Nothing can compare to the sheer happiness of becoming an independent individual and start earning by ourselves. It gives us a sense of becoming an adult and having great responsibilities. However, it is said that with age and power come great responsibilities. As we start earning, we get often get to hear the term ‘Income Tax.’ Most of us who are new have a basic idea of what it means and how it works.
However, we often do not have comprehensive and in-depth knowledge about the same. Having a good knowledge about the same is essential for you to ensure that you do not face any difficulties while paying taxes in the future. To help you out, we have prepared this article that talks about income tax slabs and tax-filing in India. Read this article to know more about the same.
What is Income Tax Slab in India?
The Government of India has the provision of the Income Tax System, which abides by income tax slabs for citizens of India. It is levied on both individuals and non-individuals, like companies, shops, etc. The Indian Income Tax System levies income tax based on earned income, also known as tax slabs. A taxpayer is someone who works for the Government of his or her country but doesn’t really appear for Government examinations and becomes an officer, right?
What are the determinants of the Income Tax Slab in India?
In India, we have different income tax levied for a different range of income earned by individuals and non-individuals. There are various factors that determine the income tax slab in India, such as –
- Gender
- Age
- Whether the individual or non-individual is a citizen of India or not
- For Individuals
- Association Of Person (AOP)
- Hindu Undivided Family (HUF)
- Body Of Individual (BOI)
- If a person is working for an Indian company
- If a person is working for a foreign company
- For Non-Individuals
- Firms that work in partnership
- Limited Liability Partnership (LLP)
- Whether the company is domestic
- Whether the company is foreign
- Authorities that are local
What is the New Income Tax Slab for Financial Year 2022-2023 in India?
The financial year for 2022-2023 will commence on 1st April 2022. We all know the sheer feeling of tension and worry whenever we see the commencement date for the financial year approaching. We all start to wonder whether there will be any changes in the tax slabs and regime for the coming year.
For the budget of the financial year 2022-2023, the Indian Finance Minister Nirmala Sitharaman said that there would be no changes in the income tax slabs or in the income rates as such. Moreover, people who are salaried and are taxpayers can take a sigh of relief as the tax regime chosen for 2022-2023 will be the same as it was chosen.
New Income Tax Slabs & Rates
The table below talks about the old and the new tax slabs and rates for the financial year 2022-2023.
| S. No | Income Tax Slab | New Income Tax Slabs According to the New Regime (does not include deductions and exemptions) | Tax Rates According to the Old Regime |
| 1 | Income that ranges from ₹0 – ₹2,50,000 | Nil | Nil |
| 2 | Income that ranges from ₹2,50,001 – ₹ 5,00,000 | 5% | 5% |
| 3 | Income that ranges from ₹5,00,001 – ₹ 7,50,000 | ₹12500 + 10% of total income that surpasses ₹5,00,000 | ₹12500 + 20% of total income that surpasses ₹5,00,000 |
| 4 | Income that ranges from ₹7,50,001 – ₹ 10,00,000 | ₹37500 + 15% of total income that surpasses ₹7,50,000 | ₹62500 + 20% of total income that surpasses ₹7,50,000 |
| 5 | Income that ranges from ₹10,00,001 – ₹12,50,000 | ₹75000 + 20% of total income that surpasses ₹10,00,000 | ₹112500 + 30% of total income that surpasses ₹10,00,000 |
| 6 | Income that ranges from ₹12,50,001 – ₹15,00,000 | ₹125000 + 25% of total income that surpasses ₹12,50,000 | ₹187500 + 30% of total income that surpasses ₹12,50,000 |
| 7 | Income that is Above ₹ 15,00,000 | ₹187500 + 30% of total income that surpasses ₹15,00,000 | ₹262500 + 30% of total income that surpasses ₹15,00,000 |
The income tax slab rates for the financial year 2023-2024 i.e. assessment year 2024-2025 are as follows:
Income Tax Slab Rates FY 2023-24 for Individuals, NRIs & HUF – “New Tax Regime”
| Income Tax Slab | Income Tax Rate* |
| Up to Rs 3 lakhs | NIL |
| Above Rs 3 lakhs – Rs 6 lakhs | 5% |
| Above Rs 6 lakhs – Rs 9 lakhs | 10% |
| Above Rs 9 lakhs – Rs 12 lakhs | 15% |
| Above Rs 12 lakhs – Rs 15 lakhs | 20% |
| Above Rs 15 lakhs | 30% |
*As per the Union Budget 2023 presented by Finance Minister Nirmala Sitharaman on 1st February 2023.
Is Your Income Taxable? Know all About the Types of Taxable Income in India
Income earned by People Who Are Salaried
All incomes earned by employees who are salaried under their employers come under this category. Apart from salary, the retirement pension earned by the employee also falls under this category.
Income Tax for income earned via Capital Gains
In simple terms, capital gains mean the income earned by the taxpayer from capitals, such as selling properties, shares, stocks, jewellery, etc. The Income Tax Slab includes the taxes involved while selling of above-given capital.
Income generated via Business/Profession
All individuals who run a business or a profession fall under this category. According to the Income Tax Act, the Sections 30 to 43D include the income that is earned by an individual from a profession or a business are taxable as per the rates decided
Income earned from House Property
If you have properties that are up for rent, then the amount you earn from them is also taxable.
Income that is earned from Other Sources
- Income and profits that are earned from gambling, etc.
- Interest earned on debentures, bonds, etc.
- Taxes are levied on the income from dividends
- Gifts such as a house, car, etc. that you may receive from your loved ones
How is New Income Tax Slab Different?
As per the new income tax slab for Financial Year 2022-23, the old and the new income tax slabs are not different. However, under the new tax regime, the taxpayers won’t be able to claim up to 70 tax deductions while calculating their taxes.
How to Calculate Income Tax from Income Tax Slabs?
To help you better understand how to calculate the income tax, you will have to pat from the new income tax slab; here is an example.
Suresh is a salaried employee who earns Rs. 60,000 in a month. Apart from this, he gets a travel allowance of Rs. 5,000. Medical allowance of Rs. 1,000 and a house rent allowance of Rs. 20,000 for every month.
| Type of Income | Total Amount (per annum) | Deducted Amount | Tax |
| Salary | Rs. 7,20,000 | NIL | Rs. 7,20,000 |
| Travel allowance | Rs. 60,000 | Rs, 45,000 | Rs. 15,000 |
| Medical allowance | Rs. 12,000 | Rs. 12,000 (Suresh has submitted his medical bills) | NIL |
| House rent allowance | Rs 2,40,000 | Rs. 1,40,000 | Rs. 1,40,000 |
| Total amount | Rs. 8,75,000 |
Suresh will invest his money in Public Provident Fund (PPF) and other investment plans to claim his taxes. He also has a savings account from which he receives interest of Rs. 15,600.
So, his total income is Rs. 8,75,000 + 15,600, which is a total of Rs. 8,90,600. Let us now see the deductions as per the Income Tax of India.
- Deduction on Section 80C – 1,50,00
- Deduction on Section 80D – 12,000
His new income is Rs. 7,28,600.
| Range | Tax Rates | Total Tax Amount |
| Up to Rs 2,50,000 | Exempted | Nil |
| From Rs 2,50,000 to Rs 5,00,000 | 5% | 12,500 |
| From Rs 5,00,000 to Rs 10,00,000 | 20% | 42,560 |
| More than Rs 10,00,000 | 30% | Nil |
Suresh can now calculate the income tax from the income tax slabs given above.
Things to Keep in Mind If You Choose the New Tax Slab
- Suppose you want to inform your employer that you want to opt for the new income tax slabs. You can do this with the help of the declaration form provided by the employer to you. After this, your employer will start deducting TDS every month. Informing your employer that you are opting for the new income tax slabs is crucial as it will ensure that you do not face any hassles in the future.
- For all those who have an annual income less than Rs. 5 lakhs are not applicable to pay income tax.
Word to Remember
Tax Deducted as Source (TDS) – The concept of TDS was included in India as a means to collect taxes from the income earned by individuals and non-individuals. The TDS is deducted as per the rates defined by the Income Tax Department of India.
Applicable Tax Returns & Forms
Depending on the type of income an individual earns, the ITR forms vary, such as
ITR 1 – Hindu Undivided Family Indian and individuals who are residents
ITR 2 – Hindu Undivided Family and individuals
ITR 3 – Hindu Undivided Family, someone who is a partner in a firm or individuals
ITR 4 – Firm, Hindu Undivided Family
ITR 5 – Limited Liability Partnership (LLP) or Partnership Firms
ITR 6 – Companies
ITR 7 – Trusts
Did You Know?
All those individual taxpayers who have an income up to 5 lakh have been exempted to pay any taxed by the Budget.
Conclusion
As a beginner who has just started earning, it is necessary to know all about income tax slabs, TDS, ITR, and much more so that you do not face any difficulties moving forward. If you are facing difficult on how to take a step forward towards calculating your income tax and filing for ITR, then you can take a sigh of relief as we are here to back you up!
FAQs
The Government of India has the provision of Income Tax System, which abides by income tax slabs for the citizens of India. The Indian Income Tax System levies income tax based on earned income, also known as tax slabs.
Various factors determine the income tax slab in India, such as –
Gender
Age
Whether the individual or non-individual is a citizen of India or not
For Individuals
For Non-Individuals
The concept of TDS was included in India to collect taxes from the income earned by individuals and non-individuals. The deductor who will pay the specified TDS to the deductee is deducting and paying the amount in the Central Government’s bank account.
For all those who have an annual income less than Rs. 5 lakhs are not applicable to pay income tax. So, you do not have to pay taxes to the Government of India.
| S. No | Income Tax Slab | New Income Tax Slabs According to the New Regime (does not include deductions and exemptions) | Tax Rates According to the Old Regime |
| 1 | Income that ranges from ₹0 – ₹2,50,000 | Nil | Nil |
| 2 | Income that ranges from ₹2,50,001 – ₹ 5,00,000 | 5% | 5% |
| 3 | Income that ranges from ₹5,00,001 – ₹ 7,50,000 | ₹12500 + 10% of total income that surpasses ₹5,00,000 | ₹12500 + 20% of total income that surpasses ₹5,00,000 |
| 4 | Income that ranges from ₹7,50,001 – ₹ 10,00,000 | ₹37500 + 15% of total income that surpasses ₹7,50,000 | ₹62500 + 20% of total income that surpasses ₹7,50,000 |
| 5 | Income that ranges from ₹10,00,001 – ₹12,50,000 | ₹75000 + 20% of total income that surpasses ₹10,00,000 | ₹112500 + 30% of total income that surpasses ₹10,00,000 |
| 6 | Income that ranges from ₹12,50,001 – ₹15,00,000 | ₹125000 + 25% of total income that surpasses ₹12,50,000 | ₹187500 + 30% of total income that surpasses ₹12,50,000 |
Key Takeaways
- There will not be any changes in the old and new income tax slabs for the financial year 2022-23.
- The time limit to avail input tax credit by businesses regarding invoices has been extended till 31st November of the following financial year.
- There has been a reduction in the alternate minimum tax by 15% for cooperative societies.
