Income Tax Slabs In India For FY 2022-23 – Rates, New and Old Tax Regime
Any reforms in income tax or income tax slabs are announced by the Finance Minister of India, usually during the Union Budget . Right now, there are two income tax slabs or regimes in India – the new and the old tax regime. So, which income tax slab is better for you, the new or the old?
You can get a comprehensive rundown of income tax slabs under both regimes in the following sections.
Income Tax Slab: What Is it?
Income tax in India is levied through a slab system. The system refers to different tax rates that are meant for individuals earning different ranges of income. The income tax rate goes up as your annual income increases.
This kind of taxation system is subject to change every year. The tax slab rates are different for these age groups:
- Individuals below 60 years
- Individuals between 60 years to 80 years
- Senior residents above 80 years
Income Tax Slabs FY 2022-23: New & Old Income Tax Regime
The New Regime gives taxpayers the option to choose from the following:
- As per the New Tax Regime, income tax can be paid at lower rates with a condition that forgoes certain permissible exemptions and deductions that are already available.
- To continue to pay taxes under the existing tax rates. Rebates and exemptions can be availed by being under the old regime but at the existing higher rate.
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Conditions for Opting for New Tax regime
While the taxpayer opts for paying tax via the New Tax Regime, the payer has to forgo certain exemptions and deductions that exist in the old tax regime. Some deductions and exemptions that are not allowed in the New Tax Regime are listed below:
- Leave Travel allowance / LTA
- House Rent allowance / HRA
- Conveyance allowance
- Daily expenses while employed
- Relocation allowance
- Child education allowance
- Special allowances as listed under Section 10(14)
- Professional tax
- Interest on housing loan as listed under Section 24
- Deduction under Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2))
Deductions allowed under the New Tax Regime are listed below:
- For specially-abled payers, transport allowance would be allowed.
- Investment in NPS (National Pension Scheme) as listed under 80CCD(2).
- Deduction for employment of new employees under section 80JJAA
- Any allowance for travelling for employment or on transfer
New Tax Regime Slabs for FY 22-23
The new income tax slab provides a singular income tax structure across all categories, such as HUF, individuals below 60, senior citizens and super senior citizens. However, the new tax regime is optional, and you have the right to choose between the old and the new one.
Current income tax slabs as per the new tax regime is as follows:
| Tax Slab | Tax Rate |
| Up to Rs. 2,50,000 | NIL |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 7,50,000 | 10% |
| Rs. 7,50,001 to Rs. 10,00,000 | 15% |
| Rs. 10,00,001 to Rs. 12,50,000 | 20% |
| Rs. 12,50,001 to Rs. 15,00,000 | 25% |
| Above Rs. 15,00,000 | 30% |
An additional 4% cess is levied on the income tax amount for all individuals. Also, if you have a total taxable income of up to Rs. 5 lakh, you can seek a rebate under Section 87A. This means your tax liability will be zero under both new and old tax regimes.
Income Tax Slab for Old Regime
Income tax rates under the old regime vary based on the age groups to which individual taxpayers belong. Let’s check the rates for each age group in the following sections:
1. Individuals below the age of 60 years
| Tax slab | Tax Rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
2. Individuals between 60 and 80 years
| Tax Slab | Tax Rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,001 to Rs, 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
3. Individuals above 80 years
| Tax slab | Tax rate |
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Similar to the new tax regime, there is a 4% cess on the taxable amount across all age groups.
Calculating Income Tax in Different Tax Regimes
To let you have a clear understanding of the tax rates under the new and old slabs, let’s take a look at this example:
Mr. Mehra has an annual income of Rs. 10,00,000. He has a total investment of Rs. 1,70,000 under Section 80C in PF, ELSS, life insurance premium, home loan principal payment. In addition, he pays medical insurance of Rs. 28,000. If he goes for the old regime, he can opt for tax deductions.
However, with the new tax regime, he cannot seek any exemption. Suppose the amount of home loan interest paid by him for FY20-21 is Rs. 75,000.
Let’s check the income tax payable under both regimes:
| Tax Slabs/ Particulars | Old Tax Regime | New Tax Regime |
| Gross Income | Rs. 10,00,000 | Rs. 10,00,000 |
| Deductions | ||
| Under Section 80C | 1,50,000 | – |
| Section 80D | 25,000 | – |
| Section 24B | 75,000 | – |
| Taxable income | Rs. 7,50,000 | Rs. 10,00,000 |
| Old Tax Slab | ||
| Up to Rs. 2.5 lakh | – | – |
| Rs. 2.5 lakh to Rs. 5 lakh at 5% | Rs. 12,500 | – |
| Rs. 5 lakh to Rs. 7.5 lakh at 20% | Rs. 50,000 | – |
| More than Rs. 10 lakh at 30% | – | – |
| New Tax Slab | ||
| Up to Rs. 2.5 lakh | – | |
| Rs. 2.5 lakh to Rs. 5 lakh at 5% | – | Rs. 12,500 |
| Rs. 5 lakh to Rs. 7.5 lakh at 10% | – | Rs. 25,000 |
| Rs. 7.5 lakh to Rs. 10 lakh at 15% | – | Rs. 37,500 |
| Rs. 10 lakh to Rs. 12.5 lakh at 20% | – | – |
| Rs. 12.5 lakh to Rs. 15 lakh | – | – |
| Over Rs. 15 lakh | – | – |
| Income tax | Rs. 62,500 | Rs. 75,000 |
| Cess at 4% | Rs. 2,500 | Rs. 3,000 |
| Total Tax Payable | Rs. 65,000 | Rs. 78,000 |
Which Income Tax Regime is Better: Old or New Tax Regime?
Eligible deductions will differ from person to person, applying a standard rule for all will be ruled out. Taxpayers will need to evaluate and compare the tax liability under both regimes and then decide on which to opt for.
Tax-payers who have a taxable income of INR 15 Lakh can overall take a good benefit by opting for the new tax regime. Payers who make low investments can also benefit from this regime. If the payer opts for concessional tax rates, the payer would have to evaluate both the regimes and choose the most beneficial one. Hence a comparative analysis and evaluation is advisable before opting for a regime.
Let’s check how two salaried taxpayers have the same gross income but are eligible for different tax deductions/exemptions with no other source of income.
| FY 2022 – 23 | Tax Payer – A | Tax Payer – B |
| Income from salary | Rs. 15,00,000 | Rs. 15,00,000 |
| HRA Exemption | Rs. 1,10,000 | – |
| LTA Exemption | Rs. 75,000 | – |
| Standard deduction | Rs. 45,000 | – |
| EPF, PPF and other deductions | Rs. 1,25,000 | Rs. 1,25,000 |
Based on the above table, let us find out which tax regime benefits both taxpayer A and B :
| Tax Payer A | Old Tax Regime | New Tax Regime |
| Income from Salary | Rs. 15,00,000 | Rs. 15,00,000 |
| HRA Exemption | Rs. 1,10,000 | NA |
| LTA Exemption | Rs. 75,000 | NA |
| Standard deduction | Rs. 45,000 | NA |
| EPF, PPF and other deductions | Rs. 1,25,000 | NA |
| NET TAXABLE INCOME | Rs. 11,45,000 | Rs. 15,00,000 |
| TAX ON THE ABOVE | Rs. 1,62,240 | Rs. 1,87,500 |
In this case, the old regime proves beneficial for Tax Payer A since he pays less tax as compared to the new regime.
| Tax Payer B | Old Tax Regime | New Tax Regime |
| Income from Salary | Rs. 15,00,000 | Rs. 15,00,000 |
| Standard deduction | Rs. 45,000 | NA |
| EPF, PPF and other deductions | Rs. 1,25,000 | NA |
| NET TAXABLE INCOME | Rs. 11,45,000 | Rs. 15,00,000 |
| TAX ON THE ABOVE | Rs. 2,73,000 | Rs. 1,87,500 |
In this case, where HRA and LTA are not deducted and not applicable, the new tax regime proves beneficial for Tax Payer B.
Surcharge rates Applicable to Income Tax
Income tax surcharge is the additional tax liability that a payer pays based on the income above the mentioned limit during the mentioned financial year.
The rates differ for each payer based on their income.
Let’s look at the surcharge rates for various taxpayers as per their net income:
| Tax Payer | Net Income Limit | Surcharge rate on Income tax |
| Individual / HUF / AOP / BOI | From Rs. 50 Lakhs to Rs. 1 Crore | 10% |
| Individual / HUF / AOP / BOI | From Rs. 1 Crore to Rs. 2 Crore | 15% |
| Individual / HUF / AOP / BOI | From Rs. 2 Crore to Rs. 5 Crore | 25% |
| Individual / HUF / AOP / BOI | Above Rs. 5 Crore | 37% |
| Firm / LLP / Local Authorities / Co-operative Society | Above Rs. 1 Crore | 2% |
| Domestic companies | From Rs. 1 Crore to 10 Crores | 7% |
| Domestic companies | Above Rs. 10 Crores | 12% |
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Income Tax Rates for Women
Previously women had to pay slightly lower income tax than men. However, the income tax rates for men and women have become the same since FY 2012 -13. There are no specific exemptions for women taxpayers anymore.
Final Word
You can choose to pay your income tax by option for any of the two regimes. However, it is best to evaluate the advantages and downsides of each of the tax regimes to find out which one would be most suitable for you.
FAQs
Ans: Income tax rates of domestic companies will depend on the turnover. A company with a gross turnover of up to Rs. 250 crore will have to pay 25% tax. However, the tax rate levied on those with gross turnover over Rs. 250 crore is 30%.
Ans: No, you do not need to file income tax returns if your annual income is below Rs. 2.5 lakh. However, you might want to file ‘Nil Return’ just to keep a record of your income. You can produce them as proof of income.
Ans: The Government collects income tax in the following ways:
Voluntary tax payment by individuals into designated banks
TDS (Tax Deducted at Source) deducted from the income of the taxpayer
Tax collected at source (TCS)
Ans: A surcharge is basically a tax on tax. It is calculated on the tax payable and not on income. For instance, if you have a taxable income of Rs. 1,000 and the tax rate is 30%, then the tax amount is Rs. 300. The surcharge would be levied on Rs. 300.
The rate of surcharge is 10% if your total income is more than Rs. 50 lakh, 15% for a total income of more than Rs. 1 crore and 25% if it is more than Rs. 2 crores.
Ans: As per provisions of the Income Tax Act, 1961 of the country, taxpayers with an annual income lesser than Rs. 2.5 lakh are not required to pay income tax. However, if it is more than that amount, you need to file IT returns each year. If you avoid filing income tax returns, you might face various issues during loan application, visa application or property registration. Moreover, a fine of up to Rs. 10,000 would be levied on individuals if they file their ITRs after the due date.
Disclaimer
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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