Income from capital gain
- Income from other sources
Tax rates for assessment year 2017-18
Income Tax - Slab for Individual Tax Payers & HUF
|
Income Slab |
Tax Rate |
|
Income up to Rs 2,50,000* |
No tax |
|
Income from Rs 2,50,000 – Rs 5,00,000 |
5% |
|
Income from Rs 5,00,000 – 10,00,000 |
20% |
|
Income more than Rs 10,00,000 |
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 SLAB - DOMESTIC COMPANIES
|
Particulars
|
Up to 5 Cr Turnover |
Above 5 Cr Trunover |
|||
|
Taxable income less than Rs 1 crore |
Taxable income more than Rs 1 crore |
Taxable income less than Rs 1 crore |
Taxable income more than Rs 1 crore but less than Rs 10 crores |
Taxable income more than Rs 10 crores |
|
|
Corporate tax |
29% |
29% |
30% |
30% |
30% |
|
Surcharge |
0 |
7% |
0 |
7% |
12% |
|
Corporate tax + surcharge |
29% |
31% |
30% |
32.10% |
33.60% |
|
Education cess |
3% |
3% |
3% |
3% |
3% |
|
Effective tax rate |
29.87% |
31.96% |
30.90% |
33.06% |
34.61% |
Tax rates Firms and LLPs
Firm and LLPs are taxed at 30% on taxable income after partners salary
Surcharge is also levied in case of Firms and Local Authorities as per the below mentioned schedule. The following schedule is applicable from Financial Year 2017-18 onwards
Surcharge at 12% levied on Tax in case income exceeds Rs. 1 Cr. The effective rate of tax will be as given below
|
Income |
Rate |
|
Up to Rs.1 Crore |
30 % |
|
Above Rs. 1 Crore |
33.6 % |