Welcome to our Direct Tax Compliance module. In this section, we’ll delve into the tax slabs, which are essential for calculating income tax liabilities.

2.1 Individual Tax Slabs:

Basic Structure:

Tax rates for individuals vary based on income brackets.

Divided into slabs to ensure progressive taxation.

2.2 Assessment Year vs. Financial Year:

Clarification:

Financial Year: The year in which income is earned.

Assessment Year: The year in which income is assessed for taxation.

2.3 Income Tax Rates:

For Individual Taxpayers Below 60 Years:

Up to ₹2,50,000: Nil

₹2,50,001 to ₹5,00,000: 5%

₹5,00,001 to ₹10,00,000: 20%

Above ₹10,00,000: 30%

For Senior Citizens (60 to 80 Years):

Up to ₹3,00,000: Nil

₹3,00,001 to ₹5,00,000: 5%

₹5,00,001 to ₹10,00,000: 20%

Above ₹10,00,000: 30%

For Very Senior Citizens (Above 80 Years):

Up to ₹5,00,000: Nil

₹5,00,001 to ₹10,00,000: 20%

Above ₹10,00,000: 30%

2.4 Health and Education Cess:

Additional Levy:

Health and Education Cess of 4% is applicable on the total income tax.

2.5 Rebates:

Benefit for Taxpayers:

Rebates available for specific categories.

Example: Rebate under Section 87A for taxpayers with income up to ₹5,00,000.

2.6 Tax Planning:

Strategic Approach:

Utilize exemptions, deductions, and rebates for tax optimization.

Careful planning can minimize tax liabilities.