Income Tax Slabs and Rates for FY 2013-14 and AY 2014-15
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The following INCOME TAX RATES ARE applicable for the Financial Year ending March 31, 2014 (Financial
Year 2013-14)-Assessment Year 2014-15):
Every year the income tax rates are changed and it is important to get the latest income tax rates. We give below the Income Tax Rates and Slabs
applilcable for the FY 2013-14 or AY 2014-15. The income rates and slabs for FY 2013-14 are the same as it was during FY 2012-13, except the
following two major changes (frankly speaking this affects only a limited number of assesses) :-
As per Finance Act, 2013 section 87A of the Income Tax Act, 1961 additional
rebate of Rs.2000/- will be given to the individual tax payer whose total does
NOT exceed Rs 5 lakhs Thus, we can say that a benefit of Rs
2000/- tax credit has been given to persons having an annual income upto Rs 5
(b) There is a surcharge of 10% on persons whose taxable income exceeds Rs
1 crore per year. This will apply to individuals, HUFs, firms and entities with
similar tax status.
General (non-senior citizens) Category
Women (Below 60 years of age)
(This category is abolished from this year and is thus is same as that of
Senior Citizens (Men and Women above 60 years of age), but below 80 years
Very Senior Citizens (Men and Women above 80 years of age)
Upto Rs. 2,00,000
Rs. 2,00,001 to Rs. 2,50,000
Rs. 2,50,001 to Rs. 5,00,000
Rs. 5,00,001 to Rs. 10,00,000
Above Rs. 10,00,000
* A tax rebate of Rs 2,000 from tax calculated will be available for people
having an annual income upto Rs 5 lakh. However, this benefit of
Rs2,000 tax credit will not be available if you cross the income range of Rs 5
lakh. Thus we can say that tax payable in 10% slab will be maximum
Rs28,000 (taking into account Rs 2000 tax credit), but for people who fall in
income range of Rs5 lakh and above, the tax will be Rs30,000 + 20% tax on income
above Rs 5 lakh;
** Surcharge of 10% will be payable, if income is above Rs 1 crore
1. Filing of income tax is compulsory for all individuals whose
gross annual income exceeds the maximum amount which is not charageble to income
tax (e.g. Rs.2,50,000 for Senior citizens, Rs.200000/- for resident individuals
2. The last date for filing of income tax return is usually July
31 for individuals (sometimes the same is extended).
3. The penalty for non filing of income tax return is Rs.5,000/-
(1) Deductions from Taxable
Income (Section 80C) :-
VARIOUS INVESTMENTS OPTIONS
AVAILABLE TO INDIVIDUALS AND TAX BENEFITS AVAILABLE UNDER EACH OF THEM -
Financial Year 2013-14
A new section 80C was introduced (replacing section 88) from the financial year
2005-06. Under this Section, a deduction of upto Rs.1,00,000/- is allowed
from Taxable Income in respect of the investments made in some specified
schemes. The schemes are similar as were available in Section
88 earlier. Now there are no sectoral caps and individuals can save in any
of the schemes upto Rs.1,00,000/- (now even in PPF it is allowed upto Rs. 1 lac
as against only Rs.70,000/- upto November, 2011). The tax payers can plan their investments / savings so
as to achieve their financial goals. The details of such schemes alongwith some major features of
each of these are given below : -
(last reviewed in
Sec. under which Tax Benefit available
Tax benefits for earnings (i.e. interest received / dividend received)
Lock in Period
and other Remarks
National Saving Certificates - ( NSC scheme )
8.50% for VIII Series 5 Year NSCs; and 8.80% for 10 year NSCs for FY 2013-14
5 years (reduced wef Dec 2011 from 6
years to 5 years for new investments). The yield on these NSCs will
now be revised every year and will be 25 bps above the 5 year government bond yields
Equity Linked Savings Schemes (ELSS)
Varies from year to year (Market
Dividend is tax free
Life Insurance Policies
Varies from year to year
Varies from scheme to scheme
Varies from scheme to scheme
Unit Linked Insurance Plan (ULIP)
Varies from year to year
Varies from scheme to scheme
Varies from scheme to scheme
(15 to 20 years)
Varies from issue to issue.
These were around 8%+ in Dec 2011. These have lost their charm
as Additional Tax rebate of Rs 20,000 is NOT given now from FY 2012-13
3 to 5 years
Contribution to EPF / GPF /
Interest earned is tax free
Till retirement (loans are
permitted only after 5 years)
6 to 7% only
Earnings are tax free in most
of the cases
Locked till maturity
Earnngs are tax free
Partiail withdrawal allowed
Public Provident Fund (PPF)
Decreased to 8.70% for FY
earned is tax free
15 years and extendable.
Withdrawals allowed after 7 years. Yield on PPF will vary and will be
fixed at 25 basis point above the 10 year government bonds.
Interest earned is tax free
Withdrawal not permitted
Tuition Fees including
admission fees or college fees paid for full time education of any two
children of the assessee.
Repayment of Housing Loan
Bank Fixed Deposits - 5 Years
Varies from bank to bank (around 8.00%
Senior Citizens Savings Scheme 2004 (from financial year 2007-08)
9.20% for FY 2013-14
As per the guidelines issued
in December 2011, there will be spread of 100 basis points above the 5 year
bonds yields for this scheme.
Post Office Time Deposit Account (from financial 2007-08)
PS Note : Now some of the above
investments (like PPF and 5 Year Senior Citizens Saving Schemes etc.)
are linked to the benchmark of 10 year / 5 Year government bond yields, and
thus the return on these investments will vary as and when the yield
on government bonds changes. Therefore, now remember
that you will not have fixed rate of return on these investments.
On the other hand, for other Small Saving schemes GoI will advise before 1st
April every year, the rates applicable for those schemes for the next FY.
Such instruments will continue to have same return for the whole tenure of the
investment. [For clarification see below the notification which is self
Under this section, the contributions by individuals towards "Pension" schemes
of LIC or any othr Insurance company, is allowed as deduction of Rs.10,000/-.
However, as provided under section 80CCE, the aggregate deduction u/s 80C, and
u/s 80CCC and 80CCD can not exceed Rs.1,00,000/-.
Thus effectively, now
these are covered under the maximum limit of Rs.1,00,000/- under section
(2) Deductions Under Section 80 D :
Basic Deduction under Section 80D,
Mediclaim premium paid
for Self, Spouse or dependant children is allowed upto Rs 15,000. In case
any of the persons specified above is a senior
citizen (i.e. 65 years or more as of end of the
year) and Mediclaim insurance premium is also
paid for such senior citizen, deduction amount
is enhanced to Rs. 20,000.
Mediclaim premium paid for
parents. Maximum deduction Rs 15,000.
In case any of the parents covered by the
Mediclaim policy is a senior citizen, deduction
amount is enhanced to Rs. 20,000.
Thus, in a net shell
we can say that health insurance premium that you pay for
yourself, your dependents (spouse and children) and your parents,
are all considered for tax benefit under Section 80D of the Income
Tax Act 1961.Therefore, you can claim
a deduction up to Rs.30000 on your taxable income, and if your
parents are senior citizens, the deductible amount goes up to
However, there are a few conditions:
can not claim tax benefit on health insurance premium paid for
Proof of payment of premium has to be furnished, in order to
avail the tax benefit
health insurance premium must be paid from taxable income of
that year only if you want to claim a deduction.
Thus, if one has paid the premium from ones savings or from
gifts of money received, then one is not eligible for tax
benefits under this section.
However, you have to remember that the
premium paid by any mode of other than cash is eligible. Note prior to 1st
April 2009, premium payment was required to be paid only by cheque. However,
now even the payments through Credit card or other on line mechanism are
allowed. Thus, now all payment modes except cash payment are accepted
(3) Deductions Under Section 80 E :
Under this section, deduction is available for payment of interest on a loan
taken for higher education from any financial institution or an approved
charitable institution. The loan should be taken for either pursuing a full-time
graduate or post-graduate course in engineering, medicine or management, or a
post-graduate course in applied science or pure science.
The deduction is available for the first year when the interest is paid and for
the subsequent seven years. Up to March 2005, deduction was available for the
repayment of principal and interest aggregating to Rs 40,000 a year.
(4) Deductions Under Section 24(b) :
Under this section, interest on borrowed capital for the purpose of house
purchase or construction is deductible from taxable income upto Rs.1,50,000/- is
deductible from income. (certain conditions are to be fulfilled)
Section 80CCF allowsed you to invest an
additional Rs. 20,000 in infrastructure
bonds, and such an investment was
reduced from your taxable income in addition
to the Rs.100,000 deduction you get from the
other instruments listed above.
You were to get the
tax benefit only in
the year in which
you have invested in
TAX FREE INCOMES :
Some of the incomes are completely exempted from income tax and that too
without any upper limit. The following incomes which are tax free :-
(a) Interest on EPF / GPF / PPF
(b) Interest on GOI Tax Free Bonds / Tax Free Bonds issued with specific
stipulation to this effect
(c) Dividends on Shares and Mutual Funds. Dividend income from
companies / Equity Oriented Mutual funds is completely exempt in the hands of
investors. Dividend is also tax free in the hands of investors in case of
debt-oriented Mutual Fund schemes. (However, the Asset Management Company
is liable to deduct 22.44% distribution tax in case of non individuals / non HUF
investors and 14.025% in case of individuals or HUF investors.)
(d) Capital receipts from Life Insurance policies i.e. sums received either
on death of the insured or on maturity of Life insurance plans. However,
in case of life insurance policies issued after March 31, 2004, exemption on
maturity payment u/s 10(10D) is available only if premium paid in any year does
not exceed 20% of the sum asssured;
e) Interest on Saving Bank accounts in banks upto Rs10,000/- per year (from
(f) Interest earned was Tax Free up to INR 3500/- per year in single and INR
7000/- in Joint account up to 2011-12. From 2012-13 FY, interest up to INR
10,000/- per year either in single or joint account
(f) Long term capial gains on sale of shares and equity mutual funds after
01/10/2004, if security transaction is paid / imposed on such transactions.
GIFT TAX :
Gift tax was abolished with effect from October 1, 1998. The gifts are
no longer taxable in the hands of donor or donee. However, w.e.f.
September 1, 2004, any gift received by an individual or HUF will be included in
taxable income, if the amount of tax exceeds Rs.25,000/-. However,
gifts received from any of the following will continue to remain tax free :-
(ii) Brother or sister;
(iii) Brother or sister of the spouse;
(iv) Brother or sister of either of the parents of the individual;
(v) Any lineal ascendant or descendant of the individual
(vi) Any lineal ascendant or descendant of the spouse of the individual
(vii) spouse of the person referred to in (2) or (6) or received on the
occasion of marriage or under a will by way of inheritance
Capital Gains :
Capital gains arise when an individual sells at a profit
certain assets like property or shares or mutual funds or bonds etc
The treatment of such income is not the same as income from other
sources. There are two types of capital gains, viz
Short Term Capital Gains or Long Term Capital Gains.
(a) Short Term Capital Gains :
Capital gain is considered as Short Term Capital Gain, if immovable
property is sold / transferred within three years of acquiring the same.
Similarly, if shares or other financial securities such as mutual funds
are sold within one year of purchase, the profit earned is treated as
Short Term Capital Gain.
Short term capital gain is included in the gross taxable income and
normal tax rates are applicable. However, w.e.f. 1st October,
2004, the short term capital gains from sale of equity shares or units
of equity oriented mutual fund schemes are taxed only at a flat rate of
10%, irrespective of the tax slab on other sources of income, provided
securities transaction tax is paid on such sale.
(b) Long Term Capital Gains : Capital
gain is considered as the Long Term, if the immovable property is sold
after three years from purchse, or financial securties such as shares,
deep discount bonds, units of open ended or close ended schemes of
mutaula funds are disposed (i.e. sold / redeemed / transferred) after
holding the same for more than twelve months, then the gain is
considered to be long term capital gain.
Long term capital gains on transfer of listed shares / units of
equity oriented mutual funds schemes has been exempted from tax w.e.f.
1st October, 2004, provided securities transaction tax has been paid on
such sale. For assets other than the listed shares / units of
mutual funds schemes, tax is payable in respect of long term capital
gains at a flat rate of 20% and the amount of gain has to be adjusted
for inflation through indexation benefit.
Long term capital gains tax in respect of bonds and debt securities
or debt oriented mutual fund schemes listed on stock exchanges is
payable at a flat rate of 10% of the capital gains amount. In case an
individual wishes to avail the benefits of indexation, then tax has to
be paid at normal long term capital gains tax rate of 20%.
Section 54EC of the I-T Act, 1961 : Relief
from Capital Gains Tax
You can make good use of this Section to save Taxes
specially when you sell some property. The Income Tax laws
provides for taxes on long-term capital gains at 20 per cent for individuals
and foreign firms and 30 per cent for domestic companies. However, Section
54EC of the I-T Act, 1961, provides relief from capital gains tax.
Under this Section, gains on transfer of a long-term capital asset can be
exempted from tax if the money is invested in bonds of specified
institutions such as NABARD, the Rural Electrification Corporation (REC),
SIDBI or the National Highway Authority of India. Such bonds are
redeemable after three years. However, to save tax, you have
to invest in these bonds within six months from the date of transfer of the
original asset. Thus investing in these bonds will effectively mean
that your money is locked in for three years. If you want to buy a new
property one or two years after transferring the original asset, you will
have to either wait or look for alternative funds. After the
lock-in period or on the maturity of the bonds, the investor is free to put
in his money in any kind of asset. However, the interest on the
bond is taxable.
On the other hand, State Bank of India, offers SBI
Capgains Plus Scheme where lock-in period is absent, a slightly higher
interest rate compared to the capital gain tax saving bonds is offered.
The proceeds of the sale of the capital asset can be parked in the fixed
deposit scheme under the Capgains Plus plan at an interest rate marginally
higher than what bonds under Section 54 EC would fetch. The interest earned
will be taxed at prevailing rates. However, unlike the bonds under 54
EC, the depositor cannot put the money in a different kind of asset. The
plan stipulates that re-investment should be made on the specified asset
only. Therefore, this scheme is a boon for people who have sold
their property but haven't been able to purchase the property within the
stipulated period. Once a final decision is taken on
the property you want to reinvest in, you can opt for an exit from SBI Plan,
but you will need to get a certificate of consent from the assessment
SOME OLD NOTIFICATIONS RELATING
TO SMALL SAVING FUND SCHEMES
DGBA.CDD. No. H- 6506 /15.02.001/2011-12
April 3, 2012
Public Provident Fund Scheme, 1968 (PPF,
Senior Citizens Savings Scheme, 2004 (SCSS, 2004) - Revision of
Please refer to our
circular RBI/2011-12/359 dated January 20, 2012 regarding
interest rates on small savings schemes, wherein it was
indicated that as per Government’s decision on revision of
interest on small savings schemes, the interest rates on various
small savings schemes for every financial year will be notified
by the Government before April 01st of that year.
2. The Government of India have vide their
Office Memorandum (OM) No. 6-1/2011-NS.II (Pt.) dated March 26,
2012, advised the rate of interest on various small savings
schemes for the financial year 2012-13. Accordingly, the rates
of interest on PPF, 1968 and SCSS, 2004 for the financial year
2012-13 effective from April 01, 2012, on the basis of the
interest compounding/payment built-in in the schemes, will be as
interest w.e.f. 01.12.2011
interest w.e.f. 01.04.2012
3. The contents of this circular may be brought to the notice
of the branches of your bank operating the PPF, 1968 and SCSS,
2004 schemes. These should also be displayed on the notice
boards of your branches for information of the PPF, 1968 and
SCSS, 2004 subscribers.
Deputy General Manager
Ministry of Finance
Department of Economic Affairs
the 26 March, 2012.
Revision of Interest rates for small savings schemes.
undersigned is directed to refer to Ministry of Finance’s O.M. of even number
dated 11th November, 2011, vide which the various decisions taken by the
Government on the recommendations of the Shyamala Gopinath Committee for
Comprehensive Review of National Small Savings Fund (NSSF), were communicated to
2. One of the decisions of the Government based on the recommendations of the
Committee relates to revision of interest rates every financial year, to be
notified before 1st April of that year. Accordingly, the rates of interest on
various small savings schemes for the financial year 2012-13 effective from
1.4.2012, on the basis of the interest compounding/payment built-in in the
schemes, shall be as under:
Rate of interest w.e.f.1.12.2011
Rate of interest w.e.f.1.4.2012
1 year time deposit
2 year time deposit
3 year time deposit
5 year time deposit
5year recurring deposit
10 year NSC
Necessary notifications, including those requiring amendments to rules of small
savings schemes will be notified separately.
for Launch of 10-Year National Savings Certificate
Notification for Launch of 10-Year National Savings Certificate (IX-Issue), 2011
accordance with the decisions taken by the Government on the basis of the
recommendations of the Committee for Comprehensive Review of National Small
Savings Fund (NSSF), headed by Smt Shyamala Gopinath, the then Deputy Governor,
Reserve Bank of India, Notifications on changes made in various small saving
schemes except 10-Year National Savings Certificate, have already been issued on
25th November 2011.
The Notification for launch of new savings instrument, namely
10-Year National Savings Certificate (IX-Issue), 2011, has been issued today,
the 29th November, 2011.
The major highlights of this scheme are as follows:
Investments in Certificate will earn Interest at the rate of 8.7% p.a.
investment of Rs. 100, the depositor will get Rs. 234.35 on maturity of the
Certificate will be available in the denominations of Rs. 100, Rs. 500, Rs.
1000, Rs. 5000 and Rs. 10,000.
no upper limit for investment in the Certificate.
Certificate can be transferred from a post office where it is registered to any
other post office and it can be pledged as a security.
The scheme will come into effect from 1st December 2011. Details of
the notification are attached herewith and can also be seen on the website of
the Ministry of Finance i.e. http://www.finmin.nic.in
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