Tax Bracket

What Does Tax Bracket Mean?

The rate at which an individual is taxed. Tax brackets are set based on income levels; individuals with lower income levels are taxed at a lower rate than individuals with higher income levels. Tax brackets serve as cutoff points for given income tax rates; therefore, if an individual's annual taxable income exceeds the cutoff point, that person is taxed according to the next tax bracket.

For individuals, HUF, Association of Persons (AOP) and Body of individuals (BOI):

Income Tax Rates/Slabs for Assesment Year 2011-12 (F Y 2010-11)

Income Tax Rates/Slabs

Rate (%)

Up to 1,60,000
Up to 1,90,000 (for women)
Up to 2,40,000 (for resident individual of 65 years or above)


1,60,001 – 5,00,000


5,00,001 – 8,00,000


8,00,001 upwards


Few amendments made to the taxation system for the FY2010-11:
  • From now onwards there will be only 2 pages in the IT filing form for individuals. More cases can now be appealed against.
  • Rs. 20,000 tax exemption will be provided for investments in certain investment bonds. This is in addition to the already allowed exemption (Rs. 1,00,000) in certain savings instruments.
  • Tax Exemption will be given for contribution to the Central Government Health Scheme (CGHS).

New fields have been added to the e-TDS/TCS form. These new fields are Ministry name; PAO / DDO code; PAO / DDO registration no.; State name; and Name of the utility used for return preparation

Various Taxes in India:
Income Tax:

Income earned in a financial year is liable to tax as per the rates prescribed for that year. A financial year runs from 1 April to 31 March of the following year. India follows a residence based taxation system. Broadly, taxpayers may be classified as residents or non-residents. Individual taxpayers may also be classified as 'residents but not ordinary residents'. An Indian company is always an Indian resident. Additionally, any other company whose affairs are wholly controlled and managed from India is also a resident. Any other company would be a non-resident.

Corporate Tax on Companies:
Resident Companies:

Indian resident companies are liable to tax at 30 % plus surcharge & education cess as applicable. Additionally; companies are also liable to dividend distribution tax (DDT) at 16.99 per cent on the amount of profits distributed to shareholders.

Non-Resident Companies:

Non-resident companies are typically liable to tax at 40 % plus surcharge & education cess as applicable. per cent on net basis. Non-nt es. However, income from long-term capital gains is taxable at the rate of 20 per cent plus applicable cess.

Minimum Alternate Tax (MAT):

The domestic tax law also requires companies to pay MAT in lieu of the regular corporate tax, in a case where the regular corporate tax is lower than the MAT. MAT is computed on the book profits; subject to certain prescribed adjustments MAT paid in any year is now available as credit in any subsequent year.

Dividend Distribution Tax (DDT):

Dividends are currently exempt from taxes in India. However the company paying the dividends is required to pay DDT on the amount of dividends declared, at the rate of 16.99 per cent. DDT is a tax payable on the dividend declared, distributed or paid.

Value Added Tax / Sales Tax:

Introduced to the Indian Taxation System from April 1st, 2005, the Value Added Tax (VAT) is a form of indirect tax, and takes into account all the multiple sales taxes connected with the sale of a product. VAT calculates the sales taxes in a different manner, but includes the taxes comprehensively. VAT/Sales Taxes are State level taxes levied on the sale of goods, contract work, and the hiring of these. With the introduction of VAT, the compliance requirements have increased manifold, and therefore, there arises the need for expert & elegant services for the proper maintenance of records, and the calculation of the tax liability.

Service Tax:

Rigorous compliances with the service tax have also increased both in quantum and complexity since its introduction to in the Indian Tax Laws under Central Excise & Customs Act. We extend the following expert services for the strict compliance with the service tax law.

  • Registration with Service Tax
  • Calculation of Service Tax
  • Filing of regular Service Tax returns and various other compliances
  • Advisory Services for Assessments
  • Preparation of records for the Service Tax credit and various other records under the Service Tax Law
  • Advisory Services for the Tax Planning and Minimization