Rates of Income Tax – Financial Year 2017-18 (Assessment Year 2018-19)

Rules of Income Tax Act are subjected to periodical revisions. Accordingly, the rates of income tax also undergo periodical changes. Different tax rates have been stipulated for various categories of taxpayers and for different sources of income. Individual/Hindu Undivided Family (HUF)/ Association of Persons (AOP)/ Body of Individuals (BOI) or any other artificial judicial person is taxed as per different slab rates. The same rates are applicable to individuals whose income is from Salaries and allowances.

What are the major changes in Income Tax Slab for FY 2017-18 (AY 2018-19) compared to  FY 2016-17 (AY 2017-18)?

The major changes that are announced in Income Tax slabs and rates for FY 2017-18 (AY 2018-19) compared to previous year are:

1. Tax for income between Rs. 2,50,000 to Rs. 5,00,000 for Individual below 60 years of age is reduced to 5%.
2. 10% surcharge is introduced on if net income is above Rs. 50 lakh  but below Rs. 1 Crore.
3. Tax rebate under Section 87 A stands reduced to Rs.2,500. The eligibility ceiling also is reduced to Rs. 3,50,000.

The rates of income tax mentioned below are applicable to the Financial Year 2017-18 (Assessment Year 2018-19).

1.Rates of Income Tax – Slab rates for Individuals/HUF/AOP/BOI/Artificial Judicial Person

The individual in this category mean both resident and non-resident if the said person is born on or after April 01, 1958(Age below 60 years).

2. Rates of Income Tax – For Senior Citizens- Resident (FY2017-18, AY2018-19)

                                    (born during April 01, 1938 and March 31, 1958) 

3. Rates of Income Tax – For super Senior Citizens- Resident (FY2017-18, AY2018-19)

                                          (who is 80 years or more at any time during the previous year)

3. Rates of Income Tax- Rebate under Section 87 A (FY2017-18, AY2018-19)

A resident Individual, whose net income   does not exceed Rs. 3, 50,000 is entitled to a rebate of maximum Rs.2,500. Net income for the purpose is gross total income minus deductions under section 80C to 80 U.  The rebate under Section 87A is deductible from the income tax before calculating education cess. The amount of rebate is 100% of income tax or Rs.2,500, whichever is less.

4. Rates of Income Tax – Education Cess (FY2017-18, AY2018-19)

An Education cess @ 2% and Secondary and Higher Education Cess @ 1% on the total Tax liability is payable by all the assessees.  The total cess thus becomes 3%.  In the case of employees, it becomes a part of TDS

5. Rates of Income Tax – Surcharge on Income Tax (FY2017-18, AY2018-19)

If the net income of the assesse exceeds Rs. 50 lakh but below   Rs. 1Crore, a  Surcharge of 10 %  is payable on Income Tax. If the net income exceeds Rs. 1 crore, the surcharge increases to 15% on the Income Tax.

6. Special Points to be Noted by assessees  under above categories (FY2017-18, AY2018-19)

• Age based slabs are applicable only for resident individuals. The differentiation is not extended to non-residents.
• Where surcharge is applicable, Education Cess of 2% and Secondary and Higher Education Cess of 1% is levied on the amount of income tax plus surcharge.
• 5% TDS on rent payable is made applicable if the monthly rent paid is more than Rs. 50,000
• Loss from House Property is capped at Rs. 2,00,000
• A penalty is introduced for delayed filing of tax return.  A penalty of Rs. 5,000 is payable if tax return is filed after July 2018. The fine increases to Rs. 10,000 for filing after December 2018. For tax payers, whose income is up to Rs. 5 lakh, the fine is limited to Rs. 1,000
• Various sections of Rebate and Ceilings,  HRA Exempted Under Section 10(A), Net Annual Value calculation, Income/ Loss from House Property Under Section 24 (A) ( except the cap of Rs. 2,00,000 for the Loss from House Property  mentioned above), Investments eligible for consideration Under Section  80 C,  Deduction Under Section 80CCD-NPS, RGESS Under Section 80CCG, Deduction Under Section 80 D for Health Insurance Premium etc  remain unchanged for FY2017-18 (AY2018-19), compared to FY2016-17 (AY2017-18).