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#FinancialBytes: Know all about Income Tax in India

Deepali Aggarwal


#FinancialBytes: Know all about Income Tax in India

13 Jul 2018: #FinancialBytes: Know all about Income Tax in India

Income tax refers to the percentage of your income that you're required to pay to the government under the Income Tax Act. Income tax is applicable to both individuals and companies and all types of income, be it from salary, capital gains, business/profession or any other source.

The government uses the collected tax to fund the country's infrastructural development, salaries of government employees, etc.

Here's all you need to know about Income Tax.

Income Source: What all can be the different sources of your income?

According to the Income Tax Department's classification, you may break down your total income into the following five heads:

Income from Salary: Includes both salary and pension income

Income from Business/Profession

Income from House Property: Accounts mostly for rental income

Income from Capital Gains: Earnings from the sale of capital assets such as house property, mutual funds, etc.

Income from Other Sources

Under 60 years: Tax rates for Individuals, HUFs (under 60 years)

The following tax rates are applicable to individuals, HUFs below 60 years (FY 2018-19):

Income up to Rs. 2.5 lakh: No tax

Income from Rs. 2.5 lakh-5 lakh: 5%

Income from Rs. 5 lakh-10 lakh: 20%

Income above Rs. 10 lakh: 30%

Surcharge: 10% of income tax if income is between Rs. 50L-1cr; 15% of income tax if income exceeds Rs. 1cr.

Cess: 3% on total of income tax + surcharge.

Senior Citizens: Rates for Individuals, HUFs (60yrs and more, but below 80yrs)

Following tax rates applicable to individuals, HUFs above 60yrs but below 80yrs (FY 2018-19):

Income up to Rs. 3 lakh: No tax

Income from Rs. 3 lakh-5 lakh: 5%

Income from Rs. 5 lakh-Rs. 10 lakh: 20%

Income above Rs. 10 lakh: 30%

Surcharge: 10% of income tax if income is between Rs. 50L-1cr; 15% of income tax if income exceeds Rs. 1cr.

Cess: 3% on total of income tax + surcharge.

Super Senior Citizens: Tax slabs for Individuals, HUFs (80 years and above)

The following tax rates are applicable to individuals, HUFs aged 80years and above (FY 2018-19):

Income up to Rs. 5 lakh: No tax

Income from Rs. 5 lakh-10 lakh: 20%

Income above Rs. 10 lakh: 30%

Surcharge: 10% of income tax if income is between Rs. 50L-1cr; 15% of income tax if income exceeds Rs. 1cr.

Cess: 3% on total of income tax + surcharge.

Exceptions: Exceptions to tax slabs for the FY 2018-19- Part 1

Gains from following capital assets held for the mentioned time period are taxed in exception to tax slabs:

House property held for over 24 months: 20%

Debt mutual fund held for over 36 months: 20%

Equity mutual fund held for less than 12 months: 15%; no tax if held for over 12 months.

Exceptions: Exceptions to tax slabs for the FY 2018-19- Part 2

Some other exceptions on capital gains are as follows:

Fixed maturity plans held for over 36 months: 20%

Shares (with paid securities transaction tax): 15% if held for less than 12 months; no tax if held for over 12 months

Shares (with unpaid securities transaction tax): 20% if held for more than 12 months.

Deadline: Deadlines for different income tax related activities

Apart from understanding how much tax you need to pay, it is also important to know all the deadlines for different income tax-related activities for FY 2018-19.

Submission of investment proofs to claim exemption from Income Tax: January 31, 2019

For making investments under Section 80C: March 31, 2019

To file Income Tax return: July 31, 2019

To verify Income Tax return: Oct-Nov, 2019