Income Tax Slabs FY 2017-18 (AY 2018-19)

Updated: 3 June 2026

Key change — Budget 2017: The income tax rate for the ₹2.5 lakh to ₹5 lakh bracket was cut from 10% to 5%. This was the most significant change for individual taxpayers in FY 2017-18 (Assessment Year 2018-19). The 87A rebate was simultaneously revised from ₹5,000 to ₹2,500 with a tighter eligibility cap of ₹3.5 lakh.

The ₹2.5L–₹5L slab rate was halved from 10% to 5% in Budget 2017 (FY 2017-18), saving up to ₹12,500 in tax for individuals in this bracket (before cess).

Individual (Below 60 Years) — FY 2017-18

Income Slab	Tax Rate	Tax Amount
Up to ₹2,50,000	Nil	—
₹2,50,001 – ₹5,00,000	5%	Up to ₹12,500
₹5,00,001 – ₹10,00,000	20%	Up to ₹1,00,000
Above ₹10,00,000	30%	On income above ₹10L

Senior Citizens (60 to 79 Years) — FY 2017-18

Income Slab	Tax Rate
Up to ₹3,00,000	Nil
₹3,00,001 – ₹5,00,000	5%
₹5,00,001 – ₹10,00,000	20%
Above ₹10,00,000	30%

Super Senior Citizens (80 Years and Above) — FY 2017-18

Income Slab	Tax Rate
Up to ₹5,00,000	Nil
₹5,00,001 – ₹10,00,000	20%
Above ₹10,00,000	30%

Surcharge, Cess and Rebate — FY 2017-18

Item	Rate / Amount	Applicability
Section 87A Rebate	₹2,500 (max)	Total income ≤ ₹3,50,000
Surcharge (new in Budget 2017)	10%	Income between ₹50 lakh and ₹1 crore
Surcharge (existing)	15%	Income above ₹1 crore
Education Cess	2%	On income tax + surcharge
Secondary & Higher Education Cess	1%	On income tax + surcharge
Total Cess	3%	On income tax + surcharge

Deductions Available for Salaried in FY 2017-18

Standard deduction was not available in FY 2017-18. Salaried employees could claim:

Allowance	Annual Limit	Condition
Transport Allowance	₹19,200	₹1,600/month; doubled for physically disabled (₹3,200/month)
Medical Reimbursement	₹15,000	Bills to be submitted to employer
Combined benefit	₹34,200	Replaced by flat Standard Deduction from FY 2018-19

Historical Comparison: FY 2016-17 vs FY 2017-18 vs FY 2018-19

Feature	FY 2016-17	FY 2017-18	FY 2018-19
₹2.5L–₹5L rate	10%	5% (cut by 50%)	5%
87A rebate amount	₹5,000	₹2,500	₹2,500
87A income limit	₹5,00,000	₹3,50,000	₹3,50,000
Surcharge 10%	Not applicable	₹50L–₹1Cr (new)	₹50L–₹1Cr
Cess rate	3%	3%	4% (Health & Education)
Standard deduction	Not available	Not available	₹40,000 (introduced)

Frequently Asked Questions

Why was the 10% income tax slab reduced to 5% in Budget 2017?

The Finance Minister reduced the tax rate from 10% to 5% for income between ₹2.5 lakh and ₹5 lakh in Budget 2017 as a major relief measure for small taxpayers. This effectively halved the tax burden for individuals in this bracket and was accompanied by a reduction in the Section 87A rebate from ₹5,000 to ₹2,500 (with tightened eligibility of ₹3.5 lakh instead of ₹5 lakh).

How did the Section 87A rebate change in FY 2017-18 compared to FY 2016-17?

In FY 2016-17, Section 87A allowed a rebate of up to ₹5,000 for individuals with income up to ₹5 lakh. In FY 2017-18, the rebate was reduced to ₹2,500, and the eligibility threshold was tightened to income up to ₹3,50,000. Despite the lower rebate amount, overall tax liability reduced due to the 10% → 5% slab rate cut.

When was standard deduction introduced — was it available in FY 2017-18?

No. Standard deduction was re-introduced for salaried employees only from FY 2018-19 (AY 2019-20) via Budget 2018. In FY 2017-18, salaried employees could claim a transport allowance of ₹19,200 per year and medical reimbursement of up to ₹15,000 per year — a combined benefit of ₹34,200.

Was there a surcharge on income tax in FY 2017-18?

Yes. Budget 2017 introduced a 10% surcharge on income tax for individuals earning between ₹50 lakh and ₹1 crore. For income above ₹1 crore, a 15% surcharge (already applicable from earlier years) continued. This was a new addition for the ₹50L–₹1Cr bracket.

What was the cess rate applicable in FY 2017-18?

A 3% cess (Education Cess 2% + Secondary and Higher Education Cess 1%) was applicable on income tax plus surcharge in FY 2017-18. The 4% Health and Education Cess was introduced only from FY 2018-19.

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