Income Tax Slabs and Rates

One of the most difficult tasks is overseeing the taxes system for a nation with over 100+ crore people. Income Tax slabs were developed to make the process simpler and more manageable. The finance minister unveiled the new tax system each year in the Union Budget. Every year, new income tax slab rates make it easier to calculate how much tax a person owes for a given fiscal year. You must file income tax returns and pay income tax after the current fiscal year. Both activities will need tax computation, which would be simple if you know the tax slabs accurately.

What is the Income Tax Slab?

Income tax is defined as the amount of tax paid by a person or group of individuals. An income tax slab is the various categories mentioning best-suited tax rates for people falling under a specific income group. Tax slabs in India can be viewed as a disciplined cupboard stacking different items on each shelf, fulfilling the same requirement of the users. The Finance Minister of India announces the income tax slabs each financial year when giving the Union Budget. The income tax slab evolves each year. The following are the categories of the tax slabs in India:

  • Nil rate of tax
  • 10% of the income earned
  • 20% of the income earned
  • 30% of the income earned

Each category gets surcharged and Secondary, and Higher Education Cess (SHEC) charged on the tax.

Income Tax Slab Rate for New Tax Regime for FY 2022-23 (AY 2023-24)

The income tax slab rates for FY 2022-23 (AY 2023-24) are given below:
Income Slab (in INR) Income Tax Rate
Less than 2,50,000 NIL
2,50,000 - 5,00,000 5% (tax rebate 87A is accessible)
5,00,000 - 7,50,000 10% of the exceeding amount
7,50,000 - 10,00,000 15% of the exceeding amount
10,00,000 - 12,50,000 20% of the exceeding amount
12,50,000 - 15,00,000 25% of the exceeding amount
Above 15,00,000 30% of the exceeding amount

Income Tax Slab Rate for Old Tax Regime for FY 2022-23 (AY 2023-24)

The income tax slab rate for various categories for the financial year 2022-2023 is given below:

Individuals Below 60 Years Of Age

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20% of the exceeding amount
Income above INR 10,00,000 30% of the exceeding amount

Individuals between 60 - 80 Years of Age

Tax Slab Tax Rate
Income up to INR 3,00,000 Nil
Income between INR 3,00,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20% of the exceeding amount
Income above INR 10,00,000 30% of the exceeding amount

Individuals above 80 Years of Age

Tax Slab Tax Rate
Income up to INR 5,00,000 Nil
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30% of the exceeding amount

HUF Income Tax Slab Rate

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20% of the exceeding amount
Income above INR 10,00,000 30% of the exceeding amount
  • Health and Education Cess levied is 4% over the surcharge
  • The surcharge for income groups is INR 50 lakh - 10%, INR 1 crore - 15%, INR 2 crores - 25% and over INR 5 crore - 37%.

Note:

  • Income subject to tax under Sections 111A, 112A, and 115AD is not subject to the increased surcharge of 25% or 37%, as the case may be. Therefore, the maximum tax surcharge rate that can be applied to these incomes is 15%.
  • The highest rate of additional tax that can be charged on dividend income or capital gains to which Section 112 refers, shall be 15%.
  • The maximum surcharge rate for AOP with all members as a firm is 15%

Income Tax Slab Rates for FY 2021-22

In the Union Budget of 2022, announced by Finance Minister Nirmala Sitharaman, the new tax slab remains the same as the income tax slab 2021-22. However, people aged 60 or above living on pensions are exempted from paying the taxes. The budget 2020 introduced new tax regime slabs and was enforced in the FY 2020-21. The same pattern has been followed since. The income tax slab 2021-22 is given below:

Income Tax Slab Rate for New Tax Regime for FY 2021-22

Income Slab (in INR) Income Tax Rate
Less than 2,50,000 NIL
2,50,000 - 5,00,000 5% (tax rebate 87A is accessible)
5,00,000 - 7,50,000 10% of the exceeding amount
7,50,000 - 10,00,000 15% of the exceeding amount
10,00,000 - 12,50,000 20% of the exceeding amount
12,50,000 - 15,00,000 25% of the exceeding amount
Above 15,00,000 30% of the exceeding amount
  • Please be aware that under the new tax regime, the tax rates are the same for all categories of individuals and HUF under the age of 60, senior citizens between the ages of 60 and 80, and over the age of 80. Therefore, senior and super elderly citizens will not receive the enhanced basic exemption limit benefit under the New Tax regime.
  • Individuals who qualify for a tax rebate under Section 87A have net taxable incomes of less than or equal to INR 5 lakh, meaning that their tax obligations under the new and previous tax laws are zero.
  • Paying no heed to their age, NRIs are only eligible for a basic exemption of INR 2.5 lakh.
  • Additional cess on income tax to be levied at the rate of 4% on the tax amount over surcharge.
  • The surcharge for income groups is INR 50 lakh - 10%, INR 1 crore - 15%, INR 2 crores - 25% and INR 5 crore - 37%.

Why is it optional?

The taxpayers can opt for either new tax regime slabs or the old tax slab regime. It is made optional to provide taxpayers with the freedom to choose a regime that allows them to pay less tax. The old tax regime encourages taxpayers to avail of tax deductions under various sections of the Income Tax Act, whereas the new tax regime offers lower tax rates. This difference in tax slab decides the tax they pay.

Income Tax Slab Rates for Old Tax Regime for FY 2021-22

Individuals Below 60 Years Of Age and HUF

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

Individuals between 60 - 80 Years of Age

Tax Slab Tax Rate
Income up to INR 3,00,000 Nil
Income between INR 3,00,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

Individuals above 80 Years of Age

Tax Slab Tax Rate
Income up to INR 5,00,000 Nil
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

The surcharge is 10% of income tax on income between INR 50 lakh and INR 1 crore and 15% of the tax on income exceeding INR 1 crore.

The health and benefits cess is 4%

Calculate Your Income Tax Online

Difference of Slab Rates between New Tax Regime vs Old Tax Regime

The Ministry of Finance provides the taxpayers of India independence in the form of an old vs new regime of tax slabs in India. The difference in slab rates between the two regimes are as follows:

Basis New Tax Regime Old Tax Regime
Tax Rates It offers lower tax rates It offers tax deductions under various Income Tax Act Sections
Applicability This regime is applicable to all individuals and HUF The old tax slab is different for individuals aged below 60, between 60-80 and above 80 and HUF
Tax Deduction No tax deductions are allowed Tax deductions can be availed
Surcharge More  than INR 50 lakh - 10%, INR 1 crore - 15%, INR 2 crores - 25% and INR 5 crore - 37% 10% of INR 50 lakh - INR 1 crore and 15% of INR 1 crore or above

Conditions for Opting for New Tax Regime

The conditions for opting new tax regime are:

List of deductions not allowed

  • Leave Travel Allowance (LTA)
  • House Rent Allowance (HRA)
  • Conveyance allowance
  • Daily expenses in the course of employment
  • Relocation allowance
  • Helper allowance
  • Children education allowance
  • Other special allowances under Section 10(14)
  • Standard deduction on salary
  • Professional tax
  • Interest on housing loan under Section 24
  • Deduction under Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2))

List of deductions allowed

  • Transport allowance for specially-abled people
  • Conveyance allowance for expenditure incurred for traveling to work
  • Investment in Notified Pension Scheme under section 80CCD(2)
  • Deduction for employment of new employees under section 80JJAA
  • Depreciation under Section 32 of the Income Tax Act except for additional depreciation.
  • Any allowance for traveling for employment or on transfer

Example for Old Tax Regime Vs New Tax Regime and Which is Better?

Middle-class taxpayers mostly find the new tax regime beneficial, whereas top-class taxpayers benefit from the old regime.

For instance, A taxpayer earns a salary of INR 10 lakh each year. Their total investment under Section 80C is INR 1.7 lakh, split between ELSS, PF, LIC premiums, and home loan principal payments. Additionally, they pay INR 28,000 on medical insurance for themself and their partner. The deductions mentioned above are accessible if they choose the old tax system, but the same deductions cannot be availed if they choose the new tax system. They paid INR 75,000 in house loan interest during FY 2020–21. Let's examine the tax outflow under the two systems.

Particulars Old Tax Regime (in INR) New Tax Regime (in INR)
Gross total income 10,00,000 10,00,000
Deduction U/S 80C 1,50,000 -
Deduction U/S 80D 25,000 -
Deduction U/S 24 (b) 75,000 -
Taxable Income 7,50,000 10,00,000
Tax Slab 12,500 12,500
Tax Slab 50,000 25,000
Tax Slab - 37,500
Income Tax 62,500 75,000
Cess @4% 2,500 3,000
Total Tax Amount 65,000 78,000

Time of Selection of Option of Old vs New Regime

An employee has the option to choose the new tax system and inform their employer at the start of the fiscal year. Every year, employees have the choice to choose a different tax regime. The choice can be modified when filing an income tax return, but if a new tax slab regime is chosen at the beginning of the year, it cannot be changed at any time throughout the year for TDS purposes.

As for the business and profession-generated income, choosing a tax regime is available only once.

New Tax Regime Slab Rates for Domestic Companies for FY 2020-21

The new income tax slab for domestic companies is:

  • 15% for a business registered on or after October 1, 2019, starting manufacturing on or before March 31, 2023, and choosing section 115BAB (not covered by sections 115BA and 115BAA).
  • 22% for a corporation that has chosen Section 115BAA excludes certain deductions, incentives, exemptions, and additional depreciation from the calculation of a company's total revenue.
  • 25% for every company that chooses to apply section 115BA, is registered on or after March 1, 2016, engages in the manufacture of any item, and does not make the deductions allowed by the section clause.
  • 25% if the company's turnover or gross receipts were less than Rs. 400 crores the previous year 2018-19
  • 30% for any other domestic company

Additional cess charged is 4%, and the surcharge is charged 7% on total income more than INR 1 crore, 12% on income more than INR 10 crore, and 10% where company opts for sections 115BAA and 115BAB.

Income Tax Rate for Partnership Firm or LLP as per Old/ New regime

A partnership firm or LLP is subject to a 30% tax rate and incomes over INR 1 crore are subject to a 12% surcharge. Health and education taxes will increase by 4%

Note: Under the new tax framework, there are no concessional rates for businesses or LLPs.

Income Tax Slab Rates

FY 2020-21

There were two alternatives available to taxpayers in FY 2020-21:

  • Based on the lower rates specified in the New Tax framework, taxpayers can pay income tax. This will only apply if they forego certain allowed exemptions and deductions that are listed under income tax.
  • The taxpayers can still pay the applicable taxes at the current tax rates. The taxpayers can rely on the previous tax system to obtain any exemptions. This will apply if you pay tax at a higher rate and according to the new slab rate.

Under the new tax regime, slabs for income tax are the following:

Individuals and HUF

Income Tax Slab Interest Rate
INR 0 to INR 2.5 Lakhs NIL
INR 2.5 lakhs to INR 5 Lakhs 5% (tax rebate 87A is accessible)
INR 5 lakhs to INR 7.5 Lakhs 10%
INR 7.5 lakhs  to INR 10 Lakhs 15%
INR 10 lakhs to INR 12.50 Lakhs 20%
INR 12.5 lakhs to INR 15 Lakhs 25%
Above INR 15 Lakhs 30%

Income Tax Slab Rate as per the Old Tax regime – FY 2020-2021 (AY 2021- 2022)

Income tax slab rate as per the old tax regime includes the following:

Individuals who are below 60 years

Income Tax Slab Income Tax Rate
Up to INR 2.5 lakhs NIL
INR 2.5 lakh to INR 5 Lakhs 5%
INR 5 lakh to INR 10 lakhs 20%
Above  INR 10.00 lakh 30%

FY 2019-20

The income tax slab rate for various categories for the financial year 2019-2020 is given below:

Individuals Below 60 Years Of Age

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20% of the exceeding amount
Income above INR 10,00,000 30% of the exceeding amount

Individuals between 60 - 80 Years of Age

Tax Slab Tax Rate
Income up to INR 3,00,000 Nil
Income between INR 3,00,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20% of the exceeding amount
Income above INR 10,00,000 30% of the exceeding amount

Individuals above 80 Years of Age

Tax Slab Tax Rate
Income up to INR 5,00,000 Nil
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30% of the exceeding amount

HUF Income Tax Slab Rate

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20% of the exceeding amount
Income above INR 10,00,000 30% of the exceeding amount

Co-operative Societies

Tax Slab Tax Rate  (Percentage of Income)
Income up to INR 10,000 10%
Income between INR 10,001 - INR 20,000 20%
Income above INR 20,000 30%

Surcharge and Cess on Income Tax

Category Surcharge Health and Education Cess
Individuals and HUF 10% and 15% on income exceeding INR 50 lakhs and INR 1 crore respectively 4% of tax plus surcharge
Domestic Companies 7% and 12% on income exceeding INR 1 crore and INR 10 crores respectively 4% of tax plus surcharge
Partnership Firms, Local Authorities and Co-operative Societies 12% on income exceeding INR 1 crore 4% of tax plus surcharge

FY 2018-19

The income tax slab rate for various categories for the financial year 2018-2019 is given below:

Individuals Below 60 Years Of Age

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

Individuals between 60 - 80 Years of Age

Tax Slab Tax Rate
Income up to INR 3,00,000 Nil
Income between INR 3,00,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

Individuals above 80 Years of Age

Tax Slab Tax Rate
Income up to INR 5,00,000 Nil
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

HUF Income Tax Slab Rate

Tax Slab Tax Rate
Income up to INR 2,50,000 Nil
Income between INR 2,50,001 - INR 5,00,000 5%
Income between INR 5,00,001 - INR 10,00,000 20%
Income above INR 10,00,000 30%

Co-operative Societies

Tax Slab Tax Rate  (Percentage of Income)
Income up to INR 10,000 10%
Income between INR 10,001 - INR 20,000 20%
Income above INR 20,000 30%

Surcharge and Cess on Income Tax

Category Surcharge Health and Education Cess
Individuals and HUF 10% and 15% on income exceeding INR 50 lakhs and INR 1 crore respectively 4% of tax plus surcharge
Domestic Companies 7% and 12% on income exceeding INR 1 crore and INR 10 crores respectively 4% of tax plus surcharge
Partnership Firms, Local Authorities and Co-operative Societies 12% on income exceeding INR 1 crore 4% of tax plus surcharge
Related Resource
Income Tax
Deductions Under Section 80c
Income Tax Refund Status
Income Tax e-filing
ITR - Income Tax Return

Frequently Asked Questions

Does investing in a post office save my income tax?

Under Section 80C of the Income Tax Act, the majority of the post office schemes provide tax rebates on the invested amount.

Where and how do I file income tax returns?

You can file your income tax returns using both online and offline methods. You can start by logging on to the Income Tax Department portal and carry forward by either downloading the form from the offline utility or filling out the form online.

 

What is the work of the income tax department in India?

The income tax department monitors the income tax collection in India.

How is income tax calculated?

Your income tax depends upon your gross total income. It is calculated as a percentage mentioned in the slab as per your income.

What is Form 16 for Income Tax in India?

Form 16 is a certificate of tax deduction at the source that is issued by the employer at the time of deduction of tax on behalf of the employees.

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