TAX PLANNING
Analysis of a financial situation or plan from a tax perspective, to align financial goals with tax efficiency planning. The purpose of tax planning is to discover how to accomplish all of the other elements of a financial plan in the most tax-efficient manner possible. Tax planning thus allows the other elements of a financial plan to interact more effectively by minimizing tax liability.
TAX RULES
Income Tax Slabs and Rates for the Assessment Year 2016-17 (applicable on income earned during 01.04.2015 to 31.03.2016) for various categories of Indian Income Tax payers.
- Individual resident aged below 60 years.
- Senior Citizen.
- Super Senior Citizen.
- Any NRI / HUF / AOP / BOI / AJP.
- Co-operative Society.
Individual resident aged below 60 years (i.e. born on or after 1st April 1956)
| Sno | Income Slabs | Tax Rates |
|---|---|---|
| i | Where the taxable income does not exceed Rs.2,50,000/-. | Nil |
| ii | Where the taxable income exceeds Rs.2,50,000/- but does not exceed Rs.5,00,000/-. | 10% of amount by which the taxable income exceeds Rs. 2,50,000/-. Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 2000/-. |
| iii | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs.10,00,000/-. | Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs.5,00,000/-. |
| iv | Where the taxable income exceeds Rs. 10,00,000/-. | Rs.125,000/- + 30% of the amount by which the taxable income exceeds Rs.10,00,000/-. |
Senior Citizen (Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year i.e. born on or after 1st April 1936 but before 1st April 1956)
| Sno | Income Slabs | Tax Rates |
|---|---|---|
| i | Where the taxable income does not exceed Rs.3,00,000/-. | Nil |
| ii | Where the taxable income exceeds Rs.3,00,000/- but does not exceed Rs.5,00,000/-. | 10% of the amount by which the taxable income exceeds Rs.3,00,000/-. Less : Tax Credit u/s 87A - 10% of taxable income upto a maximum of Rs. 2000/-. |
| iii | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs.10,00,000/-. | Rs. 20,000/- + 20% of the amount by which the taxable income exceeds Rs.5,00,000/-. |
| iv | Where the taxable income exceeds Rs.10,00,000/-. | Rs.120,000/- + 30% of the amount by which the taxable income exceeds Rs.10,00,000/-. |
Super Senior Citizen (Individual resident who is of the age of 80 years or more at any time during the previous year i.e. born before 1st April 1936)
| Sno | Income Slabs | Tax Rates |
|---|---|---|
| i | Where the taxable income does not exceed Rs.5,00,000/-. | Nil |
| ii | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs.10,00,000/-. | 20% of the amount by which the taxable income exceeds Rs.5,00,000/-. |
| iii | Where the taxable income exceeds Rs. 10,00,000/-. | Rs.100,000/- + 30% of the amount by which the taxable income exceeds Rs.10,00,000/-. |
Any NRI or HUF or AOP or BOI or AJP
| Sno | Income Slabs | Tax Rates |
|---|---|---|
| i | Where the taxable income does not exceed Rs.2,50,000/-. | Nil |
| ii | Where the taxable income exceeds Rs.2,50,000/- but does not exceed Rs.5,00,000/-. | 10% of amount by which the taxable income exceeds Rs.2,50,000/-. |
| iii | Where the taxable income exceeds Rs.5,00,000/- but does not exceed Rs.10,00,000/-. | Rs.25,000/- + 20% of the amount by which the taxable income exceeds Rs.5,00,000/-. |
| iv | Where the taxable income exceeds Rs.10,00,000/-. | Rs.125,000/- + 30% of the amount by which the taxable income exceeds Rs.10,00,000/-. |
- NRI - Non Resident Individual
- HUF - Hindu Undivided Family
- AOP - Association of Persons
- BOI - Body of Individuals
- AJP - Artificial Judicial Person
Co-operative Society
| Sno | Income Slabs | Tax Rates |
|---|---|---|
| i | Where the taxable income does not exceed Rs. 2,50,000/-. | Nill |
| ii | Where the taxable income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. | 10% of amount by which the taxable income exceeds Rs. 2,50,000/-. |
| iii | Where the taxable income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. | Rs. 25,000/- + 20% of the amount by which the taxable income exceeds Rs. 5,00,000/-. |
| iv | Where the taxable income exceeds Rs. 10,00,000/-. | Rs. 125,000/- + 30% of the amount by which the taxable income exceeds Rs. 10,00,000/-. |
Applicable for all the table given above.
Surcharge : 12% of the Income Tax, where taxable income is more than Rs. 1 crore. (Marginal Relief in Surcharge, if applicable)
Education Cess : 3% of the total of Income Tax and Surcharge.
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About 1% of the national population, called the upper class, fall under the 30% slab. It grew 22% annually on average during 2000-10 to 0.58 million income taxpayers. The middle class, who fall under the 10% and 20% slabs, grew 7% annually on average to 2.78 million income tax payee.