Income tax calculation for salaried individuals in India - Tax Slabs
This is my third post and provides information about the final tax calculation and tax slabs after deduction of eligible investments and expenses for men, women and senior citizens of India. According to the income tax department, only individuals (both men and women) who are of the age of 65 years and above are considered to be senior citizens.
Slab 1 - Rs. 1,10,000 and below - Zero Tax
Salaried individuals who are men have to pay zero tax if their net taxable income is Rs.1,10,000 and below. For women the zero tax limit is Rs. 1,45,000 while for senior citizens it is Rs. 1,95,000. By investing prudently and using salary allowances, it is possible to bring down even very high incomes to this level.
Slab 2 - Rs. 1,10,001 to 1,50,000: Ten Percent Tax
Men have to pay 10 percent of the amount greater than Rs. 110,000 while women have to pay 10 percent of the amount between 145,001 and 1,50,000. Senior Citizens pay zero tax in this income tax slab.
Slab 3 - Rs. 1,50,001 to 2,50,000: Twenty Percent Tax
In this bracket, salaried men have to pay Rs 4,000 plus 20 percent of the amount between Rs. 1,50,001 to 2,50,000. Women pay Rs. 500 + 20 percent of the slab amount while senior citizens pay 20 percent of the amount above 1,95,000. The Rs.4000 for men and Rs.500 for women is the amount for the previous 10 % tax slab.
Slab 4 - Above Rs. 2,50,000: Thirty Percent Tax
Men have to pay Rs.24,000 plus 30 percent of the amount greater than Rs. 250,000. Women salaried taxpayers have to pay Rs. 20,500 + 30 % of the income more than Rs.2,50,00 while for senior citizens is it Rs. 11,000 plus 30 percent of the income above the tax slab.
A 10 percent surcharge (tax on tax) is applicable if the taxable income after taking into consideration all the deductions is above Rs. 10 lakh.
All taxes in India are subject to an education cess, which is 3 percent of the total tax payable.
These are the current income tax slabs and rates for the financial year April 2007 - March 2008. After the Annual Budget is announced at the end of this month, the Finance Minister Mr.P.Chidambaram may come out with a new system of taxation, tax slabs, investment and expense deductions. If he does so, I will surely keep you informed.
Here are my other posts on calculating Income Tax in India
-Tax Slabs in 2009
- Deducting Office Allowances and Reimbursements
- Deducting Investments and Expenses