Direct Tax in India
Updated: Aug 20, 2021
Income tax is a direct tax collected by the Central Government and is levied on all income other than agricultural income on a person liable to pay such tax. The income tax on agricultural income is a state matter and only state governments can tax a person on agricultural income.
The Income Tax Act, 1961, is the law governing tax on income of an assessee (person who is liable to pay tax). This legislation comprehensively defines different assessees, the rate of tax applicable to each one, and other requirements.
In terms of income tax law, a person liable to pay tax includes the common citizen, an association of people, companies (domestic and foreign companies), firms, and LLPs.
The income of people and companies is computed under different heads and different types of deductions under the income tax law are applicable to different entities.
The heads of income envisaged under income tax law are:
Income from salary
Income from house property
Income from business and profession
Income from capital gain
Income from other sources
Tax rates for the assessment year 2017-18 Income Tax - Slab for Individual Tax Payers & HUF
Income SlabTax Rate
Income up to Rs 2,50,000* : No tax
Income from Rs 2,50,000 - Rs 5,00,000 : 5%
Income from Rs 5,00,000 10,00,000 : 20%
Income more than Rs 10,00,000 : 30%
Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh up to Rs.1 crore. Surcharge: 15% of income tax, where the total income exceeds Rs.1 crore.
Cess: 3% on total of income tax + surcharge.