Taxation
Income Tax Slab for FY 2023
5 min read
•
Nov 14, 2022
The Indian government levies income tax on the income earned by individuals, partnership firms, HUFs, LLPs and corporates according to the Income tax or IT Act of India. For individuals, the government levies tax for income above the minimum threshold also called the basic exemption limit as per the income tax slabs. Let’s understand income tax India and the new tax slab rates for FY22-23.
Income tax is an obligatory contribution made by individuals and corporations to the Government of India. With the incorporation of income taxes in India, the government generates income to enhance the country’s economy, grow its business projects, and lift the standard of living of the populace.
Below is the table depicting the different types of taxes levied under the direct tax, indirect tax and other taxes by the Government:
| Different Types of Taxes in India (Illustrative list) | ||
| Direct Taxes | Indirect Taxes | Other Taxes |
| Income Tax | Goods and Services Tax (GST) | Professional Tax |
| Capital Gains Tax | Value Added Tax (VAT) | Property Tax |
| Income Tax | Octroi Duty | Entertainment Tax |
| Corporate Tax | Custom Duty | Toll Tax |
| Capital Gains Tax | ||
| Perquisite Tax | ||
Taxes levied on the income of a person is known as direct tax. It cannot be transferred to another person. It is imposed on your income earned in a fiscal year.
A tax that is levied and paid indirectly by a person who has consumed goods and services is known as indirect tax. In this case, the tax burden is ultimately shifted to the end users.
Apart from direct and indirect taxes, other taxes are also affected by the Central and State Government to serve specific agendas for the country. Examples of other taxes include Toll Tax, Property Tax, Entertainment Tax, etc.
In Budget 2020, the government introduced a New Tax Regime. However, the Old Tax Regime was also retained, giving taxpayers the option to choose between the two tax regimes the old and the new. Following are the three key differences between the old and new income tax regime:
- The new tax regime has more tax slabs with lower tax rates when compared to the old tax regime.
- All the major deductions and exemptions like Section 80C, Section 80D, etc. available under the old tax regime are not allowed under the new tax regime.
- New tax regime slab rates are not differentiated based on age group. However, under old tax regime, the basic income threshold exempt from tax for senior citizen (aged 60 to 80 years) and super senior citizens (aged above 80 years) is INR 3 lakh and INR 5 lakh respectively.
Below are the tables with new and old tax slabs, as per the age group of Individuals and HUFs in India:
New income tax slabs for all individual taxpayers and HUF
| Income tax Slab | Tax Rates as per New Regime |
| INR 0 - INR 2,50,000 | Nil |
| INR 2,50,001 - INR 5,00,000 | 5% |
| INR 5,00,001 - INR 7,50,000 | 10% |
| INR 7,50,001 - INR 10,00,000 | 15% |
| INR 10,00,001 - INR 12,50,000 | 20% |
| INR 12,50,001 - INR 15,00,000 | 25% |
| Above INR 15,00,000 | 30% |
Old income tax slabs for individual taxpayers and HUF
A. Individual taxpayers below the age of 60 years and HUF
| Income Tax Slab | Tax Rate |
| Up to INR 2.5 Lakhs | NIL |
| INR 2.5 Lakhs to INR 5 Lakhs | 5% for income above INR 2.5 Lakhs + 4% cess |
| INR 5 Lakhs to INR 10 Lakhs | 20% for income above INR 5 Lakhs + INR 12,500 + 4% cess |
| Higher than INR 10 Lakhs | 30% for income above INR 10 Lakhs + INR 1,12,500 + 4% cess |
B. Individual taxpayers (i.e. senior citizen) ranging from 60 to 80 years
| Income Tax Slab | Tax Rate |
| Up to INR 3 Lakhs | NIL |
| INR 3 Lakhs to INR 5 Lakhs | 5% for income above INR 3 Lakhs + 4% cess |
| INR 5 Lakhs to INR 10 Lakhs | 20% for income above INR 5 Lakhs + INR 10,000 + 4% cess |
| Higher than Rs.10 Lakhs | 30% for income above INR 10 Lakhs + INR 1,10,000 + 4% cess |
C. Individual tax payers (i.e. super senior citizens) (more than 80 years of age)
| Income Tax Slab | Tax Rate |
| Up to INR 5 Lakhs | NIL |
| INR 5 Lakhs to Rs.10 Lakhs | 20% for income above INR 5 Lakhs + 4% cess |
| Higher than Rs.10 Lakhs | 30% for income above INR 10 Lakhs + INR 1,00,000 + 4% cess |
Note:
1. Tax Rebate available u/s 87A if income does not exceed INR 5,00,000.
2. Surcharge on tax rate is also applicable under old as well as new tax regime, if taxable income exceeds below
| Income tax Slab | Surcharge Rate |
| INR 50 lakhs to INR 1 crore | 10% |
| INR 1 crore to INR 2 crore | 15% |
| INR 2 crore to INR 5 crore | 25% |
| INR 5 crore to INR 10 crore | 37% |
| More than INR 10 crore | 37% |
The Union Budget 2022-23 did not introduce any change in the tax slabs, whether it is the old or new tax regime. When it comes to choosing between the two, it is necessary that you do a careful analysis of the tax outgo and how it would be beneficial for you in the long run.
Disclaimer
“This blog has been prepared to provide the readers with general information and basic understanding. The Income tax definitions and rules keep on changing, so it is suggested that the readers cross-check all the facts and contents of the material. Before taking any decisions, please consult your tax advisors.”
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