Rates of Income tax for FY 2018-19 (Assessment year 2019-20)

Income Tax Income tax Rates Updates

Rates of Income tax for Financial year 2018-19 i.e. Assessment year 2019-20

(A) Income tax Rates for Individual, HUF, AOP & BOIs

  • Income tax rates for resident senior citizen who is 60 years or more at any time during the previous year but less than 80 year on the last day of the previous year (born between 02-04-1939 to 01-04-1959)
Range of Net income (Rs.) Income tax rates Surcharge Health & Edu. Cess
 Upto 300000/-  nil  nil  nil
300000/- to 500000/-  5% of (Total income less Rs. 300000/-)  nil  4% of income tax
 500000/- to 1000000/- Rs. 10000 + 20% of (Total income less Rs. 500000/-)  nil  4% of income tax
 1000000/- to 5000000/-  Rs. 110000 + 30% of (Total income less Rs. 1000000/-)  nil  4% of income tax
 5000000/- to 10000000/-  Rs. 1310000 + 30% of (Total income less Rs. 5000000/-)  10% of income tax  4% of income tax & surcharge
 above Rs. 10000000/-  Rs. 2810000 + 30% of (Total income less Rs. 10000000/-)  15% of income tax   4% of income tax & surcharge
  • Income tax rates for resident super senior citizen who is 80 years or more at any time during the previous year (born before 02-04-1939)
Range of Net income (Rs.) Income tax rates Surcharge Health & Edu. Cess
 Upto 500000/-  nil  nil  nil
 500000/- to 1000000/- 20% of (Total income less Rs. 500000/-)  nil  4% of income tax
 1000000/- to 5000000/-  Rs. 100000 + 30% of (Total income less Rs. 1000000/-)  nil  4% of income tax
 5000000/- to 10000000/-  Rs. 1300000 + 30% of (Total income less Rs. 5000000/-)  10% of income tax  4% of income tax & surcharge
 above Rs. 10000000/-  Rs. 2800000 + 30% of (Total income less Rs. 10000000/-)  15% of income tax   4% of income tax & surcharge
  • Income tax rates for other resident individual (born after 01-04-1959), any non-resident individual, HUF, BOI, AOP, Artificial judicial perosn
Range of Net income (Rs.) Income tax rates Surcharge Health & Edu. Cess
 Upto 250000/-  nil  nil  nil
250000/- to 500000/-  5% of (Total income less Rs. 250000/-)  nil  4% of income tax
 500000/- to 1000000/- Rs. 12500 + 20% of (Total income less Rs. 500000/-)  nil  4% of income tax
 1000000/- to 5000000/-  Rs. 112500 + 30% of (Total income less Rs. 1000000/-)  nil  4% of income tax
 5000000/- to 10000000/-  Rs. 1312500 + 30% of (Total income less Rs. 5000000/-)  10% of income tax  4% of income tax & surcharge
 above Rs. 10000000/-  Rs. 2812500 + 30% of (Total income less Rs. 10000000/-)  15% of income tax   4% of income tax & surcharge

Note:-

(1)Rebate under section 87A, A resident individual whose net income does not exceed Rs. 350000/- can avail rebate u/s 87A which is an amount equal to 100% of income tax or Rs. 2500/- whichever is less. Rebate u/s 87A is deductible from income tax before calculating education cess.

(2) If Net income exceeds Rs. 50 lakhs but does not exceeds Rs. 1 crore then surcharge @ 10% is applicable but if net income exceeds Rs. 1 crore then surcharge is applicable at the rate of 15% of income tax. Further surcharge is subject to marginal relief i.e amount payable as income tax & surcharge shall not exceed the total amount payable as income tax on total income of Rs. 50 Lakhs (or 1 Crore as the case may be) by more than the amount of income that exceeds Rs. 50 Lakhs ( or 1 crore as the case may be).

(3) The existing 3% education cess is replaced by a 4% “Health and Education Cess” to be levied on the tax payable. Surcharge is calculated on income tax before adding HEC. But HEC are calculated on income tax including surcharge if any.

(4) Alternate minimum tax: Tax payable cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC. (Not applicable to those individual, HUF, AOP, BOI & AJP whose adjusted total income does not exceed Rs. 20 Lakhs AND who are not claiming any deduction u/s 10AA/ 35AD/ Chapter VI heading C-“deduction for certain incomes”.)

(5) A standard deduction of `40,000/- is allowed from salary income but this is in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. However, the transport allowance at enhanced rate shall continue to be available to differently abled persons.

(B) Income tax Rates for Firms

  • For FY 2018-19, Income of Firms is taxable at the rate of 30%.
  • Business under Proprietorship is not covered here, Income from Proprietorship is taxable in the hand of Proprietor in his Individual return under the head “PGBP – Profits & Gains of Business or Profession” .
  • Surcharge:- In case income of firm exceeds Rs. 1 crore then surcharge @ 12% of income tax is applicable which is subject to marginal relief ie. The amount payable as income tax & 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.
  • Health & Edu. Cess:The existing 3% education cess is replaced by a 4% “Health and Education Cess” to be levied on the tax payable.
  • Alternate minimum tax: Tax payable by firm cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC.

(C) Income tax Rates for Companies

  • Rate of income tax For FY 2018-19 for companies is as given below:
Company Category Tax Rate
Domestic Company (1) Domestic Company:-where total turnover or gross receipts during financial year 2016-17 does not exceed Rs. 250 crore. 25%
  (2) any other domestic Company 30%
Foreign Company (1) Royalty received form Government or Indian concern in pursuance of an agreement made by it after 31st march 1961 but before 1st April 1976 or fee for rendering technical services in pursuance of an agreement made by it after 29th February 1964 but before 1st April 1976 And where such agreement has been approved by Central Government. 50%
  (2) Other Income 40%
  • Surcharge: If net income of a company does not exceed Rs. 1 crore, surcharge will be nil . For other cases, rate of Surcharge to be calculated on Income tax are given below:-(Surcharges are subject to marginal Relief.)
Company If net income is more than Rs. 1 crore but not more than Rs. 10 crore. If net income is more than Rs. 10 crore.
Domestic Company  7%  12%
 Foreign Company  2%  5%
  • HEC:The existing 3% education cess is replaced by a 4% “Health and Education Cess” to be levied on the tax & surcharge.
  • A company is required to pay higher of the tax calculated under the following two provisions:
    1. Tax liability as per the Normal provisions of income tax act(as stated above)
    2. Tax liability as per the MAT provisions given in Sec 115JB(18.5 % of Book Profits Plus 3 % edu cess plus surcharge if applicable)

(D) Income tax Rates for Co-operative Societies

  • Rates of income tax For FY 2018-19 for co-operative societies are as given below:
Net Income Range Rate of Tax
Upto Rs. 10000/- 10%
Rs. 10000 to Rs. 20000 20%
Above Rs. 20000/- 30%
  • Surcharge:- In case income of co-operative society exceeds Rs. 1 crore then surcharge @ 12% of income tax is applicable which is subject to marginal relief ie. The amount payable as income tax & 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.
  • EC & SHEC:The existing 3% education cess is replaced by a 4% “Health and Education Cess” to be levied on the tax & surcharge.
  • Alternate minimum tax: Tax payable by co-operative society cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC.

(E) Income tax Rates for Local Authorities

  • For FY 2018-19, Income of Local Authority is taxable at the rate of 30%.
  • Surcharge:- In case income exceeds Rs. 1 crore then surcharge @ 12% of income tax is applicable which is subject to marginal relief ie. The amount payable as income tax & 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.
  • Health & Edu. Cess:The existing 3% education cess is replaced by a 4% “Health and Education Cess” to be levied on the tax & surcharge.
  • Alternate minimum tax: Tax payable cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC.

(F) Income taxable at rate specified in Income tax Act. (Income taxable at special rates)

Following given are list of some important cases of income which is taxable at rates specified in Income-tax Act and not at rates mentioned above:-

Section Income Income tax rate
111A Short term capital Gain (where STT applicable) 15%
112 Long Term Capital Gain 10% / 20%
115BB Winning from lotteries, Crossword puzzles, race horse (excluding activity of owning & maintaining race horses), card games and other games of gambling 30%
115B Profits & gains of Life insurance business 12.5%

 

Some important changes in for FY 2018-19:-

 

  • Benefit of exemption for withdrawal up to 40% from National Pension System Trust (NPS) is extended to all subscribers and not only to employees.
  • Deduction for health insurance premium shall be allowed proportionately over the years for which the benefit of health insurance is available.
  • No expenditure or allowance or set off of any loss shall be allowed in respect of undisclosed income determined by the Assessing Officer under section 115BBE of the Act.
  • Incorporation date for a start-up for availing benefit under section 80-IAC of the Act is extended to 31st March, 2021 from 31st March, 2019
  • 100% deduction to Farmer Producer Companies having annual turnover up to 100 crores in respect of their profit derived from agricultural activities for a period of five years from financial year 2018-19. At present, hundred per cent deduction is allowed in respect of profit of co-operative societies which provide assistance to its members engaged in primary agricultural activities.
  • Benefit of employment period of 150 days for taking 30% additional Deduction U/s 80 JJAA has been made applicable to footwear and leather industries. First year of employment is made free from condition of minimum period.
  • No adjustment shall be made in calculation of Capital gain on immovable property w.r.t. circle rate if circle rate value does not exceed 5% of the consideration.
  • In the Union Budget, 2017, corporate tax rate was reduced to 25% for companies whose turnover was less than `50 crore in financial year 2015-16. In Budget 2018, the benefit of this reduced rate of 25% also to companies who have reported turnover up to`250 crore in the financial year 2016-17.
  • A standard deduction of `40,000/- is allowed from salary income but this is in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. However, the transport allowance at enhanced rate shall continue to be available to differently abled persons.
  • Withdrawn of Exemption of Transport allowance of Rs. 1600/- p.m.
  • Withdrawn of Exemption of Rs. 15000/- regarding medical reimbursement .Exemption of interest income on deposits with banks and post offices to be increased from 10,000/- to `50,000/- and TDS shall not be required to be deducted on such income, under section 194A. This benefit shall be available also for interest from all fixed deposits schemes and recurring deposit schemes.
  • Limit of deduction for health insurance premium and/ or medical expenditure increased from `30,000/- to `50,000/-, under section 80D.
  • Limit of deduction for medical expenditure in respect of certain critical illness from, 60,000/- in case of senior citizens and from `80,000/- in case of very senior citizens, to 1 lakh in respect of all senior citizens, under section 80DDB.
  • Pradhan Mantri Vaya Vandana Yojana extended up to March, 2020 under which an assured return of 8% is given by Life Insurance Corporation of India. The existing limit on investment of `5 lakh per senior citizen under this scheme is also being enhanced to `15 lakh.
  • Capital gain tax exempted on transfer of derivatives and certain securities by non-residents in stock exchanges located in. Further, non-corporate taxpayers operating in IFSC shall be charged Alternate Minimum Tax (AMT) at concessional rate of 9% at par with Minimum Alternate Tax (MAT) applicable for corporates.
  • Payments exceeding `10,000/- in cash made by trusts and such institutions shall be disallowed.
  • Long term capital gains ( arising from transfer of listed equity shares, units of equity oriented fund and unit of a business trust) exceeding `1 lakh shall be taxed at the rate of 10% without allowing the benefit of any indexation. However, all gains up to 31st January, 2018 will be grandfathered. For example, if an equity share is purchased six months before 31st January, 2018 at `100/- and the highest price quoted on 31st January, 2018 in respect of this share is `120/-,there will be no tax on the gain of `20/- if this share is sold after one year from the date of purchase. However, any gain in excess of `20 earned after 31st January, 2018 will be taxed at 10% if this share is sold after 31st July, 2018. The gains from equity share held up to one year will remain short term capital gain and will continue to be taxed at the rate of 15%.
  • Tax imposed on distributed income by equity oriented mutual fund at the rate of 10%.
  • The existing 3% education cess will be replaced by a 4%  “Health and Education Cess” to be levied on the tax payable.
  • New scheme for income tax assessment will be launched where the assessment will be done in electronic mode which will almost eliminate person to person contact leading to greater efficiency and transparency.
  • It is proposed to mandate that in order to avail benefit of any deduction under Chapter VIA-C, the persons have to file return within due date specified under section 139(1) of the Act.

 

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