Taxpayers and Income Tax Slabs
Taxpayers in India, for the purpose of income tax includes:
- Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP) and Body of Individuals (BOI)
Each of these taxpayers is taxed differently under the Indian income tax laws. While firms and Indian companies have a fixed rate of tax of 30% of profits, the individual,HUF, AOP and BOI taxpayers are taxed based on the income slab they fall under. People’s incomes are grouped into blocks called tax brackets or tax slabs. And each tax slab has a different tax rate. In India, we have four tax brackets each with an increasing tax rate.
- Income earners of up to 2.5 lakhs
- Income earners of between 2.5 lakhs and 5 lakhs
- Income earners of between 5 lakhs and 10 lakhs
- Those earning more than Rs 10 lakhs
||Tax to be paid
|Up to Rs.2,50,000
|Between Rs 2.5 lakhs and Rs 5 lakhs
||5% of your taxable income
|Between Rs 5 lakhs and Rs 10 lakhs
||Rs 12,500+ 20% of income above Rs 5 lakhs
|Above 10 lakhs
||Rs 1,12,500+ 30% of income above Rs 10 lakhs
This is the income tax slab for FY 2017-18 for taxpayers under 60 years. There are two other tax slabs for two other age groups: those who are 60 and older and those who are above 80.
A word of note:People often misunderstand that if they earn let’s say Rs.12 lakhs, they will be paying a 30% tax on Rs.12 lakhs i.e Rs.3,60,000. That’s incorrect. A person earning 12 lakhs in the progressive tax system, will pay Rs.1,12,500+ Rs.60,000 = Rs. 1,72,500.
Check out the income tax slabs for previous years and other age brackets.
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