As income tax is dependent on an individual’s capacity to pay it, different taxes are applied in various salary slabs that are updated every time – to – time by the government.
How to check income tax eligibility?
Currently, there’s really no tax on revenue up to Rs 2,50,000, five percent tax is imposed on tax liability between Rs 2,5 lakh and Rs 5 lakh, and 20 percent tax is imposed on income between Rs 5 lakh and Rs 10 lakh. For taxable income over Rs 10 lakh, the effective limit is 30%.
Four percent of healthcare and development cess is also paid on the tax payable. In addition, a 10 percent surcharge is imposed on incomes from Rs 50 lakh and Rs 1 crore, and then a 15 percent surcharge is imposed on incomes above Rs 1 crore.
Tax rebates (under section 87A) up to Rs 12,500 are granted to assesses with overall revenue after expenses up to Rs 5 lakh.
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However, the standard tax calculation would be implemented if the tax liability surpasses the Rs 5 lakh limit.
How is the tax rate in India computed?
The tax rate throughout India is analyzed in terms of the tax rate set by the government for both the assessment year (AY). For example, in the case of AY 2020-21 (FY 2019-20), the tax payments made may be calculated as follows:
Once the total income is defined, as applicable, the deductions for tax-saving investment funds, allowable expenses, donations, etc. shall be adjusted.
The major sections in which India ‘s income tax deductions are permitted involve up to Rs 1.5 lakh in sections 80C, 80CCD, 80CCD(1), 80CCD(2) and 80CCG combined; up to Rs 50,000 u / s 80CCD(1B); up to Rs 1 lakh u / s 80D and 80E, 80EE, 80 G, 80TTA.
Once the maximum amount of the eligible deduction has been deducted from the gross income, the sum of the tax liability has been calculated. The amount of income tax owed is calculated on the basis of taxable income.
|0 — 2,50,000||0||0|
|2,50,000 — 5,00,000||5||12500|
|10,00,000 – 40,00,000||30||9,00,000|
|Health & Education cess||4||40500|