In this Article we updates about the normal tax rates applicable to different types of taxpayers. The tax rates discussed in this part are applicable for assessment year 2017-18 i.e. financial year 2016-17.
Normal tax rates applicable to an individual
The normal tax rates applicable to a resident individual will depend on the age of the individual. However, in case of a non-resident individual the tax rates will be same irrespective of his age. For the purpose of ascertainment of the applicable tax slab, an individual can be classified as follows:
Normal tax rates applicable to a resident individual below the age of 60 years i.e. born on or after 1.4.1957
Net income range | Income-tax rates | Education Cess | Secondary and higher Education Cess |
Up to Rs. 2,50,000 | Nil | Nil | Nil |
Rs. 2,50,000 – Rs. 5,00,000 | 10% of (total income minus Rs. 2,50,000) [*] | 2% of income-tax | 1% of income-tax |
Rs. 5,00,000 – Rs. 10,00,000 | Rs. 25,000 + 20% of (total income minus Rs. 5,00,000) | 2% of income-tax | 1% of income-tax |
Above Rs. 10,00,000 | Rs. 1,25,000 + 30% of (total income minus Rs. 10,00,000) | 2% of income-tax | 1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
[*] A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 5,000, whichever is less.
Normal tax rates applicable to a resident individual of the age of 60 years or above at any time during the year but below the age of 80 years i.e. born during 1.4.1937 to 31.3.1957
Net income range | Income-tax rates | Education Cess | Secondary and higher Education Cess |
Up to Rs. 3,00,000 | Nil | Nil | Nil |
Rs. 3,00,000 – Rs. 5,00,000 | 10% of (total income minus Rs. 3,00,000) [*] | 2% of income- tax | 1% of income-tax |
Rs. 5,00,000 – Rs. 10,00,000 | Rs. 20,000 + 20% of (total income minus Rs. 5,00,000) | 2% of income- tax | 1% of income-tax |
Above Rs. 10,00,000 | Rs. 1,20,000 + 30% of (total income minus Rs. 10,00,000) | 2% of income- tax | 1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT: In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
[*] A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 5,000, whichever is less.
Normal tax rates applicable to a resident individual of the age of 80 years or above at any time during the year i.e. born before 1.4.1937
Net income range | Income-tax rates | Education Cess | Secondary and higher Education |
Up to Rs. 5,00,000 | Nil | Nil | Nil |
Rs. 5,00,000 – Rs. 10,00,000 | 20% of (total income minus Rs. 5,00,000) | 2% of income- tax | 1% of income-tax |
Above Rs. 10,00,000 | Rs. 1,00,000 + 30% of (total income minus Rs. 10,00,000) | 2% of income- tax | 1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
Non-resident individual irrespective of age
Net income range | Income-tax rates | Education Cess | Secondary and higher Education |
Up to Rs. 2,50,000 | Nil | Nil | Nil |
Rs. 2,50,000 – Rs. 5,00,000 | 10% of (total income minus Rs. 2,00,000) [*] | 2% of income- tax | 1% of income-tax |
Rs. 5,00,000 – Rs. 10,00,000 | Rs. 25,000 + 20% of (total income minus Rs. 5,00,000) | 2% of income- tax | 1% of income-tax |
Above Rs. 10,00,000 | Rs. 1,25,000 + 30% of (total income minus Rs. 10,00,000) | 2% of income- tax | 1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
[*] Rebate under section 87A is available only to a resident individual (whose net income does not exceed Rs. 5,00,000), thus, no rebate is available to a non-resident individual.
Net income range | Income-tax rates | Education Cess | Secondary and higher Education Cess |
Up to Rs. 2,50,000 | Nil | Nil | Nil |
Rs. 2,50,000 – Rs. 5,00,000 | 10% of (total income minus Rs. 2,50,000) | 2% of income-tax | 1% of income-tax |
Rs. 5,00,000 – Rs. 10,00,000 | Rs. 25,000 + 20% of (total income minus Rs. 5,00,000) | 2% of income-tax | 1% of income-tax |
Above Rs. 10,00,000 | Rs. 1,25,000 + 30% of (total income minus Rs. 10,00,000) | 2% of income-tax | 1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” as per section 1 15JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
Normal tax rates applicable to every AOP/BOI/Artificial juridical person
Net income range | Income-tax rates | Education Cess | Secondary and higher Education Cess |
Up to Rs. 2,50,000 | Nil | Nil | Nil |
Rs. 2,50,000 – Rs. 5,00,000 | 10% of (total income minus Rs. 2,50,000) | 2% of income- tax | 1% of income-tax |
Rs. 5,00,000 – Rs. 10,00,000 | Rs. 25,000 + 20% of (total income minus Rs. 5,00,000) | 2% of income- tax | 1% of income-tax |
Above Rs. 10,00,000 | Rs. 1,25,000 + 30% of (total income minus Rs. 10,00,000) | 2% of income- tax | 1% of income-tax |
Surcharge : Surcharge is levied @ 15% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayers to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
Normal tax rates applicable to a firm
A firm is taxed at a flat rate of 30%. Apart from tax @ 30%, Education Cess is levied @ 2% of income-tax and Secondary and higher Education Cess is levied @ 1% of income-tax.
Surcharge : Surcharge is levied @ 12% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayers to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
A domestic company is taxed at a flat rate of 30%. However, tax rate is 29% where turnover or the gross receipt of the company in the previous year 2014-15 doesn’t exceed Rs. 5 crore. Apart from tax @ 30%, Education Cess is levied @ 2% of income-tax and Secondary and higher Education Cess is levied @ 1% of income-tax.
Surcharge : In addition to tax at above rate, surcharge is levied @ 7% on the amount of income-tax if net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 12% on the amount of income-tax if net income exceeds Rs. 10 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a company whose net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore, the amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
In case of a domestic company whose net income exceeds Rs. 10 crore, marginal relief is available from surcharge in such a manner that the amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax and surcharge on total income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore.
MAT : In the case of a corporate taxpayer to whom the provisions of Minimum Alternate Tax (MAT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “Book profit” computed as per section 1 15JB. For provisions relating to MAT refer tutorial on “MAT/AMT” in tutorial section.
Normal tax rates applicable to a foreign company
A foreign company is taxed at a flat rate of 40%. Apart from tax @ 40%, Education Cess is levied @ 2% of income-tax and Secondary and higher Education Cess is levied @ 1% of income-tax.
Surcharge : In addition to tax at above rate, surcharge is levied @ 2% on the amount of income-tax if net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 5% on the amount of income-tax if net income exceeds Rs. 10 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a foreign company whose net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore the amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
In case of a foreign company whose net income exceeds Rs. 10 crore, marginal relief is available from surcharge in such a manner that the amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax and surcharge on total income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore.
MAT : In the case of a corporate taxpayer to whom the provisions of Minimum Alternate Tax (MAT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “Book profit” as per section 11 5JB. For provisions relating to MAT refer tutorial on “MAT/AMT” in tutorial section.
Normal tax rates applicable to a Co-operative societies
Net income range | Rate of income-tax | ||
Up to Rs. 10,000 | 10% | ||
Rs. 10,000 – Rs. 20,000 | 20% | ||
Above Rs. 20,000 | 30% | ||
Apart from tax at above rate, Education Cess is levied @ 2% of income-tax and Secondary and higher Education Cess is levied @ 1% of income-tax.
Surcharge : Surcharge is levied @ 12% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having a net income exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.
Normal tax rates applicable to local authorities
A local authority is taxed at a flat rate of 30%. Apart from tax @ 30%, Education Cess is levied @ 2% of income-tax and Secondary and higher Education Cess is levied @ 1% of income-tax.
Surcharge : Surcharge is levied @ 12% on the amount of income-tax where net income exceeds Rs. 1 crore. In a case where surcharge is levied, EC of 2% and SHEC of 1% will be levied on the amount of income-tax plus surcharge.
However, marginal relief is available from surcharge in such a manner that in the case of a person having net income exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+EC+SHEC) of “adjusted total income” computed as per section 11 5JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.