What is the Income tax slab?
The taxpayers in India need to pay income tax basis on the income tax slab they fall in. Income tax slab consists of different ranges of income with different tax rates. As income increases, the tax rates also increase. The slab system was introduced to enable a fair tax system in the country. The changes in the income tax slab are done as per the budget announcement. There are three categories under which income tax is divided:-
- Individuals who are less than 60 years
- Senior citizens with age 60 to 80 years
- Super senior citizens with age above 80 years.
New Income Tax Slabs For FY 2022-23 (AY 2023-24) as per Budget 2023
As per the Union Budget 2023, a few key changes have been introduced under the new tax regime. The tax slab under the new tax regime has been reduced from 6 to 5, and the basic exemption limit has been raised to Rs. 3 lakh from Rs. 2.5 lakh. These changes will be applicable from 1 April 2023. The slab structure has been revised:-
Income Tax Slab Rate for New Tax Regime
| Range of Income |
Tax Rate |
| Upto 3,00,000 |
Nil |
| 3,00,000-6,00,000 |
5% |
| 6,00,000-9,00,000 |
10% |
| 9,00,000-12,00,000 |
15% |
| 12,00,000-15,00,000 |
20% |
| Above 15,00,000 |
30% |
The income tax slab rates for the old regime are the same as previous years’ income tax slab rates.
Income Tax Slab Rate for Old Tax Regime
| Range of Income |
Tax Rate |
| Up to 2,50,000 |
Nil |
| 2,50,000-5,00,000 |
5% |
| 5,00,000-10,00,000 |
20% |
| Above 10,00,000 |
30% |
Old Tax Regime Vs. New Tax Regime
A lot of confusion has arisen after Budget 2023 as it has brought many amendments under the new tax regime. This time, the government focused on a new tax regime, making it more attractive for the taxpayers. But with several deductions, the old tax regime has always been the first choice for taxpayers. Let us talk in detail about both these regimes and check which will be the best suitable for you.
New Tax Regime
The new tax regime was introduced in Budget 2020, effective April 1, 2020. The new regime offers lower tax rates for higher incomes than the old tax regime. It allows you to lower your tax liability subject to certain conditions and is optional.
So, If you choose to calculate your taxes using the new tax regime, most of the deductions and exemptions available under the Income Tax Act 1961 would not be available to you. However, with the budget 2023, the government offered a few key changes in the new tax regime to make it more attractive:-
- The new income tax regime will be set as the default option. The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh to make the new tax regime more attractive. Also, the highest tax rate of 30% will be levied above Rs 15 lakh income.
- In the budget 2023-24 announcement, the rebate under Section 87A has been hiked to Rs. 25000 for taxable income up to Rs. 7 lakhs under the new tax regime.
- The proposal to introduce the standard deduction in the new tax regime has been shared. As per this salaried class, the pensioners, including family pensioners, will benefit from a standard deduction of Rs. 50,000/-
- Also, the exemption of a family pension of Rs. 15,000 has been introduced under the new tax regime.
- Reduction in the surcharge on annual income above Rs 5 crore from 37% to 25% under the new regime. Currently, the highest tax rate is 42.74%, which would slash the maximum tax rate to 39% after this reduction.
- The limit of Rs. 3 lakh for tax exemption on leave encashment on non-government salaried employees has been raised to Rs. 25 lakh.
Old Tax Regime
The old tax regime in India refers to the system of income tax calculation and slabs that existed before the introduction of the new tax regime. In the old tax regime, individuals have the option to claim various tax deductions and exemptions to reduce their taxable income. The Old Tax Regime offers more than 70 deductions and exemptions to claim like Section 80C, HRA, LTA, and more. This regime is also called the existing tax regime.
The comparison for the tax rates is as follows:
| Income Tax Slab |
Old Tax Regime FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25) |
New tax Regime (Before budget 2023)
(until 31st March 2023) |
New Tax Regime (After Budget 2023)
(Applicable from 1st April 2023) |
| ₹0 - ₹2,50,000 |
- |
- |
- |
| ₹2,50,001 - ₹3,00,000 |
5% |
5% |
- |
| ₹3,00,001 - ₹5,00,000 |
5% |
5% |
5% |
| ₹5,00,001 - ₹6,00,000 |
20% |
10% |
5% |
| ₹6,00,001 - ₹7,50,000 |
20% |
10% |
10% |
| ₹7,50,001 - ₹9,00,000 |
20% |
15% |
10% |
| ₹9,00,001 - ₹10,00,000 |
20% |
15% |
15% |
| ₹10,00,001 - ₹12,00,000 |
30% |
20% |
15% |
| ₹12,00,001 - ₹12,50,000 |
30% |
20% |
20% |
| ₹12,50,001 - ₹15,00,000 |
30% |
25% |
20% |
| More than ₹15,00,000 |
30% |
30% |
30% |
Income Tax Slab Rates for FY 2022-23 (AY 2023-24)
Income Tax Rate for Resident Individual or HUF
| Income Range |
Old Regime Tax Rates for FY 22-23 (AY 23-24), |
New Regime Tax Rates for FY 22-23 (AY 23-24) |
| Individuals and HUF with age less than 60 years |
Individuals and HUF with age 60years or more but less than 80 years |
Individuals and HUF with age 80 years or more |
Applicable for All Individuals or HUF |
| Rs 0.0 to Rs 2,50,000 |
NIL |
NIL |
NIL |
NIL |
| Rs 2,50,001 to Rs 3,00,000 |
5% (tax rebate u/s 87a is available) |
NIL |
NIL |
5% (tax rebate u/s 87a is available) |
| Rs. 3,00,001 to Rs 5,00,000 |
5% (tax rebate u/s 87a is available) |
NIL |
| Rs. 5,00,001 to Rs 7,50,000 |
20% |
20% |
20% |
10% |
| Rs 7,50,001 to Rs 10,00,000 |
20% |
20% |
20% |
15% |
| Rs 10,00,001 to Rs. 12,50,000 |
30% |
30% |
30% |
20% |
| Rs. 12,50,001 to Rs. 15, 00,000 |
30% |
30% |
30% |
25% |
| Exceeding Rs. 15,00,000 |
30% |
30% |
30% |
30% |
Note:
1. In Addition to basic Income Tax as discussed above , the following are also to be taken care of:-
- Surcharge: A surcharge is levied on the amount of income-tax at following rates if the total income of an assessee exceeds specified limits:-
| Rs. 50 Lakhs to Rs. 1 Crore |
Rs. 1 Crore to Rs. 2 Crores |
Rs. 2 Crores to Rs. 5 Crores |
More Than 5 Crores |
| 10% |
15% |
25% |
37% |
- Health & Education Cess @4%
- Rebate u/s 87A (no tax will be payable on total income upto Rs. 5 lakh in both the new and old tax regimes). The rebate is allowed to the extent of Rs. 12,500. Thus, if the total tax (excluding health & education cess) is less than or equal to Rs. 12,500, then the whole amount can be claimed as a rebate by a resident individual.
2. Certain income tax exemptions and deductions like sections 80C, 80D,80TTB, HRA, etc are available in the OLD tax regime but will not be available under the new tax regime.
|
Income Tax Rate for Non-Resident Individual
| Income of the assessee |
Rate of Tax under Old Regime for FY 22-23 (AY 23-24) |
New Regime Slab Rates for FY 22-23 (AY 23-24) |
| Rs 0.0 to Rs 2,50,000 |
NIL |
NIL |
| Rs 2,50,001 to Rs 5,00,000 |
5% |
5% |
| Rs. 5,00,001 to Rs 7,50,000 |
20% |
10% |
| Rs 7,50,001 to Rs 10,00,000 |
20% |
15% |
| Rs 10,00,001 to Rs. 12,50,000 |
30% |
20% |
| Rs. 12,50,001 to Rs. 15,00,000 |
30% |
25% |
| Exceeding Rs. 15,00,000 |
30% |
30% |
Note:
Surcharge & cess also applicable here as in case of the resident.
|
Income Tax Rate for AOP/BOI/Artificial Judicial Person
| Income of the assessee |
Rate of Tax under Old Regime for FY 22-23 (AY 23-24) |
| Rs 0.0 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 10,00,000 |
30% |
Income Tax Rate for a Domestic Company
| Domestic Company |
NORMAL TAX RATE |
| Assessment Year 2022-23 |
Assessment Year 2023-24 |
| Where its total turnover or gross receipt during the previous year 2019-20 does not exceed Rs. 400 crore |
25% |
NA |
| Where its total turnover or gross receipt during the previous year 2020-21 does not exceed Rs. 400 crore |
NA |
25% |
| Any other domestic company |
30% |
30% |
Also, the Government introduced special tax rates for domestic companies under various sections, these can be summarized as:-
| Domestic Company |
SPECIAL TAX RATES |
| Assessment Year 2022-23 |
Assessment Year 2023-24 |
| Where it opted for section 115BA |
25% |
25% |
| Where it opted for Section 115BAA |
22% |
22% |
| Where it opted for Section 115BAB |
15% |
15% |
Note:
1. In Addition to basic Income Tax as discussed above, the following are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits:-
| Rs. 1 Crore to 10 Crores |
Above Rs. 10 Crore |
| 7% |
12% |
The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10% irrespective of the amount of total income.
- Health & Education Cess @4%
2. MAT Provisions as per section 115JB would also be applicable while calculating tax payable.
Income Tax Rate for a Foreign Company
| Nature of Income |
Tax Rate |
| Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964, but before April 1, 1976, and where such agreement has, in either case, been approved by the Central Government |
50% |
| Any other income |
40% |
Note:
1. In Addition to basic Income Tax as discussed above, the following are also to be taken care of:-
- Surcharge: A surcharge is levied on the amount of income-tax at following rates if the total income of an assessee exceeds specified limits:-
| Rs. 1 Crore to 10 Crores |
Above Rs. 10 Crore |
| 2% |
5% |
- Health & Education Cess @4%
2. MAT Provisions as per section 115JB would also be applicable while calculating tax payable.
|
Income Tax Slab for Senior Citizens (60 to 80 years)
| Income level |
Applicable |
| Up to INR 300,000 |
Nil |
| INR 300,001 to INR 500,000 |
5% of the income exceeding INR 300,000 |
| INR 500,001 to INR 10,00,000 |
5% of the income exceeding INR 300,000 + 20% of the income exceeding INR 500,000 |
| INR 10,00,001 and above |
5% of the income exceeding INR 300,000 + 20% of the income exceeding INR 500,000 + 30% of the income exceeding INR 10,00,000 |
Income Tax Slabs for Super Senior Citizen (Individuals above 80 years)
| Income level |
Applicable tax |
| Up to INR 500,000 |
Nil |
| INR 500,001 to INR 10,00,000 |
20% of the income exceeding INR 500,000 |
| INR 10,00,001 and above |
20% of the income exceeding INR 500,000 + 30% of the income exceeding INR 10,00,000 |
What are the Exemptions/Deductions unavailable under the new tax regime?
The 2020 budget has removed approx 70 of the 100 exemptions available under the new regime. The following exemptions and deductions are some of the most important ones which would not be available if the new tax slab is chosen for tax calculation –
- House Rent Allowance under Section 10 (13A)
- Leave Travel Allowance under Section 10(5)
- Allowances under Section 10(14)
- Food coupons and other tax-free allowances and perquisites
- Deductions under Chapter VI A of the Income Tax Act like Section 80C, 80D, 80TTA, etc.
- Deduction for home loan interest paid for self-owned house property under Sections 24 (b) and Section 80EEA
Which exemptions and deductions are available under the new tax regime?
The following deductions and exemptions would be available under the new tax regime –
- Employer’s contribution to the NPS for up to 10% of your salary under Section 80CCD (2) [ 14% in case of Central Govt employee]
- Standard deduction of 30% of net rental income if house property is let out.
- Home loan interest paid can be deducted from the rental income from the house property. However, loss from the House Property head can not be set off from any other head of income.
- Transport allowance exemption will be available to Divyang employees to meet the day-to-day travel expenses from the workplace to home.
- Conveyance allowance will be allowed to meet the expenditure on the conveyance to perform an official duty.
- Allowances granted will be allowed to meet the cost of traveling on tour or on transfer to the employees.
- Daily allowance granted for day-to-day ordinary expenses in case of absence from his / her normal place of duty.
What are the benefits or disadvantages of opting for the old tax regimes/the new tax regime?
The various benefits and disadvantages of old and new tax regimes include
| Benefits |
Disadvantages |
| OLD TAX REGIME |
| Option to avail approx 70 exemptions and deductions under the Income Tax Act |
Investment only in specified options were required to claim the tax benefit. |
| Practice to submit false disclosures for investment proofs is prevalent |
| NEW TAX REGIME |
| Tax Rates Reduced |
No major tax saving options given, increasing cash flow in the hands of taxpayers |
| Not attractive to those who were already investing and have binding premiums |
|
Tax2win AI integrated efiling portal provides you with all the computations and a detailed comparison on how much your taxability will be as per both regimes (old/new), so that you can decide which one is suitable for you. Filing ITR at Tax2win is easy and smooth.
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