What is Income Tax?
Income Tax is a type of tax that is levied directly on the income of a person by the government. Income tax in India is calculated as per slab rates on the total income of a person. There are different income tax rates for different slabs. Income tax is directly collected by the government and is governed by the Income Tax Act, 1961 in India. In this post, let’s discuss income tax slabs for FY 2018-19 (AY 2019-20).
Income tax is at present counted as a stable source of revenue for the central government. The central government uses the collected tax money to finance its various schemes and operations.
Primary Sources of Income
The Income from the following sources considered taxable as per Income Tax Act of India:
- Income from salary
- Income from house property
- Profits and gains of business or profession
- Capital gains income
- Other sources income
Income Tax Slabs for FY 2018-19 (AY 2019-20)
Income tax in India is levied on the income of a person. The Income tax is charged on the basis of slab rates prescribed by the central government in the union budget every financial year.
Categories of Individual Taxpayers
There are three categories of individual taxpayers:
- Individuals which includes residents as well as non-residents (below the age of 60 years).
- Resident senior citizens (who is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year).
- Resident super senior citizens (who is 80 years or more at any time during the previous year).
Income Tax Slabs for FY 2018-19 (AY 2019-20)
Following Income Tax Slabs are applicable for the Financial Year 2018-19 (Assessment Year 2019-20). There are no separate income tax slabs for men and women. At present, there are three income tax slabs based on the age.
Income Tax Slabs for Individual Taxpayers (Below the age of 60 years)
| Income Slab | Rate of Income Tax |
| Income upto Rs. 2,50,000 | No Tax |
| Income between Rs. 2,50,001 – Rs. 500,000 | 5% |
| Income between Rs. 500,001 – Rs. 10,00,000 | 20% |
| Income above Rs. 10,00,000 | 30% |
Income Tax Slabs for Senior Citizens (Age 60 years or more but less than 80 years)
| Income Slab | Rate of Income Tax |
| Income upto Rs. 3,00,000 | No Tax |
| Income between Rs. 3,00,001 – Rs. 500,000 | 5% |
| Income between Rs. 500,001 – Rs. 10,00,000 | 20% |
| Income above Rs. 10,00,000 | 30% |
Income Tax Slabs for Senior Citizens (Age 80 years or more)
| Income Slab | Rate of Income Tax |
| Income upto Rs. 5,00,000 | No Tax |
| Income between Rs. 500,001 – Rs. 10,00,000 | 20% |
| Income above Rs. 10,00,000 | 30% |
Surcharge
- 10% surcharge is applicable on income tax where the total income exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore.
- 15% surcharge is applicable on income tax where the total income exceeds Rs. 1 crore.
Cess
- 4% Health and Education cess is applicable on the income tax and applicable surcharge.
Tax rebate under Section 87A
- For individuals whose income is equal to or less than Rs 3.5 lakh, a tax rebate of Rs. 2,500 or 100% of income tax (whichever is lower) is available under section 87A.
What is a Financial Year (FY)?
The year in which the income is earned is known as financial year. It starts from April 1 and ends on March 31 of the following year.
What is an Assessment Year (AY)?
The year following the financial year in which income is assessed is known as assessment year. It starts from April 1 and ends on March 31, immediately succeeding a financial year.
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Income Tax Slabs for FY 2018-19 (AY 2019-20)
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