How much tax does an individual pay per year
If you’ve recently started working, one of the most important things you should know about is taxation. Read this post to know how much income tax an individual pays to the Income Tax (IT) department every year.
It is with the tax money that the Government develops the nation, uplifts the society, improves infrastructure and introduces welfare initiatives.
But for people who have recently started working or about to get employed soon, a common concern is ‘How much tax do I have to pay?’ If you are struggling with the same question too, the first thing you need to know about is the different tax slabs.
Income tax slabs in India
The income tax liability depends on the income tax slab you fall under in a particular financial year. Each slab has a different income tax rate. Moreover, apart from earnings, the tax rates also vary for different age groups. Here is a list of different tax slabs for different age groups currently applicable in India:
1. Individuals below 60 years
If you are below the age of 60 years, the individual tax slabs applicable to you are as follows:
|Tax slabs||Tax rates|
|Annual income of up to Rs 2,50,000||Nil|
|Annual income between Rs 2,50,001and Rs 5,00,000||5% tax on the income above Rs 2.5lakh + 4% cess|
|Annual income between Rs 5,00,001 and Rs 10,00,000||Rs 12,500 + 20% tax on the income above Rs 5lakh + 4% cess|
|Annual income above Rs 10,00,001||Rs 1,12,500 + 30% tax on the income above Rs 10 lakh + 4% cess|
2. Seniors between 60 years and 80 years
For seniors between the age group of 60 and 80 years, the tax slabs are as follows:
|Tax slabs||Tax rates|
|Annual income of up to Rs 3,00,000||Nil|
|Annual income between Rs 3,00,001 and Rs 5,00,000||5% on the income above Rs 3 lakh + 4% cess|
|Annual income between Rs 5,00,001 and Rs 10,00,000||Rs 10,000 + 20% tax on the income above Rs 5 lakh + 4% cess|
|Annual income above Rs 10,00,001||Rs 110,000 + 30% tax on the income above Rs 10 lakh + 4% cess|
3. Super seniors above 80 years
Resident individuals above the age of 80 years are considered super seniors. Tax slabs for them are as follows:
|Tax slabs||Tax rates|
|Annual income of up to Rs 5,00,000||Nil|
|Annual income between Rs 5,00,001and Rs 10,00,000||20% tax on the income above Rs 5 lakh + 4% cess|
|Annual income above Rs 10,00,001||Rs 100,000 + 30% tax on the income above Rs 10 lakh + 4% cess|
How to pay income tax?
Now that you know the individual tax rates, you might be wondering how you will pay the income tax to the Government. There are basically two ways in which the Government collects income tax from the taxpayers:
1. Tax Deducted at Source (TDS)
- As the name suggests, the TDS taxation system deducts the tax right from the source where the income originates. For instance, if you are a salaried employee, your employer will deduct TDS from your salary before crediting it to your bank account. The employer then pays your TDS to the Government.
2. Self-assessment and advance tax
- If your actual income tax liability is higher than the TDS you have paid, you have the self-assessment option to pay the remaining tax amount to the IT department. Similarly, if you have other sources of income where TDS is not applicable, you can pay advance tax on the same. But make sure that you always pay your tax liabilities in full before Mar 31 every year.
Understanding taxation in India
- Taxation is a complex subject that you will only get better at with time. If you are just starting your professional life, the details mentioned in this post are sure to answer several of your queries on individual taxation.
You can consult the relationship manager of your bank or a tax consultant to know more about taxation and understand how income tax is calculated.
The contents of this document are meant merely for information purposes. The information contained herein is subject to updation, completion, revision, verification and amendment and the same may change materially. The information provided herein is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person‘s nationality, residence or otherwise) be contrary to law or regulation or would subject lClCl Bank or its affiliates to any licensing or registration requirements. This document is not an offer, invitation or solicitation of any kind to buy or sell any security and is not intended to create any rights or obligations. Nothing in this document is intended to constitute legal, tax, securities or investment advice, or opinion regarding the appropriateness of any investment, or a solicitation for any product or service. Please obtain professional legal, tax and other investment advice before making any investment. Any investment decisions that may be made by you shall be at your sole discretion, independent analysis and at your own evaluation of the risks involved. The use of any information set out in this document is entirely at the recipient's own risk. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith by lClCl Bank and from sources deemed reliable. There can be no assurance that such projections will prove to be accurate. lClCl Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out in this document. The information set out in this document has been prepared by ICICI Bank based upon projections which have been determined in good faith and sources considered reliable by lClCl Bank. In preparing this document we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources or which was provided to us or which was otherwise reviewed by us. Past performance cannot be a guide to future performance. 'lClCl ' and the 'I-man' logo are the trademarks and property of lCICl Bank. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.
People who read this also readView All
Scroll to top