Income Tax Rates of India for the Current Financial Year 2010-11

The finance ministry of India has now finalized the new income tax rates for the financial year 2010-11 and the assessment year 2011-12. These new rates are extremely profitable for the people having their yearly taxable income in the range of Rs.500000 to Rs.800000. I have tried to cover these new current tax rates in this article. I have also compared the income tax payable by the tax payers this year as compared to last year i.e. financial year 2009-10.

There are mainly three categories of tax payers in India. The first category is general tax payers. First Rs.160000 is tax free in this category. The income tax of 10% would be levied on the income between Rs.160000 to Rs.500000. the income tax of 20% shall be levied on the income from Rs.500000 to Rs.800000. And finally, income tax of 30% shall be levied on the taxable income exceeding Rs.800000. The 3% surcharge shall also be payable on the total income tax paid as an educational tax. The second category is the ladies category. First Rs.190000 shall be tax free in this category and all the further slabs shall be the same as general tax payer category. The third and final category is senior citizens. This category covers all the Indian citizens having age more than 65 years. Initial Rs.240000 shall be considered tax free from the taxable income in this category and the remaining income tax slabs shall be same as in earlier two categories. It may be noted that all NRIS are treated as general tax payers only in spite of their being ladies or the senior citizen. The Indian residents only are given the benefits of second and third categories. All the tax payers are also given maximum rebate of Rs.100000 against the section 80-c for the investments made in some government schemes like Public Provident Fund, selected mutual funds and some of the post office funds like NSC. That means that if you are able to save and invest Rs.100000 in such schemes, no income tax would be required to pay till your total yearly income is Rs.260000. Over and above this rebate, the yearly premium for the mediclaim policies purchased up to maximum of Rs.15000 per year is also considered in tax rebate. Some of the donations made to government approved NGOS are also considered tax free in addition to other rebates.

As compared to these new revised rates for this year, the income tax rates applicable for the last financial year 2009-2010 and the assessment year 2010-11 were as under. For the general tax payers, the first Rs.160000 was totally tax free. The income tax of 10% was required to pay on the income from Rs. 160000 to Rs.300000. The income tax of 20% was required to pay on the income from Rs.300000 to Rs.500000 and finally, income tax of 30% was required to pay on the taxable income above Rs.500000. The educational tax of 3% was same as in the current year. All other deductions and the rebates mentioned above for the current financial year of 2010-11 were the same during the financial year 2009-10. Around 60% of the general tax payers will be benefited by these new tax rates for the current year.

That means that if your yearly taxable income is Rs.800000 after considering all the rebates and the deductions applicable during the current financial year of 2010-11, the total income tax payable shall be Rs. 94000 and the 3% educational tax of Rs.2820, making the total tax liabilities as Rs.96820 for the current financial year of 2010-11 as compared to the total tax liability of Rs.148320 including 3% educational tax for the last financial year of 2009-10. This implies that the individual with taxable income of Rs.800000 will save Rs.52500 per year due to these revised current rates. It will be easy to calculate the exact amount saved in income tax in current year based on the information given in this article.

I am sure that this article shall be of immense help to all the tax payers of India. If anybody has any further question or doubt feel free to contact me.