Income tax slab rates applicable to a person in India are defined every year in our finance budget. After finalizing these income tax slab rates, tax rates will be applicable to the taxable income that is generated by a person from 1st of April to 31st march of the financial year for which the finance budget is passed in parliament.
For example, when budget-2014 was placed in parliament and got approval of both the houses, income tax slab rates as finalized, were applied to the income that was generated between 1st April 2014 to 31st march 2015.
Similarly in budget 2015, our finance minister has placed the finance budget and kept the last year tax rates unchanged. Tax rates that are placed below will be applicable for the incomes that is generated from 1st of April 2015 to 31st March 2016.
This article is written for individuals who are below 60 years of age. We will not be considering income tax slab rates that are applicable to individuals who are 60 years old or above 60 years of age.
We do not have different income tax slab rates for men and women. Earlier this provision was there in tax law, but now it’s not applicable.
In case of salary employee, it’s the obligation of employer to deduct income tax at source if his or her income is above the basic exemption limit specified for the financial year. Basic exemption limit for the Assessment year 2014-2015 is Rupees two lakhs and for assessment year 2015-2016 its 2.5 lakhs.
This means, if taxable salary is more than Rs 2.5 lakhs after deductions as applicable to the employee then employer will be deducting TDS for the financial year starting from 1st April 2014 to 31st March 2015.
Similar provision is also applicable to assessment year 2015-2016 as these rates and basic exemption limit remain unchanged in budget 2015.
Income Tax Slab rates Assessment Year 2015-2016
- For assessment year 2015-2016, incomes below Rupees 2.5 Lakhs are exempted and will not be taxed in India. Please do not get confused with your salary and the income limit. Limit that we specified above is the taxable income i.e. after taking out deduction like investment on LIC, medical insurance, tuition fees and investment in fixed deposits etc and including your interest income or other taxable incomes. As below Rs 2.5 lakhs, incomes are not taxable for an individual who is below 60 years of age, we call this limit as basic exemption limit.
- For assessment year 2015-2016, above rupees Rs 2.5 Lakhs and below rupees five Lakhs the income tax rate is 10%. If your taxable income is rupees Rs 2, 80,000 then 10% will be charged on Rs 30,000 (i.e.280000-250000).
- Above rupees five Lakhs and below rupees 10 Lakhs the tax rate is 20%. This is in addition to the 10 % rate that is charged in between the income of rupees 2.5 Lakhs and 5 Lakhs. If your income is Rs 610000 then tax rate will be applicable in two phases. First 10 % between the income of Rs 2,50,000 and Rs 5,00,000 then 20% between Rs 5,00,001 to Rs 610000.
- Above rupees ten Lakhs tax rate is 30%. This is the last income tax slab rate. After this, whatever income you generate will be taxed at the rate of 30%.
Amount of tax that has been derived above will be added with 3% cess i.e. 2% towards education cess and 1% for secondary and higher secondary education cess.
Total figure will be called the actual income tax liability for the year.
In addition to these taxes, you may be charged with interest and penalty for late filing of income tax return or for late payment of taxes.
In addition to all these, under section 87A individuals are also eligible for tax rebate of Rs. 2,000 if income for the financial year is between Rs 200000 and Rs 500000.
Table Showing Income Tax Slab Rates for Individuals below 60 years of age
|Income Tax Slab
||Income Tax rates
|Where total income does not exceed Rs 2,50,000
|Where total Income exceeds Rs 2,50,000 but does not exceed Rs 5,00,000
||10% of the amount by which it exceeds Rs 2,50,000
|Where total income exceeds Rs 5,00,000 but does not exceed Rs 10,00,000
||20% of the amount by which it exceeds Rs 5,00,000
|Where total income exceeds Rs 10,00,000
||30% of the amount by which it exceeds Rs 10000
Mr X is working in a company XYZ pvt limited and getting taxable salary of Rs 10, 90,000. Investment in LIC is Rs 10,000. Below is his tax calculation for the assessment year 2015-2016 i.e. financial year 2014-2015.
Mr. X’s taxable income is Rs 10, 90,000-10000 = Rs 10, 80,000.
||Particulars of slab rates
||Tax to be paid (Rupees)
||Salary up to Rs 2.5 lakhs
||Salary between Rs 2.5 Lakhs and Rs 5 Lakhs
||10% on 5 Lakhs minus 2.5 Lakhs
||Salary between Rs5,00,000 and Rs 10,00,000
||20 % on 10 Lakhs minus 5 Lakhs
||Salary above rupees 10 Lakhs
||30% on 10,80,000 minus 10,00,000
On this total taxable amount, education cess and other cess will be charged at the rate of 3%. 3% on Rs 149000 = Rs 4470
Total taxable amount = Rs 149000 + 4470 = Rs 1, 53,470
If you are employed for 12 months under an employer then based on above calculation, your employer will deduct Rs 153470 as TDS in 12 equal installments starting from April to March.