Taxable Income - Meaning, Calculation, and Examples
All income is considered as taxable, with some tax deductions and exemptions not included under the taxable income. This is applicable for all individuals, companies, Hindu Undivided Families (HUF), local authorities, body of individuals, etc.
What is Taxable Income?
Taxable income is the base income upon which tax is levied. It includes some or all items of income and is reduced by expenses and other deductions.
The amounts included as income, expenses, and other deductions vary according to the country and the system in the country. Usually, all income is considered as taxable income, but some income have tax exemptions and deductions and hence won’t be included under taxable income.
Taxable Income in India
The taxable income in India is levied on all individuals including Hindu Undivided Families (HUFs), companies, firms, body of individuals, local authority and any other artificial judicial person.
The tax levied on every individual is different depending on their income. The tax levied is governed by Indian Income Tax Act, 1961.T he income tax received by taxpayers is the main source of funding for the public services in the country.
How to Calculate Taxable Income?
Calculating taxable income is very easy and hassle free. To calculate the income tax to be paid, the customer has to add up all the income received and the tax liability is then reduced by deductions and exemptions.
The official website of Income Tax India has a tax calculator on their website which is available to the public. The customer can use the tax calculator by providing a few details to calculate their income.
Listed below are few details that need to be filled out while calculating the tax:
- Assessment year
- Tax payer
- Residential status
- Income from salary
- Income from house property
- Capital gains
- Income from other sources
- Profits and gains
- Agricultural income
- Deductions
Examples of Taxable Income
Listed below are some of the examples of taxable income.
- Wages
- Salary
- Bonus
- Annuity
- Alimony
- Discounts
- Dividends
- Employee awards
- Interest
- Fee
- Hobby income
Taxable Income Slab Rates
Listed below are the income tax slab rates for the year 2024-2025. The taxable income slab rates differ for each category.
For Male Individuals and HUF Individuals who are below 60 years:
Taxable Income Slab | Taxable Income Rates |
For total income below Rs. 2,50,000 | NIL |
For total income between Rs.2,50,000 and Rs.5,00,000 | 5% |
For total income between Rs.5,00,000 and Rs.10,00,000 | 20% |
For income that exceeds Rs.10,00,000 | 30% |
Individual aged above 60 years to 80 years
Taxable income slab | Taxable income rates |
For total income Rs. 0 - Rs. 3.00 lakh | NIL |
For total income between Rs 3.00 lakh- Rs 5.00 Lakh | 5% |
For total income between Rs 5.00 lakh - Rs 10 Lakh | 20% |
For income that exceeds Rs.10 Lakh | 30% |
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