Posted on 29 June 2011. (39 views)
This article may be of primary interest for people having income which are taxable under the Indian Income Tax Law.
As per Income Tax Act 1961, every individual, who is an assessee and whose total income exceeds the maximum exemption limit, shall be chargeable to the income tax at the rate or rates prescribed in the Finance Act. The income tax shall be paid on the total income of the previous year in the relevant assessment year.
The total income of an individual is determined on the basis of the individual?s residential status in India. For tax purposes, an individual may be resident, nonresident or not ordinarily resident.
Residence Rules
An individual is treated as resident in a year if present in India
- For 182 days during the year or
- For 60 days during the year and 365 days during the preceding four years. Individuals fulfilling neither of these conditions are nonresidents. (The rules are slightly more liberal for Indian citizens residing abroad or leaving India for employment abroad.)
A resident who was not present in India for 730 days during the preceding seven years or who was nonresident in nine out of ten preceding years are treated as not ordinarily resident. In effect, a newcomer to India remains ?not ordinarily resident?.
Non-Residents and Non-Resident Indians
Residents are on worldwide income. Nonresidents are taxed only on income that is received in India or arises or is deemed to arise in India. A person not ordinarily resident is taxed like a nonresident but is also liable to tax on income accruing abroad if it is from a business controlled in or a profession set up in India. The Capital gains on transfer of assets acquired in foreign exchange is not taxable in certain cases. Non-resident Indians are not required to file a tax return if their income consists of only interest and dividends, provided taxes due on such income are deducted at source. It is possible for non-resident Indians to avail of these special provisions even after becoming residents by following certain procedures laid down by the Income Tax act.
Taxability of assessee:
| Status | Indian Income | Foreign Income |
| Resident and ordinarily resident | Taxable | Taxable |
| Resident but not ordinary resident | Taxable | Not Taxable |
| Non-Resident | Taxable | Not Taxable |
Budget 2011 highlights and the tax slab changes
The main highlights of the budget presented on Feb 28, 2011:
- Income Tax exemption limit for individuals rose from Rs. 1.6 lakh to Rs. 1.8 lakh .Senior citizens? base slab shifted to 2.5 lakh from existing 2.4 lakh. Senior citizen?s age for consideration of tax relief reduced to 60 years from the current 65 years.
- The government proposed a full tax rebate on developing such projects under a notified scheme and raised the ceiling of one per cent interest subsidy on home loans up to Rs 15 lakh from the current Rs 10 lakh.
-? In the Budget for 2011-12, Honorable finance minister Pranab Mukherjee proposed 100% tax deductions on capital expenditure to develop affordable houses under government scheme, thus promoting builders to focus more on such homes.
Income tax slabs 2011-2012 for General tax payers
| Income tax slab (in Rs.) | Tax |
| 0 to 1,80,000 | No tax |
| 1,80,001 to 5,00,000 | 10% |
| 5,00,001 to 8,00,000 | 20% |
| Above 8,00,000 | 30% |
Income tax slabs 2011-2012 for Women
| Income tax slab (in Rs.) | Tax |
| 0 to 1,90,000 | No tax |
| 1,90,001 to 5,00,000 | 10% |
| 5,00,001 to 8,00,000 | 20% |
| Above 8,00,000 | 30% |
Income tax slabs 2011-2012 for Senior citizen (Aged 60 years but less than 80 years)
| Income tax slab (in Rs.) | Tax |
| 0 to 2,50,000 | No tax |
| 2,50,001 to 5,00,000 | 10% |
| 5,00,001 to 8,00,000 | 20% |
| Above 8,00,000 | 30% |
Income tax slabs 2011-2012 for Very Senior citizen (Above 80 years)
| Income tax slab (in Rs.) | Tax |
| 0 to 5,00,000 | 0% |
| 5,00,001 to 8,00,000 | 20% |
| Above 8,00,000 | 30% |
Source: http://www.want2rich.com/2011/06/personal-finance/income-tax-in-india-tax-slabs-for-2011/
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