Income Tax Rates For Financial Year (FY) 2017-18 And Assessment Year (AY) 2018-19

Finance Minister Arun Jaitley presented Union Budget 2017 on February 1, 2017, at 11 am. There were no changes in the income tax slabs for the financial year 2017-18 and assessment year 2018-19.

However, he did reduce the rate of tax for individuals who fall in the lowest tax rebate. The major changes is the proposal to decrease the rate of income tax from 10% to 5% for the tax bracket of Rs 2.5 lakhs to Rs 10 lakhs. So, those earnings above Rs 5 lakhs would end-up saving Rs 12,500 every year.

What is Financial Year(FY) and Assessment Year(AY)?

A financial year is one that is of one year and is between 1st April to 31st March of the following year, in which all financial information are reported.

Assessment Year (AY) on the other hand is the income of a particular financial year, which is assessed in the following financial year, which is known as the assessment year.

Let us cite this with an example. Let us say that you earn an income of Rs 5 lakhs, between April 2017 and March 31, 2018. Then we say that this is the financial year 2017-18. You would file your income tax anytime until July 31, 2018. So, for you, the assessment year would be 2018-19.

What is income tax slab?

In India, tax on an individual's income is charged according to the taxpayer's income. When there is an increase in income, the taxpayer is required to contribute more portion of his earned income in the form of taxes to the government.

Under this tax structure, income is categorized into different groups. The criteria for grouping is the amount of income. Each such group is known as Tax Slab. Tax is charged at different rates on the range of income falling under different tax slabs.

Normally, your tax slab would depend on what the Union Budget announces. If it increases the tax limit than your tax slab changes automatically. If for example, the Union Budget had to increase the minimum amount of tax paid from Rs 2.5 lakhs to Rs 3 lakhs, than the tax slab would change accordingly.

Here are the tax slabs for FY 2017-18 and assessment year 2018-19:

General Tax Payers and Women

Senior citizens (Aged 60 years but less than 80 years)

Very senior citizens (Aged 80 and above)

There would now be a surcharge of 10% for those earning an income of Rs 50 lakhs and above.

Note: Tax rates are excluding Surcharge, Education Cess and Secondary and Higher Education Cess.

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