Income Tax Slab - FY 2013-2014 / AY 2014-15

When calculating the income tax liability each year, the first and foremost aspect which comes across one’s mind is the tax slabs. In this year’s annual budget, the government has not brought about great relief for the common man by keeping these tax slabs same as the previous years. Here is a look into the slabs for the current financial year to help you prepare your investments and income, and to be able to file your tax returns accurately in the following assessment year.

Basic Tax Jargons

Financial Year, Assessment Year and Previous Year, do these commonly used income tax jargons often confuse you? This is what they mean.

1. Financial Year (FY) – Duration of one year between 1st April to 31st March of the following year, in which all financial information are reported. The current financial year is 1st April 2013 to 31st March 2014.
2. Assessment Year (AY) – The income of a particular financial year is assessed in the following financial year, which is known as the assessment year. For the current financial year, income will be assessed in the assessment year 2014-2015.
3. Previous Year (PY) – The financial year preceding the assessment year, the income of which is assessed in the following assessment year. Assessment year 2014-2015 will assess income for previous year 2013-2014.                 

Income Tax Slabs

 With no change in the tax slabs, there would not be any greater savings for the consumers. Basic tax exemption limits have been retained; however, the brackets have been broadened. Below are the income tax slabs and rates applicable for the current financial year 2013-14 and assessment year 2014-15.

Tax Slabs for Male/Female Assessee (less than 60 years)

Income :      up to 2 lakhs	No Tax
Income :      2 lakhs to 5 lakhs	10 %
Income :      5 lakhs to 10 lakhs	20 %
Income :       above 10 lakhs	30 %

        

Tax Slabs for Senior Citizen (60 to 80 years)

Income :     up to 2.5 lakhs	No Tax
Income :    2.5 lakhs to 5 lakhs	10 %
Income :    5 lakhs to 10 lakhs	20 %
Income :     above 10 lakhs	30 %

 Tax slabs for Super Senior Citizen   (> 80 years)

Income :     up to 5 lakhs	No Tax
Income :    5 lakhs to 10 lakhs	20 %
Income :     above 10 lakhs	30 %

However, the government has introduced a tax credit of Rs 2,000 for people with an income up to Rs 5,00,000.

5 Easy Steps to Calculate your Tax

Calculating income tax is not any rocket science. The following 5 steps give you an idea of the process.           

1. Calculate your gross total income. This includes gross income from Form 16; and the taxable income from other sources.
2. Calculate your net deductions, which may include, donations, investments and savings such as provident fund subscriptions, Life Insurance Premiums etc.
3. Your net taxable income is gross total income minus net deductions.
4. Apply the appropriate income tax slab to calculate your tax payable on aggregate income.
5. Education Cess of 3% is applied on the tax payable to arrive at the total tax payable. Relief under various sections would be applied on this total tax.               

For example: Let us consider a net taxable income of Rahul as Rs. 8,00,000.

As an assessee, here’s how his tax is calculated. 

Calculation 

Tax up to Rs. 2,00,000	Nil
Tax on Rs.2,00,000 to Rs.5,00,000 @ 10%	30,000
Tax on Rs. 5,00,000 to Rs. 8,00,000 @ 20%	60,000
Total	90,000
Educational Cess - 3% of Total Tax	2,700
Net Tax Payable	92,700