Income Tax

Income Tax Rates/Slabs for A.Y. (2011-12)

Income tax slabs A.Y 2011-2012 for Men
Slab (Rs.) Tax (Rs.)
less than 1,60,000 Nil
1,60,000 to 5,00,000 (Total Income – 1,60,000) * 10%
5,00,000 to 8,00,000 34,000 + (Total Income – 5,00,000) * 20%
Greater than 8,00,000 94,000 + (Total Income – 8,00,000) * 30%
Income tax slabs A.Y  2011-2012 for Women
Slab (Rs.) Tax (Rs.)
less than 1,90,000 Nil
1,90,000 to 5,00,000 (Total Income – 1,90,000) * 10%
5,00,000 to 8,00,000 31,000 + (Total Income– 5,00,000) * 20%
Greater than 8,00,000 91,000 + (Total Income – 8,00,000) * 30%
Income tax slabs A.Y 2011-2012 for Senior Citizen
(Aged above 65 years)
Slab (Rs.) Tax (Rs.)
less than 2,40,000 Nil
2,40,000 to 5,00,000 (Total Income– 2,40,000) * 10%
5,00,000 to 8,00,000 26,000 + (Total Income – 5,00,000) * 20%
Greater than 8,00,000 86,000 + (Total Income – 8,00,000) * 30%

Income Tax Rates/Slabs for A.Y. (2010-11)

Income tax slabs  A.Y  2010-2011 for Men
Slab (Rs.) Tax (Rs.)
less than 1,60,000 Nil
1,60,000 to 3,00,000 (Total Income – 1,60,000) * 10%
3,00,000 to 5,00,000 14,000 + (Total Income – 3,00,000) * 20%
Greater than 5,00,000 54,000 + (Total Income – 5,00,000) * 30%
Income tax slabs  A.Y  2010-2011 for Women
Slab (Rs.) Tax (Rs.)
less than 1,90,000 Nil
1,90,000 to 3,00,000 (Total Income – 1,90,000) * 10%
3,00,000 to 5,00,000 11,000 + (Total Income– 3,00,000) * 20%
Greater than 5,00,000 51,000 + (Total Income – 5,00,000) * 30%
Income tax slabs A.Y  2010-2011 for Senior Citizen
(Aged above 65 years)
Slab (Rs.) Tax (Rs.)
less than 2,40,000 Nil
2,40,000 to 3,00,000 (Total Income– 2,40,000) * 10%
3,00,000 to 5,00,000 6,000 + (Total Income – 3,00,000) * 20%
Greater than 5,00,000 46,000 + (Total Income – 5,00,000) * 30%

What is a tax deduction?

A tax deduction is simply an item that helps you reduce your taxable income by the amount of the deduction. So by utilizing that particular deduction, you can reduce the amount of income tax by reducing the amount of your taxable income.

For example: If you have a taxable income of Rs. 2,50,000 for the financial year, and you invest Rs. 70,000 in PPF and Rs. 30,000 in Insurance Plan, then your taxable income is: Gross Taxable Income: Rs. 2,50,000

PPF: Rs. 70,000
ELSS: Rs. 30,000
Total Deductions: Rs. 1,00,000

Net Taxable Income: Rs. 1,50,000

How can I save tax using different tax deductions?

There are different tax deductions available to an individual under different Sections of the IT Act. Section 80C for example has a deduction limit of Rs. 1 lakh per annum.
You can save tax by making use of the various deductions available to you under different sections of the IT Act i.e. investing in these instruments.

What are the investment avenues available under Section 80C?

The specified investment schemes under section 80C are:

  • Life Insurance Premiums
  • Contributions to Employees Provident Fund (EPF)
  • Public Provident Fund (PPF)
  • National Savings Certificates (NSC)
  • Unit Linked Insurance Plan (ULIP)
  • Repayment of Housing Loan (Principal)
  • Equity Linked Savings Scheme (ELSS) of Mutual Funds
  • Fixed Deposit (FD) with Banks having a lock-in period of five years
  • Pension Funds

What is the limit for Section 80CCF: Long Term Infrastructure Bonds?

An additional deduction of Rs. 20,000 has been introduced by way of investment into long term infrastructure bonds.
Here, any investment made into the specified long term infrastructure bonds between April 1st, 2010 and March 31st, 2011 will be eligible for a tax deduction up to Rs. 20,000.
This is in addition to the Rs. 1 lakh deduction available under Section 80C.

How does Life Insurance Premium payment contribute to Section 80C investment?

An amount up to Rs 1 lakh that you pay towards life insurance premium for yourself, your spouse or your children can be included in Section 80C deduction and reduced from your taxable income.
If you are paying premium for more than one insurance policy, all the premiums can be included, subject to the limit of Rs. 1 lakh.

  • Can I include life insurance premiums paid for my parents?
    No. Life insurance premium paid for your parents or your in-laws is not eligible for deduction.
  • Does this apply to all life insurance products such as endowment, money back, term plans, ULIPs etc? Yes. Any premium paid for any life insurance in any life insurance product is eligible for tax deduction under Section 80C.Also note that any sum, including the bonus, received on maturity of a life insurance policy is tax free. Death benefits received are also exempt from tax.

How do I save tax by contributing to my employee’s provident fund?

The EPF is a scheme intended to help employees from both private and non-pensionable public sectors save a fraction of their salary every month in a savings scheme, to be used in an event that the employee is temporarily or no longer fit to work or upon retirement.An employee can withdraw full amount at the credit in the fund on retirement from service after attaining the age of 55 year.EPF is automatically deducted from salary. Both employee and employer contribute to it. Employee’s contribution is counted towards Section 80C investments.Employees also have the option to contribute additional amounts through voluntary contributions (VPF).

How do I save tax by contributing to the Public Provident Fund (PPF)?
PPF is eligible for tax deduction up to Rs. 70,000. So any amount up to Rs. 70,000 invested towards your PPF account will be eligible for tax deduction. The minimum investment in PPF is Rs 500 per year and the maximum investment is Rs 70,000 per year. The unique feature of PPF is that in case of insolvency it will not be attached to the assets of the insolvent. So this is an attractive tax saving tool for business people in fluctuating and highly leveraged businesses. Withdrawals from your PPF account are allowed during certain years for specific purposes.

How do I save tax by investing in the National Savings Certificate (NSC)?

NSC is a good medium term investment option. An advantage of the NSC is that it can be pledged as security against a loan to banks/ government institutions.The minimum investment starts from Rs 100 and there is no maximum limit for the investment in a year.

How do I save tax by taking a Unit Linked Insurance Plan (ULIP)?
Unit-Linked Insurance Plan (ULIP) is life insurance solution that provides for the benefits of risk protection and flexibility in investment. Part of the premium you pay goes towards the sum assured (amount you get in a life insurance policy) and the balance will be invested in whichever investments you choose as per what is available under the scheme – equity, debt or a mixture of both.

How can I use my home loan to save tax?

The EMI (equated monthly installment) that you pay to repay your home loan consists of two components – one is the principal and the other is the interest. The principal component of the EMI qualifies for deduction under section 80C.Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act. Currently, anybody with a housing loan gets a deduction up to Rs 150,000, paid as interest for the loan, from his total income, for a self occupied property.

How do I save tax by investing in the 5 Year Bank FD?

A fixed deposit is meant for those investors who want to deposit a lump sum of money for a fixed period; say for a minimum period of 15 days to five years and above. Investor gets a lump sum (principal + interest) at the maturity of the deposit.The 5-year tax-saving bank deposit gives tax benefit under Section 80C as the amount you invest in the 5 year FD is deducted from your taxable income.
However interest received on the FD is taxable.

How do I save tax by taking a Pension Plan?
Today pension plans are available with all life insurance companies.They typically come without any life cover (zero death benefit).
Pension funds are exempted under Section 80CCC, this section stipulates that an investment in pension funds is eligible for deduction from the income.Section 80CCC investment limit is clubbed with the limit of Section 80C which means that the total deduction available for 80CCC and 80C is Rs 100,000. This also means that your investment in pension funds up to Rs 100,000 can be claimed as deduction under section 80CCC.

Of the maturity amount only one-third can be commuted in cash as tax free maturity. The rest of the amount (or the full amount as the case may be) has to be used to by a pension plan (annuity). Pension receipts from the same will be treated as income in the hands of the assessee and taxed accordingly. Recently, the Insurance Regulatory and Development Authority (IRDA) has come out with a clear rule that maturity amount should not be withdrawn as cash this is coming to effect from July 1, 2010. Currently, the maturity amount can be withdrawn as cash but the amount will be added to income and will be taxed accordingly.