I am writing this post as a reminder to myself for various things I need to remind myself from time to time about individual and corporate tax in India.
Corporate Tax in India
Income Tax Rates: Corporates in India need to pay flat 30% income tax on the profits. They also need to pay 10% surcharge of the tax amount if the profits are more than Rs. 1,00,00,000 (Rs. 10 million). Education Cess of 3% is applied on top of it.
Advance Tax Payment Dates
15th June - First installment
15th September - Second installment
15th December - Third installment
15th March - Fourth installment
- Annual return must be filed by October 31.
- From 2005-06, electronic filing of company returns is mandatory.
- TDS collected should be paid before then 7th of next month.
- Statement of TDS from Salaries should be filed quarterly (15-Jan, 15-Jun, 15-Jul, 15-Oct)
Fringe Benefit Tax - (FBT 30% + SURCHARGE 10% ON IT = 33% + 2% EDUCATION CESS ON 33%= 33.66%)
Some fringe benefits and their taxable rates are mentioned:
20% of Medical reimbursements (effective: 6.8%)
20% of Telephone bills (effective: 6.8%)
Individual Tax Rates
| Tax % |
Income (INR) |
| 0% |
1 - 150,000 |
| 10% |
150,001-300,000 |
| 20% |
300,001-500,000 |
| 30% |
500,001 and above |
- 10% “surcharge” is applicable to income in more than Rs 10,00,000 for 2008-2009
- “Education Cess” of 3% on full tax+surcharge. So effective (max) tax rate is 33.99%.
Capital Gains in India
- Long Term Capital Gain - Sale of an asset that has been held for 3 years or longer (or shares and MF held for more than one year). Rate on tax on long term capital gains is 20%. The cost is adjusted to the increase in Index and deducted from proceeds. Rate of tax on long term gains on shares and MF is 0%.
- Short Term Capital Gain - Sale of an asset that has been held for a shorter period than 3 years (1 year for shares and MF). Short term capital gains is added as the part of income, hence the rate of interest is 30%.
- Medical reimbursement: Up to Rs. 15,000 per year is tax free if supported by bills. (Company pays Fringe Benefit Tax on this amount)
- Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if provided as conveyance allowance. No bills are required for this amount.
- Professional taxes: Most states tax employment on a per-professional basis, usually a slabbed amount based on gross income. Such taxes paid are deductible from income tax.
Income from Housing Property
Income from housing property is max of following:
- Rent received
- Municipal Valuation
- Fair Rent (as determined by the I-T department)
If a house is not let out and not self-occupied, annual value is assumed to have accrued to the owner. Annual value in case of a self occupied house is to be taken as NIL. (However if there is more than one self occupied house then the annual value of the other house/s is taxable.) From this, deduct Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value, deduct :
* 30% of Net value as repair cost (This is a mandatory deduction)
* Interest paid or payable on a housing loan against this house
In the case of a self occupied house interest paid or payable is subject to a maximum limit of Rs,1,50,000 (if loan is taken on or after 1st April 1999) and Rs.30,000 (if the loan is taken before 1st April 1999). For all non self-occupied homes, all interest is deductible, with no upper limits. The balance is added to taxable income.
Interest on Housing Loans
For self occupied properties, interest paid on a housing loan up to Rs 150,000 per year is exempt from tax. However, this is only applicable for a residence constructed within three financial years after the loan is taken and also the loan if taken after April 1, 1999. For let out properties, the entire interest paid is deductible under section 24 of the Income Tax act. If the house is not occupied due to employment, the house will be considered self occupied.
With the recent fuel price hike (Rs. 5 for Petrol and Rs. 3 for Diesel), prices in India are not more very cheap. But have you ever thought what are the fuel prices in other parts of the world. What are the countries where the fuel is costliest and the countries where it is cheapest.