Introduction
Generally, taxes are charged at pre-determined rates decided by the laws of the country. The tax will be charged based on the income earned by a person. Even companies are entitled to pay income tax at pre-defined tax rates.
What is Income Tax Rate?
Income tax rate means the rate at which income tax should be charged. Tax will be charged on taxable income as per the rates prescribed by the Income Tax Act, 1961. Tax rates will be different for individuals, partnerships, and companies.
Such tax slabs tend to be updated with every budget. Further, there has not been any change in the income tax slabs since the announcement of budget in 2018, it remains the same as that of the previous financial year.
According to the current income tax laws, the tax rate on resident individuals varies based on their age. There are different tax slabs applicable to the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual, aged below 60 years, with an income more than Rs 2.5 lakh but less than Rs 5 lakh have to pay tax at the rate of 5% on income.
The income tax rate for companies will be based on whether that is a domestic company or foreign company. The status of domestic or foreign will be decided as per the Income Tax Act, 1961. For instance, a domestic company have to pay income tax at the rate of 30%.
Who is eligible to pay?
In India, income tax is levied on individual taxpayers based on a slab system where different tax rates have been prescribed for different slabs, and such tax rates keep increasing with an increase in the income slab.
There are three categories of individual taxpayers:
- Individuals (below the age of 60 years) which includes both residents and non-residents
- Resident Senior citizens (age above 60 years but below 80 years)
- Resident Super senior citizens (age above 80 years)
All companies and entities are eligible to pay income tax as there is no such slab system. They will be charged at a straight rate.
The taxpayer has to pay tax at the applicable tax rate to file the return of income. The income tax rate is very important to arrive at the tax payable and to file the return of income.
