February 7, 2017

Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19)

There are certain changes to individual Income Tax Slab Rates in Budget 2017. Let us these changes and understand what are the latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19).

I already wrote a post related to the major changes in Budget 2017. Refer the post “Budget 2017 Highlights -10 changes every investor must aware” for the same.

In this post, my concentration is to share you about the latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19) and applicable Security Transaction Tax (STT).

The difference between Gross Income and Total Income or Taxable Income?

Before jumping into Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19), first understand the difference between Gross Income and Total Income.

Many of us have the confusion of understanding what is Gross Income and what is Total Income or Taxable Income. Also, we calculate the income tax on Gross Income. This is completely wrong. The income tax will be chargeable on Total Income. Hence, it is very much important to understand the difference.

Gross Total Income means total income under the heads of Salaries, Income from house property, Profits and gains of business or profession, Capital Gains or income from other sources before making any deductions under Sections.80C to 80U.

Total Income or Taxable Income means Gross Total Income reduced by the amount of permissible as deductions under Sec.80C to 80U.

Therefore your Total Income or Taxable Income will always be less than the Gross Total Income.

Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19)

There are three categories of individuals based on the age of tax payer.

  1. Individuals whose age below 60 years.
  2. Senior Citizens whose age is 60 years and above but less than 80 years.
  3. Super Senior Citizens whose age is 80 years and above.

Hence, based on these three categories of individuals I have separated them and Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19) are as below.

Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19)

Note: – Along with the applicable taxes, you have to additional surcharges at below rates.

  • Surcharge:
    • 10% surcharge on income tax if the total income exceeds Rs.50 Lakhs but below Rs.1 Cr.
    • 15% surcharge on income tax if the total income exceeds Rs.1 Cr.
  • Education Cess: 2% cess on income tax including surcharge.
  • Secondary and Higher Education Cess: 1% cess on income tax including surcharge.

How to calculate Income Tax on your net or total income?

Now we understood the Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19). However, how to calculate the tax on our total income and how much is the tax benefits from Budget 2017 changes?

Let us not take few examples and calculate the income tax amount.

# If you are under 30% Tax Slab and below 60 years of age

Let us say your next taxable income (after all deductions like Sec.80C and all) Rs.15,00,000.

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.5,00,000-Rs.12,500  @5% (Earlier it used to be Rs.25,000). Now you are saving due to Budget 2017 is Rs.12,500.

Rs.5,00,001 to Rs.10,00,000-Rs.1,00,000 @20%

Rs.10,00,001 and above (in this case Rs.15,00,000)=Rs.1,50,000 @30%.

So total tax will be Rs.12,500+Rs.1,00,000+Rs.1,50,000=Rs.2,62,500.

Your saving from Budget 2017 is Rs.12,500.

# If you are under 20% Tax Slab and below 60 years of age

Let us say your next taxable income (after all deductions like Sec.80C and all) Rs.7,00,000.

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.5,00,000-Rs.12,500 @5% (Earlier it used to be Rs.25,000). Now you are saving due to Budget 2017 is Rs.12,500.

Rs.5,00,001 to Rs.7,00,000=Rs.40,000 @20%

Therefore, the total tax will be Rs.12,500+Rs.40,000=Rs.52,500.

Your saving from Budget 2017 is Rs.12,500.

# If you are under 10% Tax Slab and below 60 years of age

a) Let us say your income is Rs.4,00,000

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.4,00,000-Rs.7,500 @5% (Earlier it used to be Rs.15,000). Now you are saving due to Budget 2017 is Rs.7,500.

Your saving from Budget 2017 is Rs.7,500.

b) Let us say your income is Rs.3,00,000

Up to Rs.2,50,000-NIL

Rs.2,50,001 to Rs.3,00,000=Rs.2,500.

However, using Sec.87A of IT Act, your tax liability will be ZERO.

An individual who is resident Indian and whose total income does not exceed Rs. 3,50,000 is entitled to claim rebate under section 87A.

HUF or NRIs are not eligible for this rebate. Also, do remember that this rebate is not available for super senior citizens. Earlier the rebate was Rs.5,000 for those whose income is up to Rs.5,00,000. However, from FY 2017-18 it is now reduced to Rs.2,500 and income range to Rs.3,50,000.

Rs.3,00,000 net income falls under the eligibility of Sec.87A. Therefore, if one claims rebate under this section, then the total income tax payable will be ZERO.

Your saving from Budget 2017 is Rs.2,500.

Security Transaction Tax (STT) for FY 2017-18 or AY 2018-19

Security Transaction Charges or STT is the charges or tax when you buy or sell securities (excluding commodities and currency) through a recognized stock exchange.

The definition of securities involves the below products.

  • Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;
  • Derivatives;
  • units or any other instrument issued by any collective investment scheme to the investors in such schemes;
  • Security receipt as defined in section 2(zg) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
  • Government securities of equity nature;
  • Rights or interest in securities;
  • Equity-oriented mutual funds

Therefore, whenever you buy and sell these securities through a recognized stock exchange, then you have to pay this STT.

Now let us understand the latest Security Transaction Tax (STT) applicable for FY 2017-2018 (AY 2018-19).

Security Tranction Tax (STT) Rates for FY 2017-18 or AY 2018-19

Hope now you became familiar with Latest Income Tax Slab Rates for FY 2017-18 (AY 2018-19) and also the way we can calculate our income tax liability (in simple terms). Any doubts??

33 Comments

  1. I purchased a Flat in the year 2000 for an amount of Rs: 4 Lakhs in the year 2000 and obtain loan from bank . I sold that property in the year 2018 for an amount of Rs: 24.5 Lakhs. I cleared bank loan. I paid for an amount of Rs: 4.85 Lakhs towards interest. I purchased agricultural land for an maount of Rs: 3 Lakhs in the month of November 2017. How much amount I have to pay towards income tax on account of this.

    Reply
  2. Hi Sir

    My Father is an NRI workinjg in UAE for the last 35 years.

    Recently my father received a letter from Income Tax for ‘Non Filing of lncome Tax Return’

    Below is the letter

    Subject: Non Filing of lncome Tax Return

    1.The lncome Tax Department has received information on financial transactions/activities relating to you.
    A list of some of the information for Financia-Year 2014-15 is provided below.
    As per records, you do not appear to have filed lncome Tax Returns for Assessment year(s) 2015-16.

    2.You are requested to furnish your response in the Compliance Module on the e-filing portal at https://incometaxindiaefiling.gov.in
    lf you are not registered with e-filing portal, use the ‘Register Yourself’ link to register.
    The response to this letter has to be submitted electronically by clicking on the ‘Compliance’ link after logging into the e-filing portal.
    You may keep a printout of the acknowledgement of submitted response for your own record.

    3.A copy of the acknowledgement is required to be submitted to the office of the undersigned within 20 days
    of receipt of this letter failing which appropriate proceedings under lncome Tax Act,1961 may be initiated.

    lnformation Summary for PAN XXXXXXXXXXXX
    ———————————————–
    2014-15 CIB-403 Time Deposit exceeding 2,00,000 with a banking company
    2014-15 TDS-195 TDS Return – Payment to Non-residents (Section 195)

    When i checked Form26AS for AY2015-16 i could see some entires under ‘PART A – Details of Tax Deducted at Source’

    But this total amounts to only Rs 45/- as shown in Form 26AS.

    Please let me know what should be done in this case.

    Why we received this letter from Income tax this month.ie Dec 2017, ..even if its for FY14-15.

    Please help me how to respond to this notice.

    Reply
    • Vishnu-No need to worry. Track the transactions and accordingly reply online.

      Reply
      • Thanks Basavaraj

        But i wonder why TDS was deducted as he deposits the money in NRE account which is not taxable.

        Reply
        • Vishnu-I am not sure about transactions. But you have valid reasons to explain in detail.

          Reply
  3. Hi Sir,

    My mother is retired from a govt job, she is getting pension.

    Please suggest some good option to invest Rs 1.50 Lac annually for tax saving purpose, she dont need any monthly income plan.

    Regards

    Reply
    • Mohit-Without knowing much about her financial life, it is hard for me to guide.

      Reply
  4. Hi, I am a salary person I worked two companies for financial year now I have 2 form 16, how can I do e filing can you please explain this topic.

    Reply
    • Sudha-You have to combine the both income and file a single ITR. If you are unable to do so, then take help of a tax expert of your area.

      Reply
  5. To have the benefit U/S 8CCD (2) my employer says ” employ can voluntarily submit the 10 % of his basic pay to NPS tier 1 account. Keep the valid receipt . Claim the refund while E filing the income tax return”. Is he correct ?

    Reply
    • Vishwanath-Your employer misguiding you. An employee can’t contribute it. It MUST Be employer contribution, which you can claim. They just want to skip from their contribution and making you scapegoat.

      Reply
  6. Sir…just wanted to know that I work in a private sector company yearly salary around 4.2 lakhs. So after 2.5 lakhs of tax exemption I am still left with 1.7 lakhs to show as investment. Can you chalk out a plan how should I invest this 1.7 lakhs..? My age is 29 and I am married.

    Reply
    • Ayan-One must not INVEST only for TAX SAVING purpose. You must align your investment based on your financial goals.

      Reply
      • Sir
        Can u suggest a plan for middle class people like us….
        Will invest accordingly as u would suggest.
        I hv my own house and car so not planning to buy any of these in future…
        Looking forward for your help….

        Reply
        • Ayan-Without understanding your financial life, it is hard for me to guide.

          Reply
  7. Dear sir,
    IF any employer pay tax on non-monetary perquisites on behalf of the empployee u/s 192(1A), can the employer deduct that tax from the salary paid by the employer to employee ? If not whether that tax paid by the employer on behalf of the employee will be a perquisites in the hands of employee which is exempt u/s 10(10CC). I would also like to know that is it optional for the employer to pay tax u/s 192(1A) ?

    Suppose employer has deducted TDS on non monetary perquisites along with employees basic salary, can employee claim exemption on the amount paid as tax on non monetary perquisites?
    Thanks in advance

    Reply
    • Aks-He can’t deduct that tax from the employee. Yes, the tax paid by an employer on non-monetary perquisites given to an employee is not taxable in hands of the employee (Under Sec.10(10CC)). As per the IT Act Sec.192(1A), he can’t deduct such tax from an employee.

      Reply
  8. Hello sir..
    I got a total amount of 120000 on maturity of my single premium LIC policy,for which I paid the premium of 90000 8years ago.On completion of policy,the deducted TDS @ 10% i.e 1200.
    Plz tell weather I have to show whole 120000 as income from other sources,or only to show the interest on maturity…

    Reply
  9. for FY 2017-18 (AY-2018-19) my
    gross income will be 572304
    and taxable will be 70700 ( after all the deductions U/s 80 c and 80ccd )
    am i eligible to rebate U/s 87A ?

    Reply
    • Bipin-If your TOTAL INCOME is less than Rs.3,50,000, then you are eligible for a claim under Sec.87A. Your Gross Income will not matter.

      Reply
  10. I want to clear information form tax credit 87/a
    Taxable gross 350000 mins
    total tax amount is 5000 and credit in 2500 balance tax amount is 2500

    but my taxable gross is 525000
    total tax amount 17500, that case credit applicable or not

    Reply
    • Prakash-You can claim deduction under Sec.87A only when your taxable income (after all deduction) is equal to or less than Rs.3,50,000.

      Reply
  11. Very nicely explained. Thanks a lot 🙂

    Reply
    • Kishore-The Rs.12,500 rebate is not related to Sec.87 of IT act. But they are pointing the difference of earlier 10% tax rate to the current reduced tax rate of 5% for the income range of Rs.5 lakh. This I already pointed in above post. Don’t confuse both.

      Reply
  12. Restriction on Loss from House Property

    Loss from ANY House property is restricted to Rs. 2,00,000 in a financial year. Balance if any shall be carried forward for set off within 8 Assessment years.

    Reply
    • Please explain about it.

      For Letout property also, unable to claim full interest amount?

      Reply
    • Manimekalai-I am planning a different blog post on this where I will explain in detail about loss from house property and carry forward changes done in Budget 2017. Please wait.

      Reply
  13. Dear Basu,
    Nice interpretation….
    Very important analysis.

    Reply
      • kudos… Basavaraj

        Reply

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