What is Income Tax?
Income tax is a percentage of an individual person’s or Business’ income that is paid to the government to run the nation smoothly, fund infrastructural development, pay salaries of those employed by the state or central governments, etc All such taxes are levied based on the passing of a law. Income tax is defined as the law that governs the provisions for our income tax. Income tax is an exclusive and direct means of taxation like capital gains tax, securities transaction tax, etc. There are many other indirect taxes that we pay such as Goods and Services Tax (GST), sales tax, VAT, Octroi and service tax..
Who pays Income Tax and why is it needed?
Income tax is applicable to be paid by individuals, corporate, businesses, and all other establishments that generate income. The collection, recovery, and administration of income tax in India is regulated by Income Tax Act, 1961 The government deploys this tax amount for a number of reasons ranging from building the infrastructure to paying the state and central government employees their salaries. Income tax helps the government generate a steady source of income which is eventually used for the development of the nation. Even though income tax is paid every month from the monthly earnings, it is calculated on an annual basis. The amount of income tax an individual has to pay depends on a number of factors.
Income Tax Slab rate
Income tax is charged progressively higher based on individual earnings and hence, tax slab rates are for different categories of taxpayers. The income tax slab rates can be broadly classified as:
New Income Tax Slab Rates for FY 2018-19 (AY 2019-20)
Slab of Income tax for individual tax payers & HUF who are less than 60 years old
| INCOME SLAB | TAX RATE |
| Income up to Rs. 2,50,000* | No Tax |
| Income from Rs. 2,50,000 – Rs. 5,00,000 | 5% |
| Income from Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Income more than Rs. 10,00,000 | 30% |
Income tax slab for individual tax payers & HUF (60 years old or more but less than 80 years old)
| Income up to Rs. 3,00,000* | No Tax |
| Income from Rs. 3,00,000 – Rs. 5,00,000 | 5% |
| Income from Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Income more than Rs. 10,00,000 | 30% |
Income tax slab for individual tax payers &HUF (80 years old and above)
| Income upto Rs. 5,00,000 | Nil | |
| Income between Rs. 500,001 – Rs. 10,00,000 | 20% of Income exceeding Rs. 5,00,000 | |
| Income above Rs. 10,00,000 | 30% of Income exceeding Rs. 10,00,000 |