What is an Income Tax Slab?
The tax liability of an individual in India depends on the amount of their annual income. It is divided into different slabs, depending on the annual earnings. The payable tax rate increases based on the growth of the slab. The government has fixed income tax rates on the different slabs, and you must know about them before you start paying your taxes. One thing to keep in mind is that the tax slabs often change during the budget. Hence, keeping yourself updated about it every year is necessary.
The new income tax slabs in India differ as per the taxpayer’s age. These fall under three categories:
1. Individuals who are younger than the age of 60
2. Senior citizens who are older than 60 years but younger than 80 years
3. Super senior citizens who are older than 80 years
Income Tax Slab Rates for FY 2023-24 (AY 2024-25) for individuals below 60 years
According to the new tax regime, taxpayers can either pay tax at lower rates by giving up certain deductions and exemptions that are available under income tax. The other option is that they can continue paying higher taxes under the existing regime and avail of certain rebates and exemptions.
Old Regime
|
New Regime
|
Income Tax Slab
|
Income Tax Rate
|
Income Tax Slab
|
Income Tax Rate
|
Up to ₹ 2,50,000
|
Nil
|
Up to ₹ 2,50,000
|
Nil
|
₹ 2,50,001 - ₹ 5,00,000
|
5% above ₹ 2,50,000
|
₹ 2,50,001 - ₹ 5,00,000
|
5% above ₹ 2,50,000
|
₹ 5,00,001 - ₹ 10,00,000
|
₹ 12,500 + 20% above ₹ 5,00,000
|
₹ 5,00,001 - ₹ 7,50,000
|
₹ 12,500 + 10% above ₹ 5,00,000
|
Above ₹ 10,00,000
|
₹ 1,12,500 + 30% above ₹ 10,00,000
|
₹ 7,50,001 - ₹ 10,00,000
|
₹ 37,500 + 15% above ₹ 7,50,000
|
| |
|
₹ 10,00,001 - ₹ 12,50,000
|
₹ 75,000 + 20% above ₹ 10,00,000
|
| |
|
₹ 12,50,001 - ₹ 15,00,000
|
₹ 1,25,000 + 25% above ₹ 12,50,000
|
| |
|
Above ₹ 15,00,000
|
₹ 1,87,500 + 30% above ₹ 15,00,000
|
The tax rates under the new tax regime are the same for all categories - individuals & HUF below the age of 60 years, senior citizens (above 60 years), and super senior citizens (above 80 years). Therefore, the basic exemption limit benefit has not been increased for senior citizens and super senior citizens.
Income Tax Slab for Senior Citizens (60 to 80 years)
As individuals progress through different stages of their lives, their financial circumstances and responsibilities often change. Recognizing the unique needs and challenges faced by senior citizens, the government has implemented specific income tax slabs tailored to their requirements. For the fiscal year 2023-2024, senior citizens falling in the age bracket of 60 to 80 years have distinct tax provisions aimed at reducing their tax burden and ensuring a more comfortable financial journey during their golden years. Let us understand them now.
Old Regime
|
New Regime
|
Income Tax Slab
|
Income Tax Rate
|
Income Tax Slab
|
Income Tax Rate
|
Up to ₹ 3,00,000
|
Nil
|
Up to ₹ 2,50,000
|
Nil
|
₹ 3,00,001 - ₹ 5,00,000
|
5% above ₹ 3,00,000
|
₹ 2,50,001 - ₹ 5,00,000
|
5% above ₹ 2,50,000
|
₹ 5,00,001 - ₹ 10,00,000
|
₹ 10,000 + 20% above ₹ 5,00,000
|
₹ 5,00,001 - ₹ 7,50,000
|
₹ 12,500 + 10% above ₹ 5,00,000
|
Above ₹ 10,00,000
|
₹ 1,10,000 + 30% above ₹ 10,00,000
|
₹ 7,50,001 - ₹ 10,00,000
|
₹ 37,500 + 15% above ₹ 7,50,000
|
| |
|
₹ 10,00,001 - ₹ 12,50,000
|
₹ 75,000 + 20% above ₹ 10,00,000
|
| |
|
₹ 12,50,001 - ₹ 15,00,000
|
₹ 1,25,000 + 25% above ₹ 12,50,000
|
| |
|
Above ₹ 15,00,000
|
₹ 1,87,500 + 30% above ₹ 15,00,000
|
Income Tax Slabs for Individuals above 80 years (Super Senior Citizen)
In many countries, including India, the income tax system includes special provisions for individuals above the age of 60 or 80 years, commonly referred to as senior and super senior citizens, respectively. We will now guide you through the new tax regime for individuals above 80 years.
Tax Slab Old Regime
|
Tax Slab New Regime
|
Income Tax Slab
|
Income Tax Rate
|
Income Tax Slab
|
Income Tax Rate
|
Up to ₹ 5,00,000
|
Nil
|
Up to ₹ 2,50,000
|
Nil
|
₹ 5,00,001 - ₹ 10,00,000
|
20% above ₹ 5,00,000
|
₹ 2,50,001 - ₹ 5,00,000
|
5% above ₹ 2,50,000
|
Above ₹ 10,00,000
|
₹ 1,00,000 + 30% above ₹ 10,00,000
|
₹ 5,00,001 - ₹ 7,50,000
|
₹ 12,500 + 10% above ₹ 5,00,000
|
| |
|
₹ 7,50,001 - ₹ 10,00,000
|
₹ 37,500 + 15% above ₹ 7,50,000
|
| |
|
₹ 10,00,001 - ₹ 12,50,000
|
₹ 75,000 + 20% above ₹ 10,00,000
|
| |
|
₹ 12,50,001 - ₹ 15,00,000
|
₹ 1,25,000 + 25% above ₹ 12,50,000
|
| |
|
Above ₹ 15,00,000
|
₹ 1,87,500 + 30% above ₹ 15,00,000
|
Current Surcharge Rates for Different Taxpayers
Taxation is a fundamental aspect of any economy, providing governments with the necessary resources to fund public services, infrastructure development, and social welfare programs. To ensure a fair distribution of the tax burden and promote equity, many countries employ a progressive tax system, wherein tax rates increase with the taxpayer’s income level. However, in addition to the progressive tax rates, some jurisdictions implement surcharges on specific taxpayers or income brackets.
Surcharge rates are additional charges applied on top of regular tax rates, often targeting certain groups or categories of taxpayers. These surcharges serve various purposes, such as generating additional revenue for specific government initiatives, addressing wealth inequality, or curbing excessive consumption. The specific factors that determine surcharge rates can vary widely between jurisdictions, including income thresholds, marital status, property ownership, or specific industries.
Range of Income
|
Applicable Rate of Surcharge
|
Less than ₹50 lakhs
|
NIL
|
₹50 lakhs to ₹1 crore
|
10%
|
₹1 crore to ₹2 crore
|
15%
|
₹2 crore to ₹5 crore
|
25%
|
More than ₹5 crore
|
37%
|
Right Time to Choose the Old Tax Regime and New Tax Regime
The Indian tax landscape has undergone a significant transformation with the introduction of the New Tax Regime in 2020, offering taxpayers an alternative method of calculating their income tax liability. Prior to this, individuals and Hindu Undivided Families (HUFs) had been following the traditional tax regime, which allowed for various deductions and exemptions to reduce taxable income. This shift has left taxpayers with a crucial decision to make – choosing between the Old Tax Regime and the New Tax Regime.
Which is Better, New Regime or Old Regime?
The income tax system in India plays a crucial role in the country’s economic framework. It is designed to collect revenue for the government while ensuring a fair distribution of the tax burden. In recent years, the Indian government introduced a new income tax regime, which raised questions about its effectiveness compared to the traditional, old regime.
The Old Regime
Under the old regime, individuals were accustomed to a progressive tax structure consisting of various slabs and rates. The income tax slabs were divided into different categories based on income levels, and each category had a corresponding tax rate. The tax rates gradually increased as the income level rose, with the highest rate applicable to individuals with the highest income bracket.
The New Regime
The new income tax regime introduced in recent years provides taxpayers with an option to choose a simplified tax structure with lower tax rates. It offers a lower number of tax slabs, resulting in a simpler and more straightforward calculation of taxes. However, this regime eliminates several deductions and exemptions available under the old regime, making it a less attractive option for some taxpayers.
The choice between the new regime and the old regime under income tax slabs and rates in India is subjective and depends on individual circumstances. While the new regime offers lower tax rates and simplified calculations, it lacks the extensive deductions and exemptions available in the old regime. Taxpayers must evaluate their income, deductions, and preferences to determine which regime aligns best with their financial situation and goals. Consulting with a tax professional or financial advisor can also provide valuable guidance in making an informed decision.
New Tax Slab Rates for Domestic Companies
In recent years, governments around the world have been making significant changes to their tax policies to adapt to evolving economic landscapes and foster business growth. One such change that has gained considerable attention is the introduction of new tax slab rates for domestic companies. These revised tax rates aim to streamline the taxation system, encourage investment, and promote competitiveness within the country.
Domestic companies, which are businesses incorporated and operating within a specific country, play a crucial role in driving economic development, creating employment opportunities, and contributing to the overall growth of a nation. Recognizing the importance of these entities, governments often review and revise their tax structures to ensure they remain conducive to business expansion and innovation.
Types
|
Tax rates
|
Section 115BAB is chosen by the company, which was registered on or after October 1, 2019, and began production on or before March 31, 2023.
|
15%
|
The company elects Section 115BAA, which calculates a company’s total income when specific deductions, incentives, exemptions, and additional depreciation are not claimed.
|
22%
|
The company elects Section 115BA and is registered on or after March 1, 2016, is engaged in the manufacturing of any item, and no deduction claim as indicated in the section clause has been filed.
|
25%
|
If a company’s revenue in the preceding fiscal year 2018-19 was less than Rs. 400 crore.
|
25%
|
Any other domestic corporation
|
30%
|
Bottom Line
The income tax slabs and rates in India for the financial year 2022-23 and assessment year 2023-24 continue to provide a structure for individuals to determine their tax liabilities based on their income levels. The tax system aims to promote progressive taxation, with higher-income individuals paying a higher percentage of their income as tax.
Key takeaways
- The tax rates under the new tax regime are the same for all categories - individuals & HUF below the age of 60 years, above 60 years and above 80 years.
- While the new regime offers lower tax rates with limited deductions, the old regime maintains its structure of progressive tax rates with varying income slabs.
- For the fiscal year 2023-2024, senior citizens falling in the age bracket of 60 to 80 years have distinct tax provisions to reduce their tax burden and ensure a more comfortable financial journey during their golden years.
Paying income tax is the duty of every earning citizen in India. The money paid in taxes is used by the government towards the development of the country. But not everyone has to pay the same amount of tax. An individual should pay taxes according to his or her income tax slab.
