Taxable Income
What is Taxable Income?
Taxable income is the part of an individual or entity’s total earnings that is subject to taxes. In India, this is calculated by subtracting eligible deductions and exemptions from the total income. The result determines the tax rate and amount owed.
Taxable income tax slab in India
| Tax Slab for FY 2023-24 | Tax Rate | Tax Slab for FY 2024-25 | Tax Rate |
|---|---|---|---|
| Upto ₹ 3 lakh | Nil | Upto ₹ 3 lakh | Nil |
| ₹ 3 lakh - ₹ 6 lakh | 5% | ₹ 3 lakh - ₹ 7 lakh | 5% |
| ₹ 6 lakh - ₹ 9 lakh | 10% | ₹ 7 lakh - ₹ 10 lakh | 10% |
| ₹ 9 lakh - ₹ 12 lakh | 15% | ₹ 10 lakh - ₹ 12 lakh | 15% |
| ₹ 12 lakh - ₹ 15 lakh | 20% | ₹ 12 lakh - ₹ 15 lakh | 20% |
| More than 15 lakh | 30% | More than 15 lakh | 30% |
Main Components of Taxable Income in India
-
Gross Total Income: This includes earnings from various sources like salary, business, capital gains, property, and other income (such as interest and dividends).
-
Deductions: Certain expenses reduce taxable income, including:
- Section 80C: Investments in schemes like Provident Fund, Life Insurance, or Tax-Saving Fixed Deposits.
- Section 80D: Medical insurance premiums for self, spouse, and children.
- Section 80E: Interest on education loans.
- Home Loan Interest: Deductions on interest paid for home loans.
How is Tax Liability Determined?
Once taxable income is determined, the corresponding tax rate is applied according to the income slab. India follows a progressive tax system, meaning higher earnings are taxed at higher rates. After this, any eligible tax credits or rebates are subtracted to find the final tax amount.
Note: Tax rules in India may change, so it’s advisable to stay updated with the latest government guidelines or seek advice from a tax professional.
