Income tax rates for 2016-17 in India
Last Updated : March 17, 2017, 12:51 p.m.
No changes have been made to the existing income tax slab rates for Financial year 2016-17 in the recent Budget announced by our Honorable Finance Minister. However, there has been changes in surcharge, marginal relief and rebate of income tax. Thus, it becomes important to discuss the overall impact of the tax rates.
Following are the income tax rates for Financial Year 2016-17 (Assessment Year 2017-18):
1. Individual taxpayers:
| Particulars | Tax rates |
|---|---|
| Where the taxable income does not exceed INR 250,000 | NIL |
| Where the taxable income exceeds INR 250,000 but does not exceed INR 500,000 | 10% of the amount by which the taxable income exceeds INR 250,000 |
| Where the taxable income exceeds INR 500,000 but does not exceed INR 10,00,000 | INR 25,000 + 20% of the amount by which the taxable income exceeds INR 500,000 |
| Where the total income exceeds INR 10,00,000 | INR 125,000 + 30% of the amount by which the taxable income exceeds INR 10,00,000 |
| Surcharge of 15% of the income tax, where taxable income is more than INR 1 crore* | |
| Education cess of 3% of the total of income tax and surcharge, if applicable |
2. Senior citizens more than 60 years and less than 80 years
| Particulars | Tax rates |
|---|---|
| Where the taxable income does not exceed INR 300,000 | NIL |
| Where the taxable income exceeds INR 300,000 but does not exceed INR 500,000 | 10% of the amount by which the taxable income exceeds INR 300,000 |
| Where the taxable income exceeds INR 500,000 but does not exceed INR 10,00,000 | INR 20,000 + 20% of the amount by which the taxable income exceeds INR 500,000 |
| Where the total income exceeds INR 10,00,000 | INR 120,000 + 30% of the amount by which the taxable income exceeds INR 10,00,000 |
| Surcharge of 15% of the income tax, where taxable income is more than INR 1 crore* | |
| Education cess of 3% of the total of income tax and surcharge, if applicable |
3 Super senior citizens above 80 years
| Particulars | Tax rates |
|---|---|
| Where the taxable income does not exceed INR 500,000 | NIL |
| Where the taxable income exceeds INR 500,000 but does not exceed INR 10,00,000 | 20% of the amount by which the taxable income exceeds INR 500,000 |
| Where the total income exceeds INR 10,00,000 | INR 100,000 + 30% of the amount by which the taxable income exceeds INR 10,00,000 |
| Surcharge of 15% of the income tax, where taxable income is more than INR 1 crore* | |
| Education cess of 3% of the total of income tax and surcharge, if applicable |
However, it is important to keep in mind that the surcharge shall be subject to marginal relief.
Marginal relief
Marginal relief is given to a taxpayer who is liable to pay the surcharge.
According to the relief, in case the total income of an individual, Hindu Undivided Family (HUF), Local Authority and Firm, exceeds rupees 1 crore, then the aggregate of income tax and surcharge shall be restricted to:
(Tax on rupees 1 crore) + (Total Income – rupees 1 crore)
For instance, in case of a resident individual, age below 60 years, calculation of tax liability and marginal relief shall be as under:
The aggregate of income tax and surcharge shall be restricted to:
(Tax on 1 crore) + (Total income – 1 crore)
Amount in INR
| Case | Total Income | Income tax | Surcharge | Total Income tax and surcharge | Restricted to |
|---|---|---|---|---|---|
| I | 10,000,000 | 2,825,000 | - | 2,825,000 | - |
| II | 10,100,000 | 2,855,000 | 428,250 | 3,283,250 | 2,925,000 |
| III | 10,200,000 | 2,885,000 | 432,750 | 3,317,750 | 3,025,000 |
| IV | 10,400,000 | 2,945,000 | 441,750 | 3,386,750 | 3,225,000 |
| V | 1,04,20,000 | 2,951,000 | 442,650 | 3,393,650 | 3,245,000 |
| VI | 10,500,000 | 2,975,000 | 446,250 | 3,421,250 | 3,325,000 |
| VII | 10,700,000 | 3,035,000 | 455,250 | 3,490,250 | No restriction |
For ease of understanding, I have described the calculation of Case II below:
Total Income = INR 101,00,000
| Particulars | Income Tax |
|---|---|
| On first 250,000 | NIL |
| 250,000 – 500,000 | 10% on 250,000 = 25,000 |
| 500,001 – 10,00,000 | 20% on 500,000 = 100,000 |
| More than 10, 00,000 | 30% on (101,00,000 – 10,00,000) = 27,30,000 |
| Income Tax | 28,55,000 |
| Surcharge | 428,250 |
| Total Income tax and surcharge | 32,83,250 |
| Marginal relief | |
| Income Tax on 1 crore | 28,25,000 |
| Total Income | 1 crore 100,000 |
| Total income tax restricted to | 29,25,000 |
Rebate on Income tax in case of certain individuals:
You can also claim a rebate of income tax under Section 87A if your total income for a financial year does not exceed rupees five lakhs. This rebate has been recently increased from rupees 3,000 to rupees 5,000.
Thus, if your total income is upto rupees 5 lakhs, you shall be entitled to a deduction from the income tax of an amount equal to 100% of such tax or rupees 5,000, whichever is less.
For instance, Mr. A, aged 50 years, earns a total income of rupees 275,000. In this case, his tax liability would be as follows:
| Particulars | Amount of Income Tax (INR) |
|---|---|
| Income Tax on 275,000 as per slab rate | 2,500 |
| Less- rebate | 2,500 |
| Net income tax payable | NIL |
4. Partnership Firm
Tax rate: A Partnership Firm (including LLPs) is taxable at the rate of 30%.
Surcharge: The amount of income tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. The surcharge will again be subject to marginal relief.
Education cess: The amount of income tax and surcharge, if applicable would be further increased by education cess and Secondary and Higher Education cess of 3%
5. Domestic Company
Tax rate:
A Domestic Company is taxable at the rate of 30%. The tax rate would be 29% if turnover or gross receipts of the company does not exceed 5 crore rupees.
Surcharge: The amount of income tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but does not exceed 10 crore rupees. If the total income exceeds 10 crore rupees, surcharge would be levied at higher rate of 12%. The surcharge will again be subject to marginal relief.
Education cess: The amount of income tax and surcharge, if applicable would be further increased by education cess and Secondary and Higher Education cess of 3%
6. Foreign Company
Tax rate:
A Foreign Company is taxable at a higher rate of 40%.
Surcharge: The amount of income tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but does not exceed 10 crore rupees. If the total income exceeds 10 crore rupees, surcharge would be levied at higher rate of 5%. The surcharge will again be subject to marginal relief.
Education cess: The amount of income tax and surcharge, if applicable would be further increased by education cess and Secondary and Higher Education cess of 3%