Finance minister Mr. Arun Jaitley brought in the budget 2017 which was expected to bring about some relief to the salaried class, often called as common man. As adhering to expectations, there was indeed change in tax structure, even though it failed to bring some relaxation for higher middle class or corporates. Let’s look at the income tax slabs which will be applicable for FY 2017-18 (AY 2018-19).

For Individuals Below 60 Years

Income slab Tax rate
Up to Rs.2,50,000 Nil
Rs.2,50,000- Rs.5,00,000 5%
Rs.5,00,000-Rs.10,00,000 20%
Above Rs.10,00,000 30%
Above rates are subject to education cess @2% and higher education cess @ 1% and surcharge at prescribed percentage.  

For Senior Citizens (above 60Years But Till 80Years)

Income slab Tax rate
Up to Rs.3,00,000 Nil
Rs.3,00,000- Rs.5,00,000 5%
Rs.5,00,000-Rs.10,00,000 20%
Above Rs.10,00,000 30%
Above rates are subject to education cess @2% and higher education cess @ 1% and surcharge at prescribed percentage.

For Super Senior Citizens (above 80years)

Income slab Tax rate
Up to Rs.5,00,000 Nil
Rs.5,00,000-Rs.10,00,000 20%
Above Rs.10,00,000 30%
Above rates are subject to education cess @2% and higher education cess @ 1% and surcharge at prescribed percentage.

Amendments Which You Should Look Out For

Change In Lowest Income Slab

Budget 2017 amended the income tax rate for lowest income tax slab of Rs.2,50,000- Rs.5,00,000 from 10% to drastic 5% rate. This has reduced the tax by 50% for the very first slab. This amendment will affect every taxpayer other than super senior citizens (since the first taxable income slab starts from threshold of Rs.5,00,000).

Due to this rate cut, every tax payer especially, the one who earns above the slab (i.e. earning taxable income up to Rs.5,00,000) will make most of the tax saving. So, now the person who has taxable earnings of Rs.5,00,000 and above will save tax outflow of Rs.12500.

Change In Rebate Under Section 87A   

Rebate under section 87A has been reduced to Rs.2,500 from Rs.5,000 for income slab of up to Rs.3,50,000. Thus, taxable income up to Rs.3,00,000 will be totally exempt as below

Tax up to Rs.2,50,000 – nil

Tax for income slab of Rs.2,50,000- Rs.3,00,000 – 5% X (Rs.3,00,000- Rs.2,50,000) = Rs.2,500

Rebate available – Rs.2,500

So, Tax payable = Tax payable – rebate = Rs.2,500 – Rs.2,500 = nil

Surcharge Applicability Extended To Lower Income Slab

Budget 2017 has levied surcharge on the income slab of Rs.50 lakhs – Rs.1 crore @ 10%. Existing surcharge @15% above income of Rs.1 crores will prevail; however, this additional 10% surcharge will add to the tax outflow of the taxpayers in the highest tax bracket (income above Rs.10 lakhs

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