Tax income in India plays a crucial role in the country's economic development and governance. The Indian tax system is complex, with various rates and provisions for different entities and individuals. Whether you're an individual taxpayer or a business owner, it's essential to have a clear understanding of the tax rates and regulations in India. In this comprehensive guide, we will explore the different tax rates applicable to individuals, partnership firms, local authorities, domestic companies, foreign companies, and co-operative societies. Let's dive in!
Tax Rates for Individuals
When it comes to individual taxpayers in India, the tax rates vary based on their income level and age. The tax rates are categorized into three groups: individuals (other than resident senior and super senior citizens), resident senior citizens (aged 60 or more but less than 80), and resident super senior citizens (aged 80 or more).
Tax Rates for Individuals (Other than Resident Senior and Super Senior Citizens)
| Net Income Range | Assessment Year 2024-25 | Assessment Year 2023-24 |
|---|---|---|
| Up to Rs. 2,50,000 | -- | -- |
| Rs. 2,50,000 to Rs. 5,00,000 | 5% | 5% |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | 20% |
| Above Rs. 10,00,000 | 30% | 30% |
Tax Rates for Resident Senior Citizens
| Net Income Range | Assessment Year 2024-25 | Assessment Year 2023-24 |
|---|---|---|
| Up to Rs. 3,00,000 | -- | -- |
| Rs. 3,00,000 to Rs. 5,00,000 | 5% | 5% |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | 20% |
| Above Rs. 10,00,000 | 30% | 30% |
Tax Rates for Resident Super Senior Citizens
| Net Income Range | Assessment Year 2024-25 | Assessment Year 2023-24 |
|---|---|---|
| Up to Rs. 5,00,000 | -- | -- |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | 20% |
| Above Rs. 10,00,000 | 30% | 30% |
Tax Rates for Hindu Undivided Family (HUF), Association of Persons (AOP), and Body of Individuals (BOI)
For Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), and other artificial juridical persons, the tax rates are the same as those for individuals (other than resident senior and super senior citizens). The rates are as follows:
| Net Income Range | Assessment Year 2024-25 | Assessment Year 2023-24 |
|---|---|---|
| Up to Rs. 2,50,000 | -- | -- |
| Rs. 2,50,000 to Rs. 5,00,000 | 5% | 5% |
| Rs. 5,00,000 to Rs. 10,00,000 | 20% | 20% |
| Above Rs. 10,00,000 | 30% | 30% |
Surcharge and Health & Education Cess
In addition to the income tax rates, there are surcharges and health & education cess levied on taxpayers based on their income levels. The surcharge rates for individuals vary depending on the income range, while the health and education cess is applied at a flat rate of 4% on the income tax plus surcharge amount.
Here are the surcharge rates for individuals:
| Range of Income | Assessment Year 2024-25 | Assessment Year 2023-24 |
|---|---|---|
| Rs. 50 Lakhs to Rs. 1 Crore | 10% | 10% |
| Rs. 1 Crore to Rs. 2 Crores | 15% | 15% |
| Rs. 2 Crores to Rs. 5 Crores | 25% | 25% |
| Above Rs. 5 Crores | 37% | 37% |
It's important to note that the enhanced surcharge rates of 25% and 37% are not applicable to income from dividends or income chargeable to tax under specific sections. The maximum surcharge rate for such incomes is 15%. Additionally, the surcharge rate for AOP with all members as a company is capped at 15%.
Marginal relief is available from surcharge for net incomes exceeding certain thresholds, ensuring that the tax and surcharge payable do not exceed the total amount payable as income tax on the respective income thresholds.
Rebate and Marginal Relief
A resident individual whose net income does not exceed Rs. 5,00,000 can avail a rebate under section 87A. This rebate, deductible from income tax before calculating education cess, is equal to 100% of income tax or Rs. 12,500, whichever is less.
For Assessment Year 2024-25, if the total income of a resident individual opting for the new tax scheme under section 115BAC(1A) is up to Rs. 7,00,000, a higher rebate of Rs. 25,000 is allowed under section 87A. This higher rebate is also subject to marginal relief.
Tax Rates for Partnership Firms and Local Authorities
Partnership firms and local authorities also have specific tax rates and provisions. Let's explore them in detail.
Tax Rates for Partnership Firms
For the Assessment Years 2023-24 and 2024-25, partnership firms (including Limited Liability Partnerships or LLPs) are taxed at a flat rate of 30%.
Partnership firms are also subject to surcharge, which is levied at the rate of 12% on the income tax if the total income exceeds one crore rupees. The surcharge is subject to marginal relief. Additionally, the health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
Tax Rates for Local Authorities
For the Assessment Years 2023-24 and 2024-25, local authorities are also taxed at a flat rate of 30%.
Similar to partnership firms, local authorities are subject to surcharge at a rate of 12% on the income tax if the total income exceeds one crore rupees. The surcharge is subject to marginal relief. Additionally, the health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
Tax Rates for Domestic Companies
Domestic companies in India are subject to specific tax rates based on their turnover or gross receipts. The rates differ for different assessment years. Let's take a closer look.
Tax Rates for Domestic Companies - Assessment Year 2024-25
- Where the total turnover or gross receipt during the previous year 2020-21 does not exceed Rs. 400 crore, the tax rate is 25%.
- For any other domestic company, the tax rate is 30%.
Domestic companies are also subject to surcharge and health & education cess.
The surcharge is levied at a rate of 7% on the amount of income tax if the total income exceeds one crore rupees but not exceeding ten crore rupees. If the total income exceeds ten crore rupees, the surcharge rate is 12%. The surcharge is subject to marginal relief.
The health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
Minimum Alternate Tax (MAT)
Domestic companies are liable to pay Minimum Alternate Tax (MAT) if their tax payable on total income computed as per normal provisions of the Act is less than 15% of their book profit. In such cases, the book profit is taken as the income of the company, and it is liable to pay tax at the rate of 15% of the book profit.
However, MAT is levied at a rate of 9% (plus surcharge and cess as applicable) for companies that are units of International Financial Services Centres and derive their income solely in convertible foreign exchange.
Special Tax Rates for Domestic Companies
There are special tax rates applicable to certain domestic companies based on specific conditions. Let's explore these rates.
- For companies opting for taxability under Section 115BAA or Section 115BAB, the surcharge rate is a flat 10%, irrespective of the total income of the company. Health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
It's important to note that companies opting for the special taxation regime under Section 115BAA and 115BAB are exempt from the provisions of Minimum Alternate Tax (MAT).
Tax Rates for Foreign Companies
Foreign companies operating in India have specific tax rates depending on the nature of their income. Let's take a closer look at these rates.
Tax Rates for Royalty and Technical Services
For royalty received from the government or an Indian concern in pursuance of an agreement made before April 1, 1976, or fees for technical services in pursuance of an agreement made before April 1, 1976, the tax rate is 50%.
Tax Rates for Other Income
For any other income earned by foreign companies, the tax rate is 40%.
Foreign companies are also subject to surcharge and health & education cess.
The surcharge is levied at a rate of 2% on the amount of income tax if the total income exceeds one crore rupees but not exceeding ten crore rupees. If the total income exceeds ten crore rupees, the surcharge rate is 5%. The surcharge is subject to marginal relief.
The health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
Foreign companies are also liable to pay Minimum Alternate Tax (MAT) if their tax payable on total income computed as per normal provisions of the Act is less than 15% of their book profit. However, MAT is not applicable if the foreign company does not have a permanent establishment in India or opts for presumptive taxation schemes under specific sections.
Tax Rates for Co-operative Societies
Co-operative societies in India have their specific tax rates based on their taxable income. Let's explore these rates in detail.
Tax Rates for Co-operative Societies
For the Assessment Years 2023-24 and 2024-25, the tax rates for co-operative societies are as follows:
- Up to Rs. 10,000: 10%
- Rs. 10,000 to Rs. 20,000: 20%
- Above Rs. 20,000: 30%
Co-operative societies are also subject to surcharge and health & education cess.
The surcharge is levied at a rate of 7% on the income tax if the total income exceeds one crore rupees but not exceeding ten crore rupees. If the total income exceeds ten crore rupees, the surcharge rate is 12%. The surcharge is subject to marginal relief.
The health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
It's important to note that co-operative societies are liable to pay Alternative Minimum Tax (AMT) if their tax payable on total income computed as per normal provisions of the Act is less than 15% of their adjusted total income. However, if the co-operative society is located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the AMT rate is 9%.
Alternative Tax Regime for Co-operative Societies
The Income-tax Act allows co-operative societies to choose from two alternative taxation regimes, subject to specific conditions.
Under Section 115BAE, a co-operative society can opt for a 15% tax rate if it meets the following conditions:
- The co-operative society is set up and registered on or after April 1, 2023.
- It is engaged in the manufacture or production of any article or thing.
- It commences manufacturing on or before March 31, 2024.
- It does not claim specified exemptions, incentives, or deductions.
Alternatively, under Section 115BAD, a co-operative society can opt for a 22% tax rate if it does not claim specified exemptions, incentives, or deductions.
Co-operative societies opting for these special taxation regimes are exempt from the provisions of Minimum Alternate Tax (MAT). The surcharge rate is 10% on the income tax, irrespective of the total income of the co-operative society, and the health and education cess is applicable at a rate of 4% on the income tax plus surcharge amount.
Conclusion
Understanding the tax rates and provisions in India is vital for individuals, businesses, and co-operative societies alike. By familiarizing yourself with the tax rates applicable to your entity or individual status, you can ensure compliance and make informed financial decisions. Remember to consult with a tax professional or chartered accountant to navigate the complexities of the Indian tax system and optimize your tax planning strategies. Stay updated with the latest changes and amendments in tax laws to make the most of your financial journey in India.
Disclaimer: This article is for informational purposes only and should not be considered as legal, financial, or tax advice. Please consult with a qualified professional for personalized advice tailored to your specific situation.
