Most important points you must understand being an Income Tax Payer
Tax payers are being worried as the final date for IT returns is nearing. Here we come up with important points one should know being a Income tax payer regarding the slab rate in order to assess the tax liability as an individual or a firm and the important dates (filing of tax return, payment of TDS/TCS, service tax , VAT, Advance Income Tax).
Income Tax Slab for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2017-18 – Part I
FY 2017-18 – Part II
for FY 2017-18 – Part III
Neha has income from interest from savings account of Rs 8,400 and a fixed deposit interest income of Rs 10,000 during the year.
Tax payers are being worried as the final date for IT returns is nearing. Here we come up with important points one should know being a Income tax payer regarding the slab rate in order to assess the tax liability as an individual or a firm and the important dates (filing of tax return, payment of TDS/TCS, service tax , VAT, Advance Income Tax).
Income Tax Slab Rates for FY 2017-18(AY 2018-19)
Income Tax Slab for Individual Tax Payers & HUF (Less Than 60 Years Old) for FY 2017-18 – Part I
Income Tax 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.
Higher education and secondary cess: 3% of Income Tax.
*Income tax exemption limit for FY 2017-18 is up to Rs. 2,50,000 for individual & HUF other than those covered in
Income Tax Slab for Senior Citizens (60 Years Old Or More but Less than 80 Years Old) for
FY 2017-18 – Part II
Income Tax Slab
|
Tax Rate
|
Income up to Rs 3,00,000*
|
No tax
|
Income from Rs 3,00,000 – 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.
Higher education and secondary cess: 3% of Income Tax.
*Income tax exemption limit for FY 2017-18 is up to Rs. 3,00,000 other than those covered in Part(I) or (III)
Income Tax Slab for Senior Citizens(80 Years Old Or More)
for FY 2017-18 – Part III
Income Tax Slab
|
Tax Rate
|
Income up to Rs 5,00,000*
|
No tax
|
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.
Higher education and secondary cess: 3% of Income Tax.
*Income tax exemption limit for FY 2017-18 is up to Rs. 5,00,000 other than those covered in Part(I) or (II)
How to calculate income tax? (See example)
Income tax calculation for the Salaried
Income from salary is the sum of Basic salary + HRA + Special Allowance + Transport Allowance + any other allowance.
Some components of your salary are exempt from tax, such as medical reimbursements, telephone bills reimbursement.
If you receive HRA and live on rent, you can claim exemption on HRA. Calculate exempt portion of HRA, by using this HRA Calculator.
Transport allowance is given to employees as part of their salary to meet travel expenses from residence to work & back.
Starting financial year 2015-16, limit of exemption on transport allowance is 1,600 per month or Rs 19,200 per annum.
For example - if you receive Rs 2,000 as transport allowance every month, Rs 1600 shall be exempt from tax and remaining
Rs 400 per month or Rs 4,800 per annum shall be taxed as salary income.
Let's understand income tax calculation by way of an example. Neha receives a Basic Salary of Rs 50,000 per month.
HRA of Rs 25,000. Transport Allowance of Rs 8,000 per month. Special Allowance of Rs 5,000 per month.
LTA of Rs 20,000 annually. Neha pays a rent of Rs 20,000 and lives in Delhi.
Nature
|
Amount
|
Exemption/Deduction
|
Taxable
|
Basic Salary
|
6,00,000
|
-
|
6,00,000
|
HRA
|
3,00,000
|
1,80,000
|
1,20,000
|
Transport Allowance
|
96,000
|
19,200
|
76,800
|
Special Allowance
|
60,000
|
-
|
60,000
|
LTA
|
20,000
|
12,000 (bills submitted)
|
8,000
|
Medical Bills
|
15,000
|
15,000(bills submitted)
|
-
|
Gross Total Income from Salary
|
8,64,800
|
To calculate income tax, include income from all sources. Include:
Neha has income from interest from savings account of Rs 8,400 and a fixed deposit interest income of Rs 10,000 during the year.
Neha has made some investments to save income tax. PPF investment of Rs 50,000. ELSS purchase of Rs 20,000 during the year.
LIC premium of Rs 8,000. Medical insurance paid of Rs 12,000. Here are the deductions Neha can claim.
Nature
|
Maximum Deduction
|
Eligible investments/expenses
|
Amount claimed by Neha
|
Section 80C
|
Rs.1,50,000
|
PPF deposit Rs 50,000, ELSS investment Rs 20,000, LIC premium Rs 8,000. EPF deducted by employer(Neha’s contribution) = Rs 50,000 *12% *12 = 72,000
|
Rs 1,50,000
|
Section 80D
|
Rs 25,000 for self Rs 30,000 for parents
|
Medical insurance premium Rs 12,000
|
Rs 12,000
|
Section 80TTA
|
10,000
|
Savings account interest 8,400
|
Rs. 8,400
|
Calculation of gross taxable income in India
Nature
|
Amount
|
Total
|
Income from Salary
|
8,64,800
| |
Income from Other Sources
|
18,400
| |
Gross Total Income
|
8,83,200
| |
Deductions
| ||
80C
|
1,50,000
| |
80D
|
12,000
|
-
|
80TTA
|
8,400
|
1,70,400
|
Gross Taxable Income
|
7,12,800
|
How to calculate income tax in India for Neha
Up to Rs 2,50,000
|
Exempt from tax
|
0
|
Rs 2,50,000 to Rs 5,00,000 (5%)
|
5% (Rs 5,00,000 - Rs 2,50,000)
=5%(250000) |
12500
|
Rs 5,00,000 to Rs 10,00,000 (10%)
|
10% ( Rs 7,12,800 - Rs 5,00,000)
=10%(212800) |
21280
|
More than Rs Rs 10,00,000
|
30% (nil)
|
0
|
Cess
|
3% of total tax (3% (Rs 12500+ Rs 21280)
|
1013
|
Total Income Tax
|
Rs 12500 + Rs 21280 + Rs 1013
|
Rs 34,793
|
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