Income Tax Slabs and Rates for FY 2014-15 and AY 2015-16

The following INCOME TAX RATES ARE applicable for the Financial Year ending March 31, 2015 (Financial
Year 2014-15)-Assessment Year 2015-16):
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 applicable for the FY 2014-15 or AY 2015-16.
Income Range
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 General Category
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. 2,50,000 Nil Nil Nil Nil
Rs. 2,50,001 to Rs. 3,00,000 10% * 10% * Nil Nil
Rs. 3,00,001 to Rs. 5,00,000 10% * 10% * 10% * Nil
Rs. 5,00,001 to Rs. 10,00,000 20% 20% 20% 20%
Above Rs. 10,00,000 30% ** 30% ** 30% ** 30%**

* 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;
The education cess to continue at 3 percent.
** Surcharge of 10% will be payable, if income is above Rs 1 crore
Some Changes effected from the FY 2014-15 (AY 2015-16)
Investment limit under section 80C of the Income-Tax Act raised from Rs.1 lakh to Rs. 1.5 lakh.
Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs.1.5
lakh to Rs. 2 lakh.
PPersonal Income-tax exemption limit raised by ` 50,000/- that is, from Rs. 2 lakh to Rs. 2.5 lakh in the case
of individual taxpayers, below the age of 60 years.


Important Rules for filing of Tax Return
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.3,00,000 for Senior citizens, Rs.2,50,000/- 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.1,50,000/- (wef FY 2014-15) 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.1,50,000/- (now even in PPF it is allowed upto Rs. 150 lac as
against only Rs.1 lakh upto March 2014).. 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 August , 2014)
Saving Scheme
Sec. under
which Tax
Benefit
available
Return
Tax benefits for
earnings (i.e.
interest received /
dividend received)
Lock in Period and other
Remarks
National Saving Certificates -
( NSC scheme )
Section 80C
8.50% for VIII
Series 5 Year
NSCs; and
8.80% for 10
year NSCs for
FY 2014-15
Taxable
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)
Section 80C
Varies from
year to year
(Market linked)
Dividend is tax free 3 years
Life Insurance Policies Section 80C
Varies from
year to year
Varies from scheme
to scheme
Varies from scheme to scheme
Unit Linked Insurance Plan
(ULIP)
Section 80C
Varies from
year to year
Varies from scheme
to scheme
Varies from scheme to scheme
(15 to 20 years)
Infrastructure Bonds (NO
LONGER AVAILABLE
FOR FRESH
INVESTMENT)
Section 80C
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 onwards.
Taxable 3 to 5 years
Contribution to EPF / GPF /
Voluntary PF
Section 80C
8.75% on EPF
for 2013-14
(announced in
August 201)
Interest earned is tax
free
Till retirement (loans are
permitted only after 5 years)
Insurance Policies Section 80C 6 to 7% only
Earnings are tax free
in most of the cases
Locked till maturity
ULIPS Section 80C Market linked Earnngs are tax free Partiail withdrawal allowed
Public Provident Fund (PPF) Section 80C
8.70% for FY
2014-15
Interest 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.
NPS Section 80C Market Linked
Interest earned is tax
free
Withdrawal not permitted before
maturity
Tuition Fees including
admission fees or college
fees paid for full time
education of any two children
of the assessee.
Section 80C Not applicable Not applicable Not applicable
Repayment of Housing Loan
(Principal)
Section 80C Not applicable Not applicable Not applicable
Bank Fixed Deposits - 5
Years
Section 80C
Varies from
bank to bank
(around 8.00% -
9.00%)
Taxable 5 Years
Senior Citizens Savings
Scheme 2004 (from
financial year 2007-08)
Section 80C
9.20% for FY
2014-15
Taxable
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)
Section 80C



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
explanatory]



HOW TO MAKE BEST USE OF SECTION 80C OR BACKGROUND AND KNOW ALL ABOUT SECTION
80C
(1) Deductions Under Section 80CCC(1) :
Under this section, the contributions by individuals towards "Pension" schemes of LIC or any other 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.1,50,000/-. Thus effectively, now these are covered under the maximum
limit of Rs.1,50,000/- under section 80C.
(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.
Additional deduction: 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 Rs.35000.

However, there are a few conditions:
You can not claim tax benefit on health insurance premium paid for your in-laws;
Proof of payment of premium has to be furnished, in order to avail the tax benefit
The 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.
(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.2,00,000/- is deductible from income. (certain conditions are to be fulfilled)
PS : 1A) Section 80CCF : Infrastructure Bonds : (NOT PERMITTED FROM FY 2012-13) onwards) :
Section 80CCF allowed 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 these instruments.
NOW THIS IS NOT ALLOWED

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 FY 2012-13)
(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 :-
(i) Spouse;
(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 officer.