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At the end of every financial year, we are mandated to prepare for filing the income tax return based on the income tax paid during the year. But, seldom do we know about the income tax and its framework! Here is a detail about the income tax slab, which forms the basis for calculating income tax in India.
Income tax in India is a type of direct tax levied by the Government on the income earned from different sources by the individuals, HUFs (Hindu Undivided Family), Corporates and Limited Liability Partnerships. It is based on the tax provisions detailed in the Income Tax Act of India.
The Government utilises the collected amount to fund infrastructure initiatives, pay salaries to the employees working under the State and the Central Government, etc. Therefore, paying income tax is an important responsibility for every individual or entity earning an income.
The income tax is levied on the income based on the tax slabs in India. It is defined to make sure paying income tax is affordable for different sections of people based on their range of income.
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The income tax slab defines the ranges of income for the different categories of people and the applicable income tax. Therefore, the income tax rates will increase with an increase in income. The income here refers to the taxable income, calculated after considering the applicable deductions and exemptions based on the gross income and tax provisions as stated under the Income Tax Act, 1961.
The Government introduced such a progressive income tax framework to ensure a fair income tax system in India. The income tax slabs in India are subject to revision based on the amendments detailed in the Union Budget every year.
The IT tax slab provides the tax rate separately for the following different categories of taxpayers, as detailed below.
There is a minimum threshold on the income above which the income tax slab 2021 gets applicable. Therefore, taxpayers must be aware of the exemption limit to apply the appropriate tax rate.
In the Union Budget, 2020, the Finance Minister introduced a new tax slab regime. It has revised income tax rates for the different ranges of income based on the categories of taxpayers.
In the subsequent Union Budgets, the Finance Minister made no further changes to the income tax slab for AY 2021-22 and FY 2021-22. However, the Budget 2020-21 mentioned that senior citizens above 75 years of age are exempt from filing ITR if their only source of income is pension and interest income.
Every individual taxpayer can choose between the old and the new tax slab. So how do the ITR slabs differ, and why is it left to the choice of individual taxpayers?
The old tax regime details a higher income tax rate but allows for a range of deductions and exemptions under the Income Tax Act, 1961, for the calculation of the taxable income. On the other hand, the new income tax slab provides lower tax rates for the different ranges of income while giving up certain deductions and exemptions. The new taxable income slab has widened the scope of the taxation scheme by introducing seven tax slab rates.
Choosing the ITR slab based on the regime is optional for the individual resident taxpayers because the benefits under both regimes differ based on the sources and extent of income and the investment scenarios.
However, it is observed that as the income reaches a higher IT tax slab, the new tax regime gets more beneficial even in the presence of tax~-saving investments.
The new income tax slab 2021-22 is not different for the different categories of taxpayers. For example, it is the same for the individuals and HUFs less than 60 years, senior citizens between 60 and 80 years of age and super senior citizens greater than 80 years of age.
Income Tax Slabs(₹) |
Income Tax Slab Rates for FY 2021-22 |
Upto ₹2.5 Lakh |
Nil |
Between ₹2.5 Lakh and ₹5 Lakh |
5% |
Between ₹5 Lakh and ₹7.5 Lakh |
10% |
Between ₹7.5 Lakh and ₹10 Lakh |
15% |
Between ₹10 Lakh and ₹12.5 Lakh |
20% |
Between ₹12.5 Lakh and ₹15 Lakh |
25% |
Greater than ₹15 Lakh |
30% |
Health and education cess will apply to the income tax liability at 4%.
The surcharge will apply based on the following rates:
Income (₹) |
Rate of Surcharge |
Between ₹50 Lakh and ₹1 crore |
10% |
Between ₹1 crore and ₹2 crores |
15% |
Between ₹2 crore and ₹5 crores |
25% |
Greater than ₹5 crores |
37% |
The new income tax slab does not allow for including about 70 different deductions and exemptions such as the deductions under Section 80C, 80D, etc., interest on housing loans, house rent allowance, leave travel allowance, etc.,
The old tax slab will vary based on the age and the category of taxpayers.
Income tax slab for individuals and HUF below 60 years of age
Income Tax Slabs(₹) |
Income Tax Slab Rates for FY 2021-22 |
Upto ₹2.5 Lakh |
Nil |
Between ₹2.5 Lakh and ₹5 Lakh |
5% |
Between ₹5 Lakh and ₹10 Lakh |
20% |
Greater than ₹10 Lakh |
30% |
Income tax slab for senior citizens between 60 and 80 years of age
Income Tax Slabs(₹) |
Income Tax Slab Rates for FY 2021-22 |
Upto ₹3 Lakh |
Nil |
Between ₹3 Lakh and ₹5 Lakh |
5% |
Between ₹5 Lakh and ₹10 Lakh |
20% |
Greater than ₹10 Lakh |
30% |
Income tax slab for super senior citizens above 80 years of age
Income Tax Slabs(₹) |
Income Tax Slab Rates for FY 2021-22 |
Upto ₹5 Lakh |
Nil |
Between ₹5 Lakh and ₹10 Lakh |
20% |
Greater than ₹10 Lakh |
30% |
Health and education cess will apply to the income tax liability at 4%.
The surcharge will apply based on the following rates:
Income (₹) |
Rate of Surcharge |
Between ₹50 Lakh and ₹1 crore |
10% |
Greater than ₹1 crores |
15% |
For both the new and the old tax regimes, individuals with taxable income less than or equal to ₹5 Lakh will qualify for a tax rebate based on Section 87A. The tax liability will be nil in such cases.
The income tax slab 2021-22 for women is the same as that of men. Here is a detail for your reference.
Income Tax Slabs |
Old Tax Slab Regime - Applicable Tax Rates for FY 2021-22(AY 2022-23) |
New Tax Slab Regime - Applicable Tax Rates for FY 2021-22(AY 2022-23) |
||
Individuals and HUF less than 60 years of age |
Individuals and HUF between 60 and 80 years of age |
Individuals and HUF above 80 years of age |
||
Upto ₹2.5 Lakh |
Nil |
Nil |
Nil |
Nil |
Between ₹2.5 Lakh and ₹3 Lakh |
5% |
Nil |
Nil |
5% |
Between ₹3 Lakh and ₹5 Lakh |
5% |
5% |
Nil |
5% |
Between ₹5 Lakh and ₹7.5 Lakh |
20% |
20% |
20% |
10% |
Between ₹7.5 Lakh and ₹10 Lakh |
20% |
20% |
20% |
15% |
Between ₹10 Lakh and ₹12.5 Lakh |
30% |
30% |
30% |
20% |
Between ₹12.5 Lakh and ₹15 Lakh |
30% |
30% |
30% |
25% |
Greater than ₹15 Lakh |
30% |
30% |
30% |
30% |
Health and education cess will apply to the income tax liability at 4%.
The surcharge will apply based on the following rates:
Income (₹) |
Rate of Surcharge (Old Tax Slab Regime) |
Rate of Surcharge (New Tax Slab Regime) |
Between ₹50 Lakh and ₹1 crore |
10% |
10% |
Between ₹1 crore and ₹2 crores |
15% |
15% |
Between ₹2 crores and ₹5 crores |
15% |
25% |
Greater than ₹5 crores |
15% |
37% |
Switching between the tax slabs in India is applicable based on the sources of income.
Calculating income tax based on the Income Tax Slabs in India is a simple procedure. Here are two different examples to describe the income tax calculation based on the old and new regimes.
Example 1: Total income less than ₹10 Lakh for salaried individuals
Let us consider a taxpayer having the following particulars.
Total taxable Income |
₹7,50,000 |
Tax saving investments |
₹1,00,000 |
Let us calculate the tax payable based on the old and new regimes.
Basic Particulars |
Old Regime(₹) |
New Regime(₹) |
Gross total income |
₹7,50,000 |
₹7,50,000 |
Standard deduction* |
₹50,000 |
Nil |
Less Deductions under Section 80C |
₹1,00,000 |
Nil |
Taxable Income |
₹6,00,000 |
₹7,50,000 |
Income Tax Slab(₹) |
Old Regime(₹) |
New Regime(₹) |
||
Calculation |
Tax Amount |
Calculation |
Tax Amount |
|
Up to ₹2.5 Lakh |
Nil |
- |
Nil |
- |
Between ₹2.5 Lakh and ₹5 Lakh |
5% |
₹12,500 |
5% |
₹12,500 |
Between ₹5 Lakh and ₹7.5 Lakh |
20% of the income that exceeds ₹5,00,000 |
₹20,000 |
10% of the income that exceeds ₹5,00,000 |
₹25,000 |
Income Tax payable |
|
₹32,500 |
|
₹37,500 |
Surcharge |
|
- |
|
- |
Cess |
4% |
₹1,300 |
4% |
₹1,500 |
Total Income Tax payable |
|
₹33,800 |
|
₹39,000 |
Example 2: Total income more than ₹10 Lakh for salaried individuals
Let us consider a taxpayer having the following particulars.
Total taxable Income |
₹14,50,000 |
Tax saving investments |
₹1,50,000 |
Let us calculate the tax payable based on the old and the new regimes.
Basic Particulars |
Old Regime(₹) |
New Regime(₹) |
Gross total income |
₹14,50,000 |
₹14,50,000 |
Standard deduction* |
₹50,000 |
Nil |
Less Deductions under Section 80C |
₹1,50,000 |
Nil |
Taxable Income |
₹12,50,000 |
₹14,50,000 |
Income Tax Slab(₹) |
Old Regime(₹) |
New Regime(₹) |
||
Calculation |
Tax Amount |
Calculation |
Tax Amount |
|
Up to ₹2.5 Lakh |
Nil |
- |
Nil |
- |
Between ₹2.5 Lakh and ₹5 Lakh |
5% |
₹12,500 |
5% |
₹12,500 |
Between ₹5 Lakh and ₹7.5 Lakh |
20% of the income that exceeds ₹5,00,000 |
₹50,000 |
10% of the income that exceeds ₹5,00,000 |
₹25,000 |
Between ₹7.5 Lakh and ₹10 Lakh |
20% of the income that exceeds ₹7,50,000 |
₹50,000 |
15% of the income that exceeds ₹7,50,000 |
₹37,500 |
Between ₹10 Lakh and ₹12.5 Lakh |
30% of the income that exceeds ₹10,00,000 |
₹75,000 |
20% of the income that exceeds ₹10,00,000 |
₹50,000 |
Between ₹12.5 Lakh and ₹15 Lakh |
- |
- |
25% of the income that exceeds ₹10,00,000 |
₹50,000 |
Income Tax payable |
|
₹1,87,500 |
|
₹1,75,000 |
Surcharge |
|
- |
|
- |
Cess |
4% |
₹7,500 |
4% |
₹7,000 |
Total Income Tax payable |
|
₹1,95,000 |
|
₹1,82,000 |
Therefore, the higher the consideration of the income tax slab, the greater the benefits of the new tax slab regime.
*Standard deduction of Rs. 50,000 is only applicable to salaried employees
Income Tax Slabs For Domestic Companies For The FY 2021-22
Basic Particulars |
Old Tax Regime |
New Tax Regime |
If the Company registered on or before 1st October 2019 and has started manufacturing on or before 31st March 2023 opts for Section 115BAB. |
Nil |
15% |
If the Company opts for Section 115BAA and the total income is derived without claiming specified incentives, deductions, exemptions and other additional depreciation. |
Nil |
22% |
If the Company opts for Section 115BA and is registered on or after 1st March 2016 and has engaged in the manufacturing business and does not claim the specified deductions. |
Nil |
25% |
The turnover or the gross receipt is less than ₹400 crore for the Company in the previous year 2018 - 2019 |
25% |
25% |
Other domestic companies |
30% |
30% |
Cess and Surcharge
Health and education cess will apply to the income tax liability at 4%.
The surcharge will apply based on the following rates:
Income (₹) |
Rate of Surcharge |
Between ₹1 crore and ₹10 crores |
7% |
Greater than ₹10 crores |
12% |
If the domestic company opts for Section 115BAA and Section 115BAB |
10%
|
Income Tax Slabs For Limited Liability Partnerships For The FY 2021-22
The Limited Liability Partnership firms are taxable at 30% for the FY 2021-22. Health and education cess will apply to the income tax liability at 4%. The surcharge is levied at 12% for income above ₹1 crore.
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Is paying income tax in India compulsory?
Paying income tax in India is compulsory based on the defined income tax slab. Failing to do so can result in paying penalties based on the default.
Do the different age groups have different slab rates?
The IT tax slab rates differ based on the age group in the old tax regime. The different categories include residents below the age of 60, senior citizens between 60 and 80, and super senior citizens above 80. However, the income tax slab is the same for people of different age groups in the new tax slab regime.
Is there a difference in the tax slab for men and women?
There is no stated difference between the income tax slab rate for women and men in India.
Is opting for the New Tax Regime compulsory for AY 2022-23?
Opting for the new tax regime is not compulsory for the AY 2022-23. The choice of opting for the old or the new tax regime is subject to the interests of the individual taxpayers. The old tax regime provides a high tax rate while allowing various tax deductions and exemptions. On the other hand, the new tax slab regime provides lower tax rates while it does not allow for the different applicable deductions and exemptions for determining the taxable income.
Who can claim the rebate under Section 87A?
Individuals with taxable income less than or equal to ₹5 Lakh will qualify for a tax rebate under Section 87A. It applies to both the old and the new tax regimes, and the tax liability is nil in such cases.
Can I opt for the New Tax Regime and claim deductions under Section 80C?
No, claiming deductions under Section 80C is not allowed under the new tax regime. However, if you have tax-saving investments that qualify for tax deduction under Section 80C, you can opt for the old tax regime to receive the benefits if applicable.
Is the due date the same for all taxpayers filing income tax returns?
The due date for all individual taxpayers is 31st July 2022 and for businesses requiring an audit is 31st October 2022.
Should I file ITR if my annual income is below ₹2.5 Lakh?
Yes, you must file ITR even if your annual income is less than ₹2.5 Lakh.
Disclaimers