Income Tax Slabs for FY 2016-17 / AY 2017-18

Income Tax Rate Chart / Income Tax Slabs as Applicable for Assessment Year 2017-18 / Financial Year 2016-17 for Individual, HUF, AOP, BOI, Partnership Firms, LLP and Companies.

Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the financial year 2016-2017.

The rates for deduction of income-tax at source from “Salaries” during the financial year 2016-2017 and also for computation of “advance tax” payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the financial year 2016-2017 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during the financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration, etc.

The salient features of the rates specified in the said Part III are indicated in the following paragraphs‑

1. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:-

(i)  The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:-

Income Slabs Tax Rates
i. Where the total income does not exceed Rs. 2,50,000/-. NIL
ii. Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. 10% of amount by which the total income exceeds Rs. 2,50,000/-
iii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. Rs. 25,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-.
iv. Where the total income exceeds Rs. 10,00,000/-. Rs. 1,25,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.

(ii)     In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—

Income Slabs Tax Rates
i. Where the total income does not exceed Rs. 3,00,000/-. NIL
ii. Where the total income exceeds Rs. 3,00,000/- but does not exceed Rs. 5,00,000/- 10% of the amount by which the total income exceeds Rs. 3,00,000/
iii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- Rs. 20,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-.
iv. Where the total income exceeds Rs. 10,00,000/- Rs. 120,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.

 

(iii)    in the case of every individual, being a resident in India, who is of the age of eighty years or more at anytime during the previous year,—

Income Slabs Tax Rates
i. Where the total income does not exceed Rs. 5,00,000/-. NIL
ii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- 20% of the amount by which the total income exceeds Rs. 5,00,000/-.
iii. Where the total income exceeds Rs. 10,00,000/- Rs. 100,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge at the rate of fifteen percent. of such income-tax in case of a person having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

2. Co-operative Societies

In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Bill. These rates will continue to be the same as those specified for financial year 2015-16.

The amount of income-tax shall be increased by a surcharge at the rate of twelve percent. of such income-tax in case of a co-operative society having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

3. Firms

In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for financial year 2015-1 6.

The amount of income-tax shall be increased by a surcharge at the rate of twelve percent. of such income-tax in case of a firm having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

4. Local authorities

The rate of income-tax in the case of every local authority is specified in Paragraph D of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the financial year 2015-16.

The amount of income-tax shall be increased by a surcharge at the rate of twelve percent. of such income-tax in case of a local authority having a total income exceeding one crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

5. Companies

The rates of income-tax in the case of companies are specified in Paragraph E of Part III of the First Schedule to the Bill. In case of domestic company, the rate of Income-tax shall be twenty nine per cent. of the total income if the total turnover or gross receipts of the company in the previous year 2014-15 does not exceed five crore rupees and in all other cases the rate of Income-tax shall be thirty per cent. of the total income.

In order to provide relief to newly setup domestic companies engaged solely in the business of manufacture or production of article or thing, it is proposed to amend the Act by way of insertion of new section 115BA, to provide that the income-tax payable in respect of the total income of a domestic company for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2017 shall be computed @ 25% at the option of the company, if, –

  • the company has been setup and registered on or after 1st day of March, 2016;
  • the company is engaged in the business of manufacture or production of any article or thing and is not engaged in any other business;
  • the company while computing its total income has not claimed any benefit under section 10AA, benefit of accelerated depreciation, benefit of additional depreciation, investment allowance, expenditure on scientific research and any deduction in respect of certain income under Part-C of Chapter-VI-A other than the provisions of section 80JJAA; and
  • the option is furnished in the prescribed manner before the due date of furnishing of income.

In the case of a company other than a domestic company, the rates of tax are the same as those specified for the financial year 2015-16.

Surcharge at the rate of seven per cent shall be levied in case of a domestic company if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of twelve percent shall be levied if the total income of the domestic company exceeds ten crore rupees. In case of companies other than domestic companies, the existing surcharge of two per cent. shall continue to be levied if the total income exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of five percent shall continue to be levied if the total income of the company other than domestic company exceeds ten crore rupees.

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees but not exceeding ten crore rupees, shall not exceed the total amount payable as income-tax on a total income of one crore rupees, by more than the amount of income that exceeds one crore rupees. The total amount payable as income-tax and surcharge on total income exceeding ten crore rupees, shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees, by more than the amount of income that exceeds ten crore rupees.

In other cases (including sections 115-O, 1 15QA, 1 15R, 1 15TA or 1 15TD), the surcharge shall be levied at the rate of twelve percent.

For financial year 2016-2017, additional surcharge called the “Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of two per cent. and one per cent. respectively, on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such Cesses.

[Clause 2, 49 & First Schedule]

Clause 49 of Finance Bill 2016

Clause 49 of the Bill seeks to insert a new section 115BA in the Income-tax Act relating to tax on income of certain domestic companies.

Sub-section (1) of the proposed new section provides that the income-tax payable in respect of the total income of a person being

domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2017 shall, at the option of such person, be computed at the rate of twenty-five per cent., if the conditions contained in sub-section (2) of the said section are satisfied.

Sub-section (2) of the proposed new section provides that the conditions referred to in sub-section (1) are the following, namely:–

(a)    the company has been set up and registered on or after the 1st day of March, 2016;

(b)  the company is engaged in the business of manufacturing or production of any article or thing; and

(c) the total income of the company has been computed, –

(i)  without any deduction under the provisions of section 1 0AA or clause (iia) of sub-section (1) of section 32 or section 32AC or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub­section (1) or sub-section (2AA) or sub-section (2AB) of section 35 or section 35AC or section 35AD or section 35CCC or section 35CCD or under any provisions of Chapter VI-A under the heading “C.– Deductions in respect of certain incomes” other than the provisions of section 80JJAA;

(ii)   without set off of any loss carried forward from any earlier assessment year if such loss is attributable to any of the deductions referred to in sub-clause (i); and

(iii) depreciation under section 32, other than clause (iia) of sub-section (1) of the said section is determined in the manner as may be prescribed.

Sub-section (3) of the proposed new section provides that the loss referred to in sub-clause (ii) of clause (c) of sub-section (2) shall be deemed to have been already given full effect to and no further deduction for such loss shall be allowed for any subsequent year.

Sub-section (4) of the proposed new section provides that the option by the person referred to in sub-section (1) shall be exercised in the prescribed manner on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for the relevant previous year.

These amendments will take effect from 1st April, 2017 and will, accordingly, apply in relation the assessment year 2017-2018 and subsequent years.

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