According to Union Budget 2010-11, a few changes have been made in Income Tax structure. Here is a glimpse to new Income Tax calculation procedure :
Learn how to calculate your Income Tax
Step I : Gross Income
Calculate your Annual Income. (Monthly Income * 12)
Step II : Donations
Calculate the total donations you have made towards various institutions in accordance to Income Tax Rules.
Step III : Savings
Calculate your total savings. This may include all the savings and investments mentioned in
Income Tax Saving Schemes Sections.
Step IV : Taxable Income
Follow the following rule to calculate your taxable income
Step I - ( Step II + Step III) = Taxable Income
Step V : Income Tax
When you have calculated your taxable income, refer to the following slabs to calculate your Income Tax accordingly. Choose the slab according to your income and calculate your Income tax.
Income tax slabs 2010-2011 (for Men) in India:
| Income Tax Slab (in Rs.) |
Tax |
| 0 to 1,60,000 |
No Tax |
| 1,60,001 to 5,00,000 |
10% |
| 5,00,001 to 8,00,000 |
20% |
| Above 8,00,000 |
30% |
Income tax slabs 2010-2011 (for Women) in India:
| Income Tax Slab (in Rs.) |
Tax |
| 0 to 1,90,000 |
No Tax |
| 1,90,001 to 5,00,000 |
10% |
| 5,00,001 to 8,00,000 |
20% |
| Above 8,00,000 |
30% |
Income tax slabs 2010-2011 (for Senior Citizens) in India:
| Income Tax Slab (in Rs.) |
Tax |
| 0 to 2,40,000 |
No Tax |
| 2,40,001 to 5,00,000 |
10% |
| 5,00,001 to 8,00,000 |
20% |
| Above 8,00,000 |
30% |
Step VI: Education Cess
Add 3 % of your taxable income as the Educational Cess to the Income Tax amount calculated in step V.
TAX CALCULATED
Example
Example 1: Mrs. Kuldeep is 35 year old and earning 8 lac annually. (Male)
Calculation
| Tax on Income up to 1,60,000 |
Nil |
| Tax on Income between 1,60,000-5,00,000 (@ 10%) |
34,000 |
| Tax on Income between 5,00,000-8,00,000 (@ 20%) |
60,000 |
| Total |
94,000 |
| Educational Cess(@ 3% of Total Tax) |
2,820 |
| Net Tax Payable |
96,820 |
Example 2: Mrs. Harminder Kaur is 32 year old and earning 12 lac annually. (Female)
Calculation
| Tax on Income up to 1,90,000 |
Nil |
| Tax on Income between 1,90,000-5,00,000 (@ 10%) |
31,000 |
| Tax on Income between 5,00,000-8,00,000 (@ 20%) |
60,000 |
| Tax on Income between 8,00,000- 12,00,000 (@30%) |
1,20,000 |
| Total |
2,11,000 |
| Educational Cess(@ 3% of Total Tax) |
6,330 |
| Net Tax Payable |
2,17,330 |
Example 3: Mrs. Rajesh is 67 years old and earning 8 lac annually. (Senior Citizen)
Calculation
| Tax on Income up to 2,40,000 |
Nil |
| Tax on Income between 2,40,000-5,00,000 (@ 10%) |
26,000 |
| Tax on Income between 5,00,000-8,00,000 (@ 20%) |
60,000 |
| Total |
86,000 |
| Educational Cess(@ 3% of Total Tax) |
2,580 |
| Net Tax Payable |
88,580 |
Glimpse of Direct Tax Code
Union government is determined to implement that Direct Tax Code (DTC) in India by April 1, 2011. The new DTC will replace the existing Income tax structure in India, leaving more money in the hands of people. Here are the main highlights of Direct Tax Code (DTC) :
- Tax Exemption limit for salaried persons - up to Rs. 2 lakh.
- Tax Exemption limit for senior citizen - up to Rs. 2.5 lakh.
- Tax on income between Rs. 2 to 5 lakhs - 10 %.
- Tax on income between Rs. 5 to 10 lakhs - 20%.
- Tax on income over Rs. 10 lakhs - 30%.
- Housing Loan exemption (retained) - Rs. 1.5 lakh.
- Corporate tax - 30% (including Cess, Surcharge.
- Capt Gains tax - unchanged.
- 20% MAT to be levied on book profits instead of gross assets.
