Rates of Tax
Income-tax is to be charged at the rates fixed for the year by the annual Finance Act. Section 2 of the Finance Act, 2015 read with Part I of the First Schedule to the Finance Act, 2015 specifies the rates at which income-tax is to be levied on income chargeable to tax for the A.Y.2015-16. Part II lays down the rate at which tax is to be deducted at source during the financial year 2015-16 from income subject to such deduction under the Act; Part III lays down the rates for charging income-tax in certain cases, rates for deducting income-tax from income chargeable under the head “Salaries” and the rates for computing advance tax for the financial year 2015-16. Part III of the First Schedule to the Finance Act, 2015 will become Part I of the First Schedule to the Finance Act, 2016 and so on. The slab rates applicable for A.Y.2016-17 are as follows:
(1) Individual / Hindu Undivided Family (HUF) / Association of Persons (AOP) / Body of
Individuals (BOI) / Artificial Juridical Person
| (i) where the total income does not exceed Rs 2,50,000 | Nil;
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| (ii) where the total income exceeds Rs 2,50,000 but does not exceed Rs 5,00,000 | 10% of the amount by which the total income exceeds Rs 2,50,000
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| (iii) where the total income exceeds Rs 5,00,000 but does not exceed Rs 10,00,000 | Rs 25,000 plus 20% of the amount by which the total income exceeds Rs 5,00,000;
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| (iv) where the total income exceeds Rs 10,00,000
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Rs 1,25,000 plus 30% of the amount by which the total income exceeds Rs 10,00,000.
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Illustration: Mr. X has a total income of ` 12,00,000. Compute his gross tax liability.
| Tax liability | = Rs 1,25,000 + 30% of Rs 2,00,000 | = Rs 1,85,000 |
| Alternatively: | ||
| Tax liability: | ||
| First Rs 2,50,000 | – Nil | |
| Next Rs 2,50,000 – Rs 5,00,000 | – @ 10% of Rs 2,50,000 | = Rs 25,000 |
| Next Rs 5,00,000 – Rs 10,00,000 | – @ 20% of Rs 5,00,000 | = Rs 1,00,000 |
| Balance i.e., Rs 12,00,000 – Rs 10,00,000 | – @ 30% of Rs 2,00,000 | = Rs 60,000 |
| Total tax | =Rs 1,85,000 |
It is to be noted that for a senior citizen (being a resident individual who is of the age of 60 years but not more than 80 years at any time during the previous year), the basic exemption limit is Rs 3,00,000. Further, resident individuals of the age of 80 years or more at any time during the previous year, being very senior citizens, would be eligible for a higher basic exemption limit of Rs 5,00,000.