There are innumerable incomes under the Income Tax Law which are exempted from the purview of tax. These incomes are, appropriately known as exempted incomes. For example, interest income from Relief Bonds as also as income from agriculture are some items of exempted incomes. There are other exempted incomes as well.
The incomes which are not exempted under the Income Tax Law are known as taxable incomes. Income tax is payable on taxable income, technically called “Total Income”. Generally speaking, capital receipts are exempted from the purview of being taxed as income. Likewise, no income tax is payable on gifts received from stipulated relatives.
Income tax is calculated on the net taxable income of an assessee. Taxable income would mean all incomes under different heads of the assessee, after the various permissible deductions which are under various provisions of the Income Tax Law. Only then the net taxable income (known as “Total Income”) of the assessee. For F.Y. 20 12-2013, relevant to the A.Y. 2013-2014, the income tax payable is Nil for individuals and HUF having taxable income up to ` 2,00,000, and that for senior citizens it is ` 2,50,000 the A.Y. 2013-20 14. For very senior citizens (80 years and above) the basic income-tax exemption limit will be ` 5,00,000. The rate of income tax for an individual is just 10% on all incomes between ` 2,00,000 and up to ` 5,00,000. The income tax rate rises to 20% on incomes between ` 5,00,000 and ` 10,00,000 and further increases to 30% income in excess of ` 10,00,000 for the A.Y. 2013-2014. In addition, an education cess of 2% of the tax and a secondary and higher education cess @ 1% of the tax is also payable. The rate of income tax on the Hindu Undivided Family is exactly the same as that for a male individual. However, for partnership firms as well as corporate tax payers there is no initial exemption limit and the income tax payable is @ 30%, pIus an education cess @ 2%, and a secondary and higher education cess of 1% of the income tax payable.