Tax Calculation of a Person

Tax Calculation of a Person for the Financial Year 2016-17 (AY 2017-18)

Tax Calculation

Tax Calculation of a Person for the Financial Year 2016-17 (AY 2017-18)

How to calculate tax of a person is a very common question. Everybody wants a answer to the question, How to calculate tax? Tax is calculated on the total income of an assessee relating to previous years in the assessment year. Total income depends upon the residential status of the assessee in the relevant previous year. To compute the total income of an assessee it is divided into five heads:
1. Income from Salaries
2. Income from House Property
3. Income from Profit and Gains of Business Profession
4. Income from Capital Gains
5. Income from Other Sources
Income from all these heads shall be computed separately according to the provisions given in the act. Income computed under these heads shall be aggregated and the total so arrived at is known as Gross Total Income. Out of Gross Total Income certain dedications under section 80 are allowed. After allowing these deductions the figures which we arrive at is called Total Income and on this figure tax is computed at the prescribed rates.

Rates of income tax for the Financial Year 2016-17 (Assessment year 2017-18)
For individual (less than 60 years), HUF, AOP or BOI, Artificial Juridical Person
Income Rate of Tax
Up to 250000              Nil

(In Union Budget 2017 the rate of tax has been reduced to 5% for those having income between 2.5 lakh to 5 lakh)
On next 250000          10%
On next 500000          20%
On balance                  30%
For individual who is of the age of 60 years or more but less than the age of 80 years at any time during the previous year
Income                 Rate of Tax
Up to 300000                Nil
On next 250000           10%
On next 500000           20%
On balance                   30%
For individual who is of the age of 80 years or more at any time during the previous year
Income                Rate of Tax
Up to 500000             Nil
On next 500000         20%
On balance                 30%
Surcharge: The rate of surcharge shall be 15% of income tax if total income exceeds one crore.
Education Cess: 2% of tax and surcharge.
Secondary and Higher Education Cess: 1% of tax and surcharge.

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Must see: What is Tax, Income Tax, Direct Tax and Indirect Tax

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