Indian Income-tax levies tax on individual taxpayers based on a slab system. A slab system means different tax rates are prescribed for different ranges of income. Income tax has classified three categories of “individual “taxpayers such as:
Income tax slabs for individual aged below 60 years & HUF
Let’s understand this better with Examples
Imagine the annual salary of Mr.XYZ 25-year old individual, is ₹5 Lakhs. After the standard deduction and the income tax deductions under Section 80C (PPF & NPS) and Section 10 (13A) (Exemption on HRA) of the Income Tax Act, 1961, his taxable income stands to be ₹2.78 Lakhs. As the income over ₹2.5 Lakhs is taxed at 5%, his total due tax comes to ₹1,400. As per Section 87A of the Income Tax Act, 1961, Mr.XYZ gets full tax rebate his annual income is up to ₹5 Lakhs.
Assume the yearly salary of Mrs.ABC, a 35-year old individual, is ₹10 Lakhs. After the deductions under Section 80C , Section 80D and Section 10 (13A) and the standard deductions, her taxable income stands to be ₹7 Lakhs. As income over ₹5 Lakhs is taxed at ₹12,500 + 20%, his total due tax comes to ₹52,500. Mrs.ABC will also be charged 4% Health & Education Cess which increases the tax amount to ₹54,600.
Similarly, in another instance, the annual salary of Mrs.UVW , a 40-year old
individual, is ₹15 Lakhs after the standard deduction and the deductions under Section 80C and Section 10 (13A) her taxable income comes to be ₹11.5 Lakhs as income over ₹10 Lakhs is taxed at ₹1,12,500 + 30%, her total due tax comes to ₹1,57,500. After adding the 4% Health & Education Cess, Mrs.UVW will have to pay the tax amount of ₹1,63,800.