What is the Income Tax Slab?

Individual taxpayers in India are taxed based on a slab system. Income tax slabs refer to different tax rates applied to different income ranges. These tax rates increase as the taxpayer's income increases. Typically, this type of taxation allows for progressive and fair tax systems. Every year, the tax slab structure changes during the Union budget.

"Individual taxpayers" can be classified into three categories as per Indian Income Tax:

  • Individuals under the age of 60, including residents and non-residents
  • Resident Senior citizens (60 to 80 years of age)
  • Resident Super senior citizens (aged more than 80 years)

Income Tax slabs & Rates as Per Old Regime FY 2022 - 23

Given below are the three tables for the alternative Income Tax Slabs :

Income Tax Slab for Individual who are below 60 years

Income Tax slab Tax Rate

Up to Rs.2.5 lakh

Nil

Above Rs.2.50 lakh - Rs.5.00 lakh

5% of the total income that is more than Rs.2.5 lakh + 4% cess

Above Rs.5 lakh - Rs.10 lakh

20% of the total income that is more than Rs.5 lakh + Rs.12,500 + 4% cess

Above Rs.10 lakh

30% of the total income that is more than Rs.10 lakh + Rs.1,12,500 + 4% cess

Individuals who have an income of less than Rs.5 lakh are eligible for tax deductions under Section 87A

Example - Given below is an example of how income tax is calculated under old regime for 3 individuals (A, B, and C):

Components A B C

Annual Salary (Rs.)

5,00,000

10,00,000

15,00,000

Standard Deduction (Rs.)

50,000

50,000

50,000

Tax deductions under Section 80C of the Income Tax Act (Rs.)

70,000

1,50,000

1,50,000

House Rent Allowance deductions

92,000

100,000

1,50,000

Gross total income after deductions (Rs.)

2,88,000

7,00,000

11,50,000

Computation of tax on the gross total income

     

Up to Rs.2.5 lakh (Rs.)

Nil

Nil

Nil

From Rs.2,50,001 to Rs.5 lakh (Rs.)

1,900

12,500

12,500

From Rs,5,00,001 to Rs.10 lakh (Rs.)

 

40,000

1,00,000

Above Rs.10 lakh (Rs.)

   

45,000

Total Tax (Rs.)

1,900

52,500

1,57,500

Deductions under Section 87A (Rs.)

1,900

Nil

Nil

Additions of cess (Rs.)

Nil

2,100

6,300

Total tax that is payable (Rs.) (Total Tax + cess – Deductions under Section 87A)

Nil

54,600

1,63,800

Income Tax Slab between 60-80 years (Senior Citizen)

Income Tax slabs Tax Rate

Up to Rs.3 lakh

Nil

Above Rs.3.00 lakh - Rs.5.00 lakh

5% of the total income that is more than Rs.3 lakh + 4% cess

Above Rs.5.00 lakh - Rs.10 lakh

20% of the total income that is more than Rs.5 lakh + Rs.10,000 + 4% cess

Above Rs.10 lakh

30% of the total income that is more than Rs.10 lakh + Rs.1,10,000 + 4% cess

Example: Given below is an example of how income tax is calculated for 3 individuals (A, B, C):

Components A B C

Annual Salary (Rs.)

5,00,000

10,00,000

15,00,000

Standard deduction (Rs.)

50,000

50,000

50,000

Tax deductions under Section 80C of the Income Tax Act (Rs.)

70,000

1,50,000

1,50,000

House Rent Allowance deductions

92,000

100,000

1,50,000

Gross total income after deductions (Rs.)

2,88,000

7,00,000

11,50,000

Computation of tax on the gross total income

     

Up to Rs.3 lakh (Rs.)

Nil

Nil

Nil

From Rs.3,00,001 to Rs.5 lakh (Rs.)

Nil

10,000

10,000

From Rs,5,00,001 to Rs.10 lakh (Rs.)

 

40,000

100,000

Above Rs.10 lakh (Rs.)

   

45,000

Total Tax (Rs.)

Nil

50,000

1,55,000

Deductions under Section 87A (Rs.)

Nil

Nil

Nil

Additions of cess (Rs.)

Nil

2,000

6,200

Total tax that is payable (Rs.)

Nil

52,000

1,61,200

Income Tax Slabs for individual above 80 years (super senior citizen)

Income Tax slabs Tax Rate

Up to Rs.5 lakh

Nil

Above Rs.5 lakh - Rs.10 lakh

20% of the total income that is more than Rs.5 lakh + 4% cess

Above Rs.10 lakh

30% of the total income that is more than Rs.10 lakh + Rs.1,00,000 + 4% cess

Example: Given below is an example of how income tax is calculated for 3 individuals (A, B, C):

Components A B C

Annual Salary (Rs.)

5,00,000

10,00,000

15,00,000

Standard deduction (Rs.)

50,000

50,000

50,000

Tax deductions under Section 80C of the Income Tax Act (Rs.)

70,000

1,50,000

1,50,000

House Rent Allowance deductions

92,000

100,000

1,50,000

Gross total income after deductions (Rs.)

2,88,000

7,00,000

11,50,000

Computation of tax on the gross total income

     

Up to Rs.5 lakh (Rs.)

Nil

Nil

Nil

From Rs,5,00,001 to Rs.10 lakh (Rs.)

 

40,000

1,00,000

Above Rs.10 lakh (Rs.)

   

45,000

Total Tax (Rs.)

Nil

40,000

1,45,000

Deductions under Section 87A (Rs.)

Nil

Nil

Nil

Additions of cess (Rs.)

Nil

1,600

5,800

Total tax that is payable (Rs.)

Nil

41,600

1,50,800

For domestic companies, the tax-slabs depend on the turnover, and it is mentioned below:

Turnover Tax Rate

Turnover or Gross Receipt in previous year 2018-19 not exceed 400 Crores

25%

Turnover or Gross Receipt in previous year 2018-19 exceed 400 Crores andnot opted for 115BA, 115BAA, 115BAB

30%

In addition to the tax rate listed above, a surcharge and cess are also charged. Details on the surcharge and cess that will be imposed are provided below:

  • Cess - 4% of corporate tax
  • Surcharge -The surcharge that would be applied is 7% if the taxable income is greater than Rs. 1 crore but less than Rs. 10 crore. If the taxable income exceeds Rs. 10 crore, a 12% surcharge would be applied.
  • Non Resident Indians -There is a maximum basic exemption limit of Rs. 2.5 lakh for non-resident Indians, regardless of their age.

Important Points

  • Cess has increased from 3% to 4% with the amendment coming in Budget 2018.

Surcharge rates applicable to Individuals or HUF

A surcharge is applied to the amount of income tax when a taxpayer's income exceeds the thresholds outlined by the Income Tax Department. The following prices for a surcharge are provided:

For Assessment Year 2022-23

Range of Income Applicable Rate of Surcharge

Rs.50 lakhs to Rs.1 crore

10%

Rs.1 crore to Rs.2 crore

15%

Rs.2 crore to Rs.5 crore

25%

Rs.5 crore to Rs.10 crore

37%

More than Rs.10 crore

37%

For Assessment Year 2023-24

Range of Income Applicable Rate of Surcharge

Rs.50 lakhs to Rs.1 crore

10%

Rs.1 crore to Rs.2 crore

15%

Rs.2 crore to Rs.5 crore

25%

Rs.5 crore to Rs.10 crore

37%

More than Rs.10 crore

37%

Deductions and Exemptions Available under the Old Tax Regime

Because of a mix of exclusions and deductions, your taxable income may be affected by a substantial amount. So, in order to maximise your earnings, savings, and assets each year and keep your taxable income to a minimal, tax planning is essential.

Over the years the government, through addition of clauses to the Income Tax Act, has given Indian taxpayers over 70 exemptions and deduction options through which they can bring down their taxable income and hence pay less.

While exemptions are part of your salary, like the House Rent Allowance (HRA) and Leave Travel Allowance (LTA), deductions allow you to lower your tax amount by investing, saving or spending on specific items. The biggest section for deduction is Section 80c through which you can bring down your taxable income by Rs.1.5 lakh. Apart from this, there are several other sections that let you take tax deductions on things ranging from interest on your loans (home and education) to premiums you pay for health insurance.

Deductions Exemptions

Public Provident Fund

House Rent Allowance

Equity Linked Savings Scheme (ELSS)

Leave Travel Allowance

Employee Provident Fund

Mobile and Internet Reimbursement

Life Insurance Premium

Food Coupons or Vouchers

Principal and Interest component of Home Loan

Company Leased Car

Children Tuition Fees

Standard Deduction

Health Insurance Premiums

Uniform Allowance

Investment in NPS

Leave Encashment

Tuition fee for Children

 -

Saving Account Interest

-

Conclusion

By forcing investments in specialised tax-saving mechanisms, the old income tax regime gradually inculcated in people a culture of saving. It encourages saving for upcoming occasions like marriage, education, property purchases, medical expenses, etc.The taxing process is influenced by a variety of variables. Please feel free to contact a private tax consultant.