What Is an Income Tax Slab?
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.
- Individuals, residents and non-residents less than 60 years of age.
- Senior citizens, residents between 60 and 80 years of age.
- Super senior citizens, residents above 80 years of age.
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.