The financial year is about to end. So, you have to get your tax papers in order. Many people must already have completed their tax-saving investments for next year. Others are perhaps just starting to calculate their income tax exemption limits. Whatever stage you may be in, it makes sense to check the income tax slabs. This will help you plan better for your income tax deductions. Besides, now that Budget 2017 is out, you can start planning for next year as well.

Know your taxable income

To figure out your income tax slab, you need to calculate your taxable income for the year. How do you do that?

  • Salaried persons: Your salary slips and Form 16 outline your yearly income from your salary. Add in any bonus that you got. From this, subtract the exempted portions of house rent allowance (HRA), medical reimbursements, and transport allowance.
  • Businesspersons or Professionals: Use your profit-and-loss statement or balance sheet to determine your net profit. Deduct the expenditures that are eligible for exemptions under the Income Tax Act.
  • Other Income: You may also have other sources of income. These may include:
    • Rent from property
    • Income from capital gains
    • Interest income
    • Dividend income
    • Gifts

Now, do you have any tax-saving investments? Does any other income tax exemption apply to you? Deduct that amount to get your taxable income.

Income tax slab for AY 2016–17 for female and male taxpayers

Income tax slabs for the general public differ according to age. If your age is under 60, these rates apply to you. You could be a resident or a non-resident Indian.

Existing income tax slabs

Income

Income Tax Payable

Up to Rs 2.5 lakh

Nil

Rs 2.5 lakh to Rs 5 lakh

10% of (Total income–Rs 2.5 lakh)

Rs 5 lakh to Rs 10 lakh

Rs 25,000 + 20% of (Total income–Rs 5 lakh)

Above Rs 10 lakh

Rs 1.25 lakh + 30% of (Total income–Rs 10 lakh)


Income tax slabs for 2017–18 for female and male taxpayers

Income

Income Tax Payable

Up to Rs 2.5 lakh

Nil

Rs 2.5 lakh to Rs 5 lakh

5% of (Total income–Rs 2.5 lakh)

Rs 5 lakh to Rs 10 lakh

Rs 12,500 + 20% of (Total income–Rs 5 lakh)

Above Rs 10 lakh

Rs 1.125 lakh + 30% of (Total income–Rs 10 lakh)

Income tax slab for AY 2016–17 for senior citizens

These rates apply to resident citizens aged between 60 and 80.

Income

Income Tax Payable

Up to Rs 3 lakh

Nil

Rs 3 lakh to Rs 5 lakh

10% of (Total income–Rs 3 lakh)

Rs 5 lakh to Rs 10 lakh

Rs 20,000 + 20% of (Total income–Rs 5 lakh)

Above Rs 10 lakh

Rs 1.20 lakh + 30% of (Total income–Rs 10 lakh)

Income tax slab for AY 2017–18 for senior citizens

Income

Income Tax Payable

Up to Rs 3 lakh

Nil

Rs 3 lakh to Rs 5 lakh

5% of (Total income–Rs 3 lakh)

Rs 5 lakh to Rs 10 lakh

Rs 10,000 + 20% of (Total income–Rs 5 lakh)

Above Rs 10 lakh

Rs 1.1 lakh + 30% of (Total income–Rs 10 lakh)

Income tax for AY 2016–17 for very senior citizens

The rates are relaxed further for residents aged above 80.

Income

Income Tax Payable

Up to Rs 5 lakh

Nil

Rs 5 lakh to Rs 10 lakh

20% of (Total income–Rs 5 lakh)

Above Rs 10 lakh

Rs 1 lakh + 30% of (Total income–Rs 10 lakh)

The income tax slabs for AY 2017–18 for very senior citizens remain unchanged.

An example of how the slabs work:

Shahnaz is a salaried employee. In AY 2016–17, she earned Rs 7.5 lakh.

She also made investments worth Rs 2 lakh. Under Section 80C, Shahnaz can claim income tax deduction up to Rs 1.5 lakh. This brings her taxable income down to Rs 6 lakh. This places her in the 20% tax slab.

Her net tax payable will be:

Rs 25,000 + 20% of (Rs 6 lakh–Rs 5 lakh) = Rs 45,000

Her father, aged 63, is a freelance management consultant. He earned Rs 4.5 lakh last year.

After tax exemptions, his taxable income drops to Rs 3.3 lakh. This places him in the 10% tax slab.

His net tax payable is:

10% of (Rs 3.3 lakh–Rs 3 lakh) = Rs 3,000

The bottom line

So, know your income tax slab and figure out your tax liability early on. Think of income tax as a yearly expenditure. Work it into your budget. Then, you need not fear the taxman anymore.