CS Notes - Income Tax| Executive Program| CALCULATION OF INCOME TAX

1. Income of every person is chargeable to tax at the rates prescribed in the Finance Act such as slab rates. However some of the income tax rates are not mentioned in Finance Act but they have been mentioned in Act itself, such as Tax on lottery income is 30% as per section 115BB and tax on long-term capital gains is 20% as per section 112 and if equity shares are sold after 1/10/2004 the STCG are taxable at 15% as per section 111A.
2. Individuals, HUF, AOP, BOI and every artificial juridical person get their income taxable on the basis of slab rate.
3. Surcharge @ 10% is leviable on the tax liability in the case of individual and HUF where their taxable income exceeds Rs. 10 lakhs and Rs. 100 Lakhs in case of firms and companies for the AY 2009-2010.
4. Firms & domestic companies are chargeable at a flat rate of 30%.
5. Surcharge leviable for the AY 2009-2010 has been 10% except in case of foreign companies where it is 2.5%.
6. No surcharge is imposed on local authority and co-operative societies.
7. Every person whose total income of the assessment year exceeds the maximum amount not chargeable to tax shall pay the tax as per the rates mentioned in the finance act, in the previous year itself. Such total income is to be calculated on the basis of the residential status of a person.
8.Education cess for the AY 2009-2010 is 2% for primary education and 1% for higher and secondary education. We should not calculate and charge education cess at 3%, it would be principally wrong.