Right Way to Pay Your Tax as Per Your Income Tax Slab

Paying income tax is your utmost obligation as a responsible citizen. Income Tax is an annually payable tax on income which every individual, corporate firm, an entrepreneur, a freelancer has to pay if he/she falls under the tax slab. Hereby, it is very important to understand your ‘Income Tax Slab’.

The tax is calculated on an annual income of a person where the cycle starts from April 1^st to March 31st for a given assessment year. The Income Tax Department of India has set a slab on basis of which a part of your income is deducted annually and it is obvious that more the income, more the tax is charged. There are a few factors, which attract the income tax slab:

·         Income of an assessee

·         Residential status of the assessee

·         Assessment year

·         Rate of tax

·         Charge of income tax

·         Maximum amount/threshold limit till income is not chargeable/taxable.

·         Gross income

Income Tax Slab for FY 2017-18

The income tax is calculated according to the income tax slab announced by our Finance Minister every year in the union budget. Let’s have a glance at Income Tax Slab for FY 2017-18 for various groups-

Income Tax Slab for FY 2017-18 for Individual Taxpayers and HUF (less than 60 yrs old, Men/Women)

Income Slab	Tax Rate for 2017-18
Income up to INR 2,50, 000	No Tax
Income from INR 2,50,000-5,00,000	5%
Income from INR 5,00,000-10,00,000	20%
Income more than INR 10,00,000	30%
Surcharge: 10% of income tax, in case of total income exceeds INR 50 lakh up to INR 1 Cr. Surcharge: 15% of income tax, in case of total income exceeds INR 1 Cr Cess: 3% on total of income tax +surcharge

Income Tax Slab FY 2017-18 for Senior Citizen (60 years or more but less than 80 years, Men/Women)

Income Slab	Tax Rate
Income up to INR 3,00,000	No tax
Income from INR 3,00,000-5,00,000	5%
Income from INR 5,00,000-10,00,000	20%
Income more than 10,00,000	30%
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh upto Rs.1 crore. Surcharge: 15% of income tax, where total income exceeds INR 1 Crore Cess: 3% on total of income tax +surcharge

Income Tax Slab FY 2017-18 for Senior Citizen (80 years ole or more, MEN/Women)

Income Slab	Tax Rate
Income up to INR 2,5,00,000	No tax
Income up to INR 5,00,000	No tax
Income from INR 5,00,000-10,00,000	20%
Income more than 10,00,000	30%
Surcharge: 15% of income tax, where total income exceeds INR 1 Crore Cess: 3% on total of income tax +surcharge

Income Tax Slab FY 2017-18: Analysis

This year Finance Minister Arun Jaitely had somehow tried to put your money in the pocket. Stuck to his promise, he halved income tax rates for individual’s earnings 2.5-5 lakhs to 5%. Even, those who have income above 5 lakhs will benefit a bit.

With the onset of the new financial year, some tax-related rules were proposed to be changed. The Lok Sabha in its recent Finance Bill declared these proposals as tax law.

·       The foremost change is a reduction in tax rate which dropped by 5% for the individual assesses income between INR 2.5 to 5 lakh.

·        Secondly, in the new budget, Mr. Jaitely proposed to reduce the benefit of tax rebate from existing 5000 to 2500 for those whose total income is up to INR 3.5 lakh. This leads to the zero liability of tax for an individual with income up to 3 lakh per annum, while tax liability for those whose income lies between 3 to 3.5 lakh will be INR 2500.

·       Change in surcharges is also visible. 10% tax will be levied as a surcharge for an individual whose annual taxable income is between INR 50 lakh to 1 crore. People earning more than 1 crore will be count under the existing slab, which is 15%.

·       A simple one-page form has been introduced for the taxpayer to file the ITR to make the process hassle free.

·         As per the new financial year, no deduction will be charged through any new investment made by an individual under Rajiv Gandhi Equity Saving Schemes (RGESS).

Paying the right amount of tax is a social responsibility. Sometimes being audited by the Income Tax department may cause highly stressful phrase for taxpayers who intentionally reduce their tax liabilities. Which further may lead to sleepless nights or anxieties in the worst cases. By paying the actual amount of tax, you can eliminate this stress. So, it is mandatory to know your tax slab and make yourself up-to-date as per the current financial amendments.