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Taxable Income

Taxable Income in India

Taxable income is the income of an individual or organization, minus any allowable tax deductions. It is the amount of income an entity makes every year upon which the government levies taxes. In simpler words, it is the amount of one’s income which is subject to income tax. This can include salaries, wages, commissions, bonuses and tips, among others. Knowledge of one's total taxable income is important as it helps the individual easily determine the final tax payable or refundable by applying the applicable tax rates and then deducting the taxes already paid.

In India, taxable income is imposed on individuals including Hindu Undivided Families (HUFs), firms, companies, body of individuals, local authority and any other artificial judicial person. How much is levied will differ depending on the income earned. Taxes relating to income is governed by Indian Income Tax Act, 1961. It forms one of the main sources of funding for the public services in the nation.

Calculation of Taxable Income

Ascertaining taxable income is rather simple and hassle free. To assess the amount of tax to be paid, an entity has to total up all the income received and the tax liability is then reduced through deductions and exemptions available on various investments under the relevant sections.

The official website of the Income Tax Department has an income and tax calculator which is available to everyone. Entities can make use of the tax calculator by entering a few details to calculate their taxable income. Some of the details to be entered in the calculator include Assessment year, Taxpayer, Residential status, Income from salary, Income from house property, Capital gains, Income from other sources, Profits and gains of business or profession, Agricultural income and Deductions.

Taxable Income - Examples

A few examples of taxable income have been listed below:

  • Salary

  • Wages

  • Bonus

  • Interest and dividends

  • Business income or self-employment income

  • Pensions

  • Employee bonuses

  • Estate and trust income

  • Gains from sale of property or securities

  • Gambling winnings

  • Severance pay

  • Lottery

  • Tips and gratuities

  • Alimony

  • Prizes

  • Tips and gratuities

  • Taxable scholarships and grants

  • Rents (gross rent)

  • Royalties and license receipts

Taxable Income Slab Rates:

Listed below are the income tax slab rates for FY 2018-19 and FY 2017-18:

FY 2018-19

Income Tax Slab - Individuals and HUF (Less Than 60 Years Old) for FY 2018-19

Income Tax SlabTax RateHealth and Education Cess
Income up to Rs. 2,50,000No tax-
Income from Rs. 2,50,000 – Rs. 5,00,0005%4% of Income Tax
Income from Rs. 5,00,000 – Rs. 10,00,00020%4% of Income Tax
Income more than Rs. 10,00,00030%4% of Income Tax

Note

Surcharge: 10% of income tax should total income surpass Rs. 50 lakhs up to Rs. 1 crore.

Surcharge: 15% of income tax should the total income surpass Rs. 1 crore.

Income Tax Slab - Senior Citizens (60 Years Old or More but Less than 80 Years Old) for FY 2018-19

Income Tax SlabTax RateHealth and Education Cess
Income up to Rs. 3,00,000No tax-
Income from Rs. 3,00,000 – Rs. 5,00,0005%4% of Income Tax
Income from Rs. 5,00,000 – Rs. 10,00,00020%4% of Income Tax
Income more than Rs. 10,00,00030%4% of Income Tax

Note

Surcharge: 10% of income tax should total income surpass Rs. 50 lakhs up to Rs. 1 crore.

Surcharge: 15% of income tax should total income surpass Rs. 1 crore.

Income Tax Slab - Senior Citizens (80 Years Old or More) for FY 2018-19

Income Tax Slab Tax RateHealth and Education Cess
Income up to Rs. 5,00,000No tax-
Income from Rs. 5,00,000 – Rs. 10,00,00020%4% of Income Tax
Income more than Rs. 10,00,00030%4% of Income Tax

Note Surcharge: 10% of income tax should total income surpass Rs. 50 lakhs up to Rs. 1 crore.

Surcharge: 15% of income tax should total income surpass Rs. 1 crore.

Income Tax Slab - Domestic Companies for FY 2018-19

TurnoverTax Rate
Gross turnover up to Rs. 250 crores in the previous year25%
Gross turnover of more than Rs. 250 crores in the previous year29%

Besides this, cess and surcharge levied are as follows:

Cess: 4% of corporate tax

Surcharge: Taxable income is more than Rs. 1 crore but less than Rs. 10 crore - 7%

Taxable income is more than Rs. 10 crore - 12%

Income Tax Slab - Cooperative Societies

Income Tax SlabTax Rate
Up to Rs. 10,00010% of income
Rs. 10,000 to Rs. 20,00020% of income exceeding Rs. 10,000
Over Rs. 20,00030% of income exceeding Rs. 20,000

Besides this, cess and surcharge levied are as follows:

Surcharge: 12% of tax if total income is greater than Rs. 1 crore

Health and Education cess - 4% of tax (plus surcharge)

FY 2017-18

Income Tax Slab - Individuals and HUF (Less Than 60 Years Old) for FY 2017-18

Income Tax SlabTax RateHealth and Education Cess
Income up to Rs. 2,50,000No tax-
Income from Rs. 2,50,000 – Rs. 5,00,0005%3% of Income Tax
Income from Rs. 5,00,000 – Rs. 10,00,00020%3% of Income Tax
Income more than Rs. 10,00,00030%3% of Income Tax

Note Surcharge: 10% of income tax should total income surpass Rs. 50 lakhs up to Rs. 1 crore.

Surcharge: 15% of income tax should the total income surpass Rs. 1 crore.

Income Tax Slab - Senior Citizens (60 Years Old or More but Less than 80 Years Old) for FY 2017-18

Income Tax SlabTax RateHealth and Education Cess
Income up to Rs. 3,00,000No tax-
Income from Rs. 3,00,000 – Rs. 5,00,0005%3% of Income Tax
Income from Rs. 5,00,000 – Rs. 10,00,00020%3% of Income Tax
Income more than Rs. 10,00,00030%3% of Income Tax

Note Surcharge: 10% of income tax should total income surpass Rs. 50 lakhs up to Rs. 1 crore.

Surcharge: 15% of income tax should total income surpass Rs. 1 crore.

Income Tax Slab - Senior Citizens (80 Years Old or More) for FY 2017-18

Income Tax SlabTax RateHealth and Education Cess
Income up to Rs. 5,00,000No tax-
Income from Rs. 5,00,000 – Rs. 10,00,00020%3% of Income Tax
Income more than Rs. 10,00,00030%3% of Income Tax

Note Surcharge: 10% of income tax should total income surpass Rs. 50 lakhs up to Rs. 1 crore.

Surcharge: 15% of income tax should total income surpass Rs. 1 crore.

Income Tax Slab - Domestic Companies for FY 2017-18

TurnoverTax Rate
Gross turnover up to Rs. 50 crores in the previous year25%
Gross turnover of more than Rs. 50 crores in the previous year30%

Besides this, cess and surcharge levied are as follows:

Cess: 4% of corporate tax

Surcharge: Taxable income is more than Rs. 1 crore but less than Rs. 10 crore - 7%

Taxable income is more than Rs. 10 crore - 12%

Income Tax Slab - Cooperative Societies

Income Tax SlabTax Rate
Up to Rs. 10,00010% of income
Rs. 10,000 to Rs. 20,00020% of income exceeding Rs. 10,000
Over Rs. 20,00030% of income exceeding Rs. 20,000

Besides this, cess and surcharge levied are as follows:

Surcharge: 12% of tax if total income is greater than Rs. 1 crore

Health and Education cess: 3% of tax (plus surcharge)

Frequently Asked Questions

What is considered as taxable income?

Taxable income is the amount of income an entity makes every year upon which the government levies taxes. This can include salaries, bonuses, wages, commissions and tips, among others.

What types of income are taxable?

Some examples of taxable income are:

  • Salary
  • Wages
  • Bonus
  • Interest and dividends
  • Business income or self-employment income
  • Pensions
  • Employee bonuses
  • Estate and trust income
  • Gains from sale of property or securities
  • Gambling winnings
  • Severance pay
  • Lottery
  • Tips and gratuities
  • Alimony
  • Prizes
  • Tips and gratuities
  • Taxable scholarships and grants
  • Rents (gross rent)
  • Royalties and license receipts

What kind of income is not taxable?

The following kinds of income are not taxable:

  • Interest received on savings account (up to Rs. 10,000)
  • Agricultural income
  • Gift of up to Rs. 50,000
  • Income received through a will or inheritance

Is gratuity taxable income?

In case of gratuity, the least of the following three is tax exempt:

  • Last salary (Basic + Dearness Allowance) number of years of employment 15/26
  • Rs. 20 lakhs (this has been increased from Rs. 10 lakhs as per a recent amendment)
  • Gratuity that is actually received

How much income is tax free in India?

This comes down to the kind of income earned, age of the assesse, and in the case of claiming tax deduction, the kind of investments made. This will decide how much tax is exempt. Income like that of interest received on savings account and gift received is tax free up to the limit of Rs. 10,000 and Rs. 50,000, respectively.

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