Updated New & Old Income Tax Slabs and Rates in India for 2022-23

Date 15 Jul 2022
Time 10 mins
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  • Table of Contents

    Table of Contents

    • What is the Income Tax Slab in India?
    • Difference of Slab Rates Between New Tax Regime vs Old Tax Regime for Taxpayers
    • Categories of Tax Slabs for Individual Taxpayers in India (under Old Tax Regime)
    • Income Tax Slab Rates for FY 2021-22 AY 2022 23
    • Difference of Slab Rates - New vs Old Tax Regime for Domestic Businesses
    • Comparison of the New Tax Regime and Old Tax Regime
    • List of Deductions “Not allowed” Vs “Allowed” under the New Regime
    • Why is the New Tax Regime is Optional?
    • When can the New Tax Regime be Opted?
    • Things to Keep in Mind Before Opting for the New Tax Slab
    • How Surcharge is Calculated?
    • Key Takeaways
    • Conclusion
    • FAQs

Finance Minister Smt Nirmala Sitharaman introduced the new tax regime under Budget 2020. The budget introduced an increase in tax slabs along with decreased tax rates. The deductions and exemptions available in the old tax regime were removed from the new regime. As a taxpayer, you may feel confused when choosing between the old and the new tax regime. It may seem like a difficult choice, but a detailed understanding of the two will allow you to compare the two tax brackets and make a well-informed decision. As a citizen, it is your responsibility that you make a note of all such amendments and also follow them.

What is the Income Tax Slab in India?

In India, individuals, Hindu Undivided Families and firms are mandated to pay a tax that is levied on the income that they earn. There is a set strategy for the payment of this tax which is called the income tax. These sets in which tax rates are divided are called tax slabs. The 2020 Union Budget has brought new updates to the taxation system and tax slabs.

As per the Indian taxation system, an individual has to pay taxes on the basis of the income slab that she/he falls in. When an individual’s income increases, there is an increase in tax liabilities as well.

Difference of Slab Rates Between New Tax Regime vs Old Tax Regime for Taxpayers

Given below is a table of comparison that would help you understand the two tax regimes and their differences:

Income Range

Old Tax Regime

New Tax Regime

Till ₹2.5 lakhs

Nil

Nil

From ₹2.5 lakhs - 5 lakhs

5%

5%

From ₹5 lakhs - 7.5 lakhs

20%

10%

From ₹7.5 lakhs - ₹10 lakhs

20%

15%

From ₹10 lakhs - ₹12.5 lakhs

30%

20%

From ₹12.5 lakhs - ₹15 lakhs

30%

25%

Income over ₹15 lakhs

30%

30%

Source: https://www.incometaxindia.gov.in/pages/charts-and-tables.aspx

Categories of Tax Slabs for Individual Taxpayers in India (under Old Tax Regime)

The taxpayer in India is divided into the following categories:

  • Individuals below 60 years of age, including residents as well as non-residents
  • Individuals between 60-80 years of age: Senior Citizens
  • Individuals above 80 years of age: Super Senior Citizens
  • Domestic companies
  • Partnership firm or LLP

Let us take a look at the different tax slabs:

Income Tax Slab Rates for FY 2021-22 AY 2022-23 - For the Individuals under 60 Years of Age HUF and NRIs

Income Tax Slab

Rates for the Individuals under 60 years of age

Till ₹2.5 lakhs

Nil

From ₹2.5 lakhs - ₹5 lakhs

5%

From 5 lakhs - ₹10 lakhs

20%

Over ₹10 lakhs

30%

Income Tax Slab Rates for FY 2021-22 AY 2022-23 - For the Age Group 60 - 80 Years

Income Tax Slab

Rates for the Individuals for the age group 60 - 80 years

Till ₹3 lakhs

Nil

From ₹3 lakhs - ₹5 lakhs

5%

From ₹5 lakhs - ₹10 lakhs

20%

Over ₹10 lakhs

30%

Source: https://www.incometaxindia.gov.in/pages/charts-and-tables.aspx

Income Tax Slab Rates for FY 2021-22 AY 2022-23 - For the Individuals Over the Age of 80 Years

Income Tax Slab

Rates for the Individuals for the age group 60 - 80 years

Till ₹5 lakhs

Nil

From ₹5 lakhs - ₹10 lakhs

20%

Over ₹10 lakhs

30%


Difference of Slab Rates Between New Tax Regime vs Old Tax Regime for Domestic Businesses

The table of comparison given below will help understand the slab rates between new tax regime vs old tax regime for domestic businesses:

Particulars

New Regime

Old Regime

A company that has:


– Opted for Section 115BAB
– Is registered on/ after 1st October, 2019
– Commenced manufacturing on/ before 31st March, 2023

15%

-

A company that has:

– Opted for Section 115BAA
– The total income is to be calculated without claiming
— Incentives
— Deductions
— Exemption
— Depreciation

22%

-

A company that has:

– Is registered on/ after 1st March, 2016
– Is engaged in manufacturing things that do not claim deductions

25%

-

A company that has:

– A turnover/ Gross Receipt less than ₹400 crores in 2018-19

25%

25%

Any other domestic company

30%

30%

Comparison of the New Tax Regime and Old Tax Regime

To understand the two tax regimes a little better, let us now see this example. Ramesh Nair is a 36-year-old software engineer with a salary of ₹15 lakhs a year his monthly house rent is ₹30,000, which comes to ₹3.6 lakhs a year. Here is his salary break-up:

  • A basic salary income of ₹15 lakhs per year
  • The LTA is ₹20,000
  • HRA of ₹4 lakhs per annum
  • A Special Allowance or ₹2.85 lakhs
  • Ramesh Nair falls in the category of an Individual Resident Indian

Nature

Amount

(in lakhs)

Deductions

(in lakhs)

Taxable Income

(Old regime)

Taxable Income

(New regime)

Basic

15

Not applicable

15

15

HRA

4

3.6

0.4

4

Special Allowances

2.85

Not applicable

2.85

2.85

LTA

0.2

0.2

0

0.2

Standard Deduction (for salaried)

-

0.5

0.5

Not applicable

Total Income

₹22.05 lakhs

₹4.3 lakhs

₹17.75 lakhs

₹22.05 lakhs

Tax Calculation under the Old Tax Regime:

Nature

Amount in 

Total in 

Salary

17,75,000

 

Any other source of income

45,000

 

Gross total income

 

18,20,000

Deductions

 

U/S 80C

 

U/S 80D

 

U/S 80TTA

 

 

1,50,000

 

20,000

 

10,000

1,80,000

Taxable Income

 

1,64,000

Tax portion

 

3,04,500

Health and education cess

 

12180

Total tax liability (including cess)

 

3,16,680

Tax Calculation under the New Tax Regime:

Nature

Amount in

Total in

Salary

22,05,000

 

Any other source of income

45,000

 

Taxable Income

 

20,50,000

Tax portion

 

4,12,500

Health and education cess

 

16,500

Total tax liability (including cess)

 

4,29,000

List of Deductions "Not allowed" Vs "Allowed" under the New Regime

If you opt for the new tax regime, you may have to let go of certain deductions and exemptions that are otherwise available in the old regime. Out of the 70 such deductions and exemptions, the common ones that are Not Allowed are listed below. The table also shows the deductions that are allowed.

Exemptions and Deductions that are Allowed

Exemptions and Deductions that are Not Allowed

Transport Allowance for the Specially abled

House rent Allowance

Conveyance Allowance for expense for travelling to work

Leave Travel Allowance

Deduction for Employment of new employees under Section 80JJAA

Relocation Allowance

Depreciation Under Section 32 of the Income Tax Act

Children Education Allowance

Investments in Notified pension Scheme

Interest on Housing loan

Allowance for travelling for employment or on transfer

Professional Tax

 

Conveyance Allowance

Why is the New Tax Regime is Optional?

There are still a number of confusions and concerns regarding the new tax regime, and there are many who are still unable to decide which one they should opt for. The new regime is available to HUF as well as individuals and is completely optional. You can get concession rates with an income up to ₹15 lakhs. In case you wish to forgo the deductions that are available in the old tax regime, you are free to file your returns under the new regime.

When can the New Tax Regime be Opted?

iconbullet
For Salaried Individuals
At the beginning of every financial year, salaried individuals can select between the old and new tax regimes.
iconbullet
For Business
Can be chosen once for a particular business.

Things to Keep in Mind Before Opting for the New Tax Slab

Make sure you keep the following points in mind when filing your ITR

  • iconbullet Under Section 80CCD(2) a deduction is available if an employer is making a contribution to the employee’s NPS account.
  • iconbullet The maximum amount that can be claimed is 10% of the basic salary + dearness allowance.
  • iconbullet The new tax regime doesn’t allow any exemptions based on the age limit of the taxpayer.
  • iconbullet Under Section 87A of the Income Tax Act, the maximum tax rebate is ₹12,500.
  • iconbullet In case you want to opt for the new regime, you must inform your employer. You can do this through the declaration form. Your employer will accordingly deduct the monthly TDS.
  • iconbullet Not informing your employer simply means that you wish to continue with the old tax regime.
  • iconbullet In the case of TDS, once you decide to go with the new tax regime, you would be able to switch only at the end of the financial year.
  • iconbullet You have the right to choose either of the two at the time of filing your ITR.

What is a Surcharge on Income Tax?

In case your income falls under the high tax bracket, and beyond a certain limit set by the government, you would be liable to pay an extra fee or additional tax known as a surcharge. This extra fee is added to the cost/ price of a service or a product over and above the original price. Thus, the surcharge is not a part of the price quoted initially but added to the existing price. The Surcharge Rates that are applied are different for different taxpayers. Let us see how

Type of the Taxpayer

Income Limit

Surcharge Rate

Individual/ BOI/ AOP/ HUF

From ₹50 lakhs to ₹1 crore

10%

Individual/ BOI/ AOP/ HUF

From ₹1 crore to ₹2 crores

15%

Individual/ BOI/ AOP/ HUF

From ₹2 crores to ₹5 crores

25%

Individual/ BOI/ AOP/ HUF

Above ₹5 crores

37%

Firm/ Local Authorities/ Co-Op Society/ LLP

Above ₹1 crore

12%

Foreign Companies

From ₹1 crore to ₹10 crores

2%

Domestic Companies

From ₹1 crore to ₹10 crores

7%

Domestic Companies

Above ₹10 crores

12%

How Surcharge is Calculated?

As explained earlier, a surcharge is a tax that is levied on a tax. Calculated on the payable tax, a surcharge is not dependent on the income that is being generated. So, for instance, a 10% on an existing 30% will effectively raise the tax to 33%. For example, on ₹50, a 10% surcharge would be ₹5, in all the payable tax would be ₹55.

Key Takeaways

  • iconbullet Point 1: The old tax regime is still in place. The taxpayer has the right to choose either of the two regimes. The Government lays no compulsion.
  • iconbullet Point 2: The new tax regime does not make it obligatory for the taxpayer to invest in any tax-saving financial products.
  • iconbullet Point 3: There are several tax slabs, and the taxpayer can fit into the one that best suits their annual income.
  • iconbullet Point 4: The new tax regime disallows the taxpayer to take the benefit of certain deductions and exemptions.
  • iconbullet Point 5: The taxpayer can exercise this choice every year and choose the regime that best suits their annual income.

Conclusion

As a taxpayer, understanding and following the changes brought in by the tax regime may seem challenging. Once you understand each detail and difference, choosing the appropriate one will be clearer.

To sum it up, it can be said that if you are a high earner or earn over ₹15 lakhs a year, the old tax regime could be a more practical alternative. The new tax regime, on the other hand, would be more beneficial for the taxpayers who have an annual income of up to ₹15 lakhs.

With the help of various free online tools, you can calculate the tax as per the two regimes and get a better picture of the tax regime to follow. Nevertheless, if you still feel that the process is daunting, you can always take the help of a professional.

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Frequently Asked Questions on Income Tax Rates

No. The Government has laid no such compulsions. As the taxpayer, you have the right to choose either of the two regimes.
While the new tax regime may allow lower tax rates but you would not be able to claim deductions under 80C.
To calculate your Income Tax for F.Y 2021-22 you can use the Income Tax Calculator available online. This free online tool will require a few basic details about your income, and in a few clicks, you’ll get your taxable amount.
There are three means by which the Indian Government collects taxes:
  • Advance Tax & Self Assessment Tax
  • TDS - Tax Deducted at Source
  • TCS - Tax Collected at Source
Income tax is charged on the income that you earn in a financial year, starting from April 1 till March 31. Under Section 143(1), the assessment has to be made within nine months from the last date of the financial year.
The tax that companies pay is named corporate tax, and on the Challan, it is mentioned as Income Tax companies. The tax that is paid by non-corporate assesses is called Income tax and is mentioned as Income Tax other than companies.
No, not really. The due date can vary based on the category that the taxpayer falls in. While salaried individuals need to file their Income Tax Return by July 31, for corporates, the date is October 31.
Introduced in the Finance Act 2003, Section 87 A allows tax rebate if the total income of an individual is less than ₹5 lakhs a year after claiming deductions.
The Income Tax Department, under the guidelines of the government, decides the IT slabs. Yes, the government can make a change in the slab rates. This is generally declared by the Finance Minister in the annual.
Yes, the slab rates depend totally on the category the taxpayer falls in.

Income Tax Slab

Rates for the Individuals under 60 years of age

Till ₹2.5 lakhs

Nil

From ₹2.5 lakhs - ₹5 lakhs

5%

From ₹5 lakhs - ₹10 lakhs

20%

Over ₹10 lakhs

30%

With an annual income below ₹2.5 lakh, you are not liable to file an ITR. However, every earning citizen needs to file their ITR on time. The benefits of doing so are aplenty, such as easy loans and credit cards, visa applications, and TDS claims become simpler.
To file your Income Tax Return (ITR) you need to follow the given steps:
  1. Go to the official income department portal, http://www.incometaxindiaefiling.gov.in/home
  2. On the website, look for the appropriate e-form for your income tax year and download it. Salaried individuals can get the Return Preparation software.
  3. In the return preparation software, enter the details in form 16
  4. If you have a tax liability, compute all your tax pays, and challan details in the tax return
  5. Verify all the details and save them as an XML file, go to the “submit return” and go to the upload the file.
  6. You would receive a confirmation message from the ITR about successful filling.
The government prescribes a specific limit up to which an individual is not required to pay any income tax. The limit, however, may depend on the tax regime and also the age group of the individual. The latest income tax exemption is ₹2.5 lakhs.
A surcharge is a tax that is levied on a tax. Calculated on the payable tax, a surcharge is not dependent on the income that is being generated. Suppose you have an income of ₹100, and the income tax is 10%, which means ₹30. The 10% surcharge would be on this tax, so 10% to ₹30 would be ₹3. So, in all, you’ll pay a total tax of ₹33.
  • To pay your taxes online visit http://www.tin-nsdl.com. Search for the “E- tax ” tab on the website.
  • Select the challan that is relevant to you.
  • Enter your TAN/PAN number for authentication along with other challan details
  • Submit the data; if correct information is received, you will get a confirmation message with your full name on the screen
  • This would direct you to the net banking website for payment
  • Log in to your net banking website with the valid id and password
  • Make the payment. On successful payment of the challan, a counterfoil will flash on the screen containing a CIN, the name of the bank, and the payment. This is proof of successful payment.
Yes, under the old as well as the new tax regime, there are different slab rates for different categories.
The tax deduction limit under section 80C is ₹1.5 Lakh in a financial year.
There is no tax for women with annual incomes of ₹2.5 lakh or less. Tax for income of more than ₹2.5 Lakh is 5% of the total revenue. And, for incomes above ₹5 lakh, it is ₹12,500 along with 20% of the total income.
Yes, by the law of India, every individual must file for ITR if they have a TDS or TCS of ₹25,000 or more in a financial year.
As per the new tax regime:
  • Under Section 80CCD(2) a deduction is available if an employer is making a contribution to the employee’s NPS account
  • Maximum of 10% (of the basic salary+ DA) can be claimed
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