Income Tax Slabs & Rates

All about Income Tax Slabs in India

According to data put forward by the e-filing website of the Income Tax Department, in India, the number of income tax e-filings submitted in Financial Year 2021-22 was about 5.83 Crore. Last year for Financial Year 2020-21, about the same number of returns (around 5.89 Crore) were filed.

That is why, with the FY 2022-23 almost coming to an end, it is your duty as a tax-payer to learn about the applicable income tax slab for this particular year, pay your income taxes and file the same before the stipulated date – around July 31^stof next year.

While this gives you ample time to sort out your finances and learn your tax liabilities, it is never too early to start!

Hence, to make things easier for you, we have listed the applicable tax slabs in India for FY 2022-23, how they are determined and of course, the exemption limit.

So, without further ado, let’s begin!

What do Income Tax Slab Rates entail?

According to the current tax laws that are applicable in India, the income tax rate that is levied on the resident individuals in our country varies according to their income and age. There are also two different income tax slab rates that individuals can opt for.

Now, if you are below 60 years of age, with an annual income which does not exceed Rs. 2.5 Lakh, you can enjoy tax exemption in India.

But, if you do not comply with the above criteria, it is best to take note of the new income tax slabs that will be applicable for the financial year 2022-23.

For the purposes of taxation, individuals are divided into three categories based on their age. These are as follows –

Resident and non-resident individuals who are below 60 years of age.
Resident individuals who are between 60 and 80 years of age.
Resident individuals who are above 80 years of age

Now, while this categorisation remains the same, the slabs are subject to change during each budget. In the budget where a change is not specifically announced, these rates remain the same as that of the previous year.

Since the passing of the Finance Act 2020, individuals and HUF have the option of paying taxes under either the old (existing) or new (special) tax regimes. The new tax regime allows both resident and non-resident individuals, as well as HUF, to pay taxes at a reduced rate.

However, anyone opting for this concessional tax regime would not be able to claim a number of tax deductions and exemptions. This includes the standard deduction, HRA, LTA and deductions under Section 80C, Section 24(b), Section 80D, Section 80E, Section 80TTA, Section 80TTB etc.

Let us now look through the different income tax slab rates as applicable for Financial Year 2022-23.

Normal Income Tax Slab Rates for Individuals and HUF

For the FY 2022-23, the Income Tax Slab Rates for Individuals and HUF (below 60 years of age) as per the existing (old) income tax regime is as follows:

Income tax slabs	Rate of Taxation
Up to ₹2.5 Lakh	Nil
Between ₹2,50,001 and ₹5 Lakh	5% of your total income that exceeds ₹2.5 Lakh
Between ₹5,00,001 and ₹10 Lakh	₹12,500 + 20% of your total income that exceeds ₹5 Lakh
Above ₹10 Lakh	₹1,12,500 + 30% of your total income that exceeds ₹10 Lakh

According to the announcements made in the 2019 Budget, if you are a taxpayer with a total income of up to ₹5 Lakh, you will be eligible to avail a rebate of ₹12,500. This rebate is set under Section 87A of the Income Tax Act, 1961.

On top of this, you will also be levied with an additional 4% Health and Education cess, applicable to the tax amount that is calculated as above.

Income Tax Slab Rates for Senior Citizens

For the FY 2022-23, Income Tax Slab Rates for Senior Citizens (above 60 years of age but below 80 years) is as follows:

Income tax slabs	Rate of Taxation
Up to ₹3 Lakh	Nil
From ₹3,00,001 – ₹5 Lakh	5% of your total income that exceeds ₹3 Lakh
From ₹5,00,001 – ₹10 Lakh	₹10,000 + 20% of your total income that exceeds ₹5 Lakh
Above ₹10 Lakh	₹1,10,000 + 30% of your total income that exceeds ₹10 Lakh

Along with this, you will also be levied with an additional 4% Health and Education cess, which is applicable to the tax amount calculated.

Income Tax Slab Rates for Super Senior Citizens

For the FY 2022-23, Income Tax Slab Rates for Super Senior Citizens (above 80 years of age) is as follows:

Income tax slabs	Rate of Taxation
Up to ₹5 Lakh	Nil
From ₹5,00,001 – ₹10 Lakh	20% of your total incomes exceeding ₹5 Lakh
Above ₹10,00,001	30% of your total income exceeding ₹10 Lakh

Like the above two instances, super-senior citizens are also liable to pay an extra 4% Health and Education Cess on the tax amount calculated.

According to the budget announcement of 2019, no new changes were announced for income tax exemption limits or tax slabs. So, if you have filed your taxes for the FY 2018-19, you will simply have to follow the same rules for FY 2022-23 and get your taxes paid and subsequently filed.

Now, if your annual income exceeds ₹50 Lakh, you will also have to pay an additional surcharge for FY 2022-23.

Surcharges for Individuals with a Taxable income exceeding ₹50 Lakh –

Taxable Income	Surcharge
For those with an income above ₹50 Lakh but below ₹1 Crore	10%
For those with an income of above ₹1 Crore but below ₹2 Crore	15%
For those with an income of above ₹2 Crore but below ₹5 Crore	25%
For those with an income of above ₹5 Crore	37%

While the above income tax slabs in India are valid for individuals and HUFs, the taxation slabs applicable for domestic companies are different.

Income Tax Rate in India for Domestic Companies for FY 2022-23

Gross turnover particulars	Tax rate
Up to ₹400 Crore for the financial year 2019-20	25%
More than ₹400 Crore for the financial year 2019-20	30%
When the company has opted for Section 115BA	25%
When the company has opted for Section 115BAA	22%
When the company has opted for Section 115BAB	15%

Apart from these income tax rates in India, domestic companies will also be levied the following cess and surcharges –

Health and Education Cess – 4%

Net income particulars	Surcharge rate on the income tax amount
For companies whose net income exceeds ₹1 Crore but is less than ₹10 Crore	7%
For companies whose net income exceeds ₹10 Crore	12%

But, is it crucial to remember that this surcharge rate for companies that have opted for taxability under Section 115BAA and Section 115BAB will be 10%, regardless of their total income amount.

Special Income Tax Slab Rates for Individuals and HUF

For the FY 2022-23, the Income Tax Slab Rates for Individuals and HUF under the special (new) tax regime is as follows:

Income tax slabs	Rate of Taxation
Up to ₹2.5 Lakh	Nil
Between ₹2,50,001 and ₹5 Lakh	5% of your total income that exceeds ₹2.5 Lakh
Between ₹5,00,001 and ₹7,50,000	₹12,500 + 10% of your total income that exceeds ₹5 Lakh
Between ₹7,50,001 and ₹10,00,000	₹37,500 + 15% of your total income that exceeds ₹7.5 Lakh
Between ₹10,00,001 and ₹12,50,000	₹75,000 + 20% of your total income that exceeds ₹10 Lakh

Key points to remember about Income Tax Rates in India

Now that we have discussed at length about tax-slabs and the limit for income tax exemptions in India, let us summarise the key-points under it.

Everyone earning income in India is liable to pay income tax. The income tax department has fixed five heads under which taxable income is calculated. These are:

- Salary

- House property

- Capital gains

- Business and profession

- Other sources that can include income from FD, savings account, winning contests, etc.

Every income, except capital gains, is taxed according to the income tax slab rate in India. Capital gains are taxed on the basis of the nature and holding period of your asset.
Indian residents are liable to be taxed on the basis of their global income in India, which includes the income earned both in India and abroad. The residential status of an individual is determined separately for each financial year.
You should check your income tax exemption in India and claim the same while computing your total taxable amount.
You income tax returns should be filed before July 31^st 2020.

With such information at your disposal, the process of evaluating your income tax liabilities can become extremely simple.

So, make sure you look through the tax slabs, determine the one applicable for you, and compute your total tax payable well before this financial year is over to avoid the risks of missing the income tax filing deadline!

Tips to Save Income Tax if you are a Salaried Individual

If you are a salaried employee, there are several legitimate ways through which you can save tax payment under the Income Tax Act, 1961. Some of the more comprehensive ways to do so include investing in the likes of National Pension Scheme, tax-saving mutual funds, insurance policy premiums, health insurance policies, etc.

Following is an elaboration on a few ways through which you can reduce your income tax liabilities if you are a salaried employee:

Income Tax Deductions under Section 80C

Under this section of the Income Tax Act, you can claim various deductions from your total income and reduce your tax payment liability by bringing down your total taxable income.

This section allows a deduction of up to ₹1.5 Lakh of your total taxable income and can be availed by individuals and HUF. Following are a few investment options and schemes for which Section 80C is applicable:

Health Insurance Premiums

Under Section 80D of the Income Tax Act, 1961, you can avail a deduction of up to ₹25,000 on your Health Insurance premium payments. Further, for senior citizens, the deduction limit is extended to ₹50,000.

Again, if you are paying premiums for both yourself and your senior citizen parents, you can avail a deduction of up to ₹75,000 on your premiums, per annum.

You may also like: Income tax benefit for Senior Citizens

Charitable donations

There is no upper limit on the deductions that can be claimed for charitable donations. However, there are specific rules that you must adhere to. For instance, in the case of most NGOs, you can avail a deduction of up to 50% of the donated amount and up to 10% in your total adjusted income.

Apart from these, you can also consider contributing to the National Pension Scheme, avail deductions on your home rent, deposit in a savings account, etc. to save on your tax payments.

However, don’t forget to look through the details of each of these schemes and investment options before you decide to avail their benefits!

FAQs about Income Tax Slab Rates in India

✓ Is filing income tax necessary if a person’s annual income is less than Rs. 2.5 Lakh?

If your income is less than ₹2.5 Lakh, you don’t need to file Income Tax Returns. However, you can choose to file “Nil return” for the purpose of maintaining records. This can help you to produce the record as proof of employment for various purposes.

✓ Who is eligible to avail the rebate on their taxable income under Section 87A?

Any resident individual with a total annual income of less than ₹5 Lakh can claim the tax rebate under Section 87A of ITA.

✓ Is income generated from agricultural activities taxable?

No, income generated through agriculture or any of its allied activities is not taxable under the Income Tax Act, 1961.