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Ref. No. KLI/22-23/E-BB/492
Ref. No. KLI/22-23/E-BB/490
The tax liability of an individual is divided into different slabs depending on the annual earnings. The payable tax rate increases based on the growth of the slab.
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. However, not everyone has to pay the same amount of tax. An individual should pay taxes according to his or her 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
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 certain rebates and exemptions.
Range of Income |
New Tax Slab - FY 2021-22/AY 2022-23 |
Up to ₹ 2.50 Lakhs |
None |
₹ 2.50 Lakhs - ₹ 3.00 Lakhs |
Rebate of 5% under Section 87a applicable |
₹ 3.00 Lakhs - ₹ 5.00 Lakhs |
Rebate of 5% under Section 87a applicable |
₹ 5.00 Lakhs - ₹ 7.5 Lakhs |
10% |
₹ 7.5 Lakhs – ₹ 10.00 Lakhs |
15% |
₹ 10.00 Lakhs – ₹ 12.50 Lakhs |
20% |
₹ 12.5 Lakhs - ₹ 15.00 Lakhs |
25% |
₹ 15 Lakhs |
30% |
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.
Also, under the old and new tax regime, if the net taxable income of an individual is ₹5 Lakhs or below, then they can benefit from the tax rebate under Section 87A, which means there will be no tax liability for such individuals.
Range of Income |
Old Tax Slab – compulsory till FY 2021-22 |
Up to ₹ 2.50 Lakhs |
None |
Above ₹ 2.50 Lakhs to ₹ 5 Lakhs |
5% |
Above ₹ 5 Lakhs to ₹ 7.50 Lakhs |
20% |
Above ₹ 7.50 Lakhs to ₹ 10 Lakhs |
20% |
Above ₹ 10 Lakhs to ₹ 12.50 Lakhs |
30% |
Above ₹ 12.50 Lakhs to ₹ 12.50 Lakhs |
30% |
Above ₹ 15 Lakhs |
30% |
Taxable income |
Tax Rates in India for Super Senior Citizens (Aged 80 years and above) |
₹0 to ₹5,00,000 |
Nil |
₹5,00,000 to ₹ 10,00,000 |
20% |
Above ₹10,00,000 |
₹1,00,000 + 30% of total income exceeding ₹10,00,000 |
Here are three examples that will help you understand the new income tax slabs for AY 2022-23 better:
Imagine the annual salary of Rahul, a 25-year old individual, is ₹5 Lakhs. After the standard deduction and the deductions and the income tax deductions under Section 80 and Section 10 (13A) of the Income Tax Act, 1961, his taxable income stands to be ₹2.78 Lakhs. As the income over ₹2.5 Lakhs is taxed at 5%, his total due tax comes to ₹1,400. However, according to Interim Budget 2021, as per Section 87A of the Income Tax Act, 1961, Rahul gets full tax rebate his annual income is up to ₹5 Lakhs.
Now, assume the yearly salary of Aditya, a 35-year old individual, is ₹10 Lakhs. After the deductions under Section 80C and Section 10 (13A) and the standard deductions, his taxable income stands to be ₹7 Lakhs. As income over ₹5 Lakhs is taxed at ₹2,500 + 20%, his total due tax comes to ₹52,500. Aditya will also be charged 4% Health & Education Cess which increases the tax amount to ₹54,600.
Similarly, in another instance, the annual salary of Roshni, a 40-year old individual, is ₹15 Lakhs after the standard deduction and the deductions under Section 80C and Section 10 (13A) her taxable income comes to be ₹11.5 Lakhs as income over ₹10 Lakhs is taxed at ₹1,12,500 + 30%, her total due tax comes to ₹1,57,500. After adding the 4% Health & Education Cess, Roshni will have to pay the tax amount of ₹1,63,800.
Now that you are aware of the new income tax slabs for FY 2021-22, it will be easier for you to calculate how much tax you are supposed to pay annually.
To know more about the latest update on ITR rules for FY 2022-23, refer to our blog on Union Budget Highlights.
Ref. No. KLI/22-23/E-BB/999
Ref. No. KLI/22-23/E-BB/490
