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Income slabs, tax rates: a lowdown
Cnergies |
March 02, 2005
 he way the Income Tax department calculates the tax on each slab can be confusing.
For instance, a young reader who earns an annual income of Rs 450,000 asked whether his tax rate of 30% would entail dishing out Rs 135,000. The answer is: No. Here, we show you how the percentages are levied according to each income slab. Note, this does not take into account the following: - Tax deductions by investing in certain instruments.
- Standard deduction.
This is just to indicate how percentages are calculated on the tax slabs. Also: when we say current year, we refer to the current financial year (April 1, 2004 - March 31, 2005). When we speak of next year, we refer to the next financial year -- April 1, 2005 to March 31, 2006. | Income slabs and tax rates | | Current year | Next year | Tax rates | Rs 0 - 50,000 | Rs 0 - 100,000 | No tax | Rs 50,001 - Rs 60,000 | Rs 100,001 - 150,000 | 10% | Rs 60,001 -150,000 | Rs 150,001 - 250,000 | 20% | Above Rs 150,000 | Above Rs 250,000 | 30% | Taxable income more than Rs 850,000 | Taxable income more than Rs 10,00,000 | Surcharge 10% |
TAX YOU WILL PAY FOR THE CURRENT YEAR Annual income = Rs 450,000
Total tax = Rs 109,000
Education cess @ 2 % = Rs 2,180
Total tax payable = Rs 109,000 + 2,180 = Rs 111,180| Income slab | Tax rates | What it means for the tax payer | Rs 0 - 50,000 | No tax | - | Rs 50,001 - 60,000 | 10% | Since no tax is levied up to Rs 50,000, tax in this case is calculated on Rs 10,000 (Rs 60,000 - Rs 50,000). Rs 10,000 x 10% = Rs 1,000 | Rs 60,001 - 1,50,000 | 20% | Since you have already paid tax on Rs 60,000, you now pay tax on Rs 90,000 (Rs 1,50,000 - Rs 60,000). Rs 90,000 x 20% = Rs 18,000 | Above Rs 1,50,000 | 30% | You have already paid tax on Rs 1,50,000, so you now pay tax on Rs 3,00,000 (Rs 4,50,000 - Rs 1,50,000). (Rs 3,00,000 x 30%) = Rs 90,000 |
TAX YOU WILL PAY FOR THE NEXT YEAR Annual income = Rs 450,000
Total tax = Rs 85,000 Income slab | Tax rates | What it means for the tax payer | Rs 0 - 100,000* | No tax | - | Rs 100,001 - 150,000 | 10% | Since no tax is levied up to Rs 100,000, tax in this case is calculated on Rs 50,000 (Rs 150,000 - Rs 100,000). Rs 50,000 x 10% = Rs 5,000 | Rs 150,001 - 250,000 | 20% | Since you have already paid tax on Rs 150,000, you now pay tax on Rs 100,000 (Rs 250,000 - Rs 150,000). Rs 100,000 x 20% = Rs 20,000 | Above Rs 250,000 | 30% | You have already paid tax on Rs 250,000, so you now pay tax on Rs 200,000 (Rs 450,000 - Rs 250,000). (Rs 200,000 x 30%) = Rs 60,000 |
* The slab for women is Rs 125,000 and Rs 150,000 for senior citizens. A surcharge of 10% will be levied once the taxable income is more than Rs 10 lakh (Rs 1 million). Currently the surcharge is 10% if the income is more than Rs 850,000. Cnergies is an end-to-end solution provider for Tax-Payroll-HR and provident fund DON'T MISS!
• Serious about tax saving? Read this!
• Should you file a return?
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