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Tax slab
In the interim budget, though the government offered tax rebate for income up to ₹5 lakh, it left income tax slabs unchanged. The current tax slab starts at 5% for income between ₹2.5 lakh and ₹5 lakh, 20% if your income is between₹5 lakh and ₹10 lakh and 30% for income above ₹10 lakh, for individuals less than 60 years old.
Senior citizens have to pay nil tax for income up to ₹3 lakh and for super senior citizens, the exemption is up to ₹5 lakh.
Remember that your entire income doesn’t get taxed at one rate.
The math
Say you are below the age of 60 years and your total taxable income is ₹15 lakh.
Without factoring in any tax benefits, ₹2.5 lakh will attract zero tax. According to income tax department calculator, the next₹2.5 lakh will be taxed at 5%, which amounts to ₹12,500.
The next slab in this example, which is ₹5 lakh, will attract 20% on the amount and you will pay ₹1 lakh. The remaining income of ₹5 lakh will attract tax of 30% considering it exceeds ₹10 lakh limit for which you will pay ₹1.5 lakh.
So your total tax amount will be ₹2.63 lakh before cess.
The cess
Besides your tax slab, you also have to pay cess on your total tax outgo.
The cess levied on your tax goes towards health and education. Health and education cess was introduced in budget 2018, and is levied from financial year 2018-19.
Earlier, it used to be levied for secondary and higher secondary education only.
The cess is charged at 4% of the tax amount.
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