You might be thinking about the income tax slab. Is. Then let me clarify all your confusion. In India, we calculate income tax with the help of an income tax slab. This list of rates is based on the Assessment year(AS) and Financial year (FY). It is said that after every year, there is a financial year. The income tax slab may differ from old to new regime. In this article, we will discuss all the details of the necessary income tax slab.
What is the income tax slab?
We all know what income tax means; however, for this income tax, individuals are charged with some charges that they have to pay based on their wealth. In India, the income tax charged to an individual is based on the slab system. The slab system mentions various income ranges and the tax rates charged to them. The income tax rate goes hand in hand; when the income tax increases, its tax rates also increase. India needs a stable economic system as every person’s status is different, so the progressive tax system is applied here—the income tax rate of the year changes and is charged on a yearly basis. Moreover, every income tax slab rate varies from one group of taxpayers to another.
Comparison between the tax rates under the New tax regime and the Old tax regime
The tax system is divided between the two types. However, we have compared the new and old tax regimes below.
| Old Tax Regime (FY 2022-23 and FY 2023-24) | New Tax Regime | ||||
| Income Slabs | Age <60 and NRIs | Age 60-80 years | Age above 80 Years | FY -2022-23 | FY 2023-24 |
| Up to Rs. 2,50,000 | Nil | Nil | Nil | Nil | Nil |
| Rs. 2,50,001 – Rs. 3,00,000 | 5% | Nil | Nil | Nil | Nil |
| Rs. 3,00,001 – Rs. 5,00,000 | 5% | 5% | Nil | 5% | 5% |
| Rs. 5,00,001 – Rs. 6,00,000 | 20% | 20% | 20% | 10% | 5% |
| Rs. 6,00,001 – Rs. 7,50,000 | 20% | 20% | 20% | 10% | 10% |
| Rs. 7,50,001 – Rs. 9,00,000 | 20% | 20% | 20% | 15% | 10% |
| Rs. 9,00,001 – Rs. 10,00,000 | 20% | 20% | 20% | 15% | 15% |
| Rs. 10,00,001 – Rs. 12,00,000 | 30% | 30% | 30% | 20% | 15% |
| Rs. 12,50,001 – Rs. 15,00,000 | 30% | 30% | 30% | 25% | 20% |
| Rs. 15,00,000 and above | 30% | 30% | 30% | 30% | 30% |
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Income tax slab rates for FY 2022-23
- New tax regime until 31 March 2023
The income tax rates based on the new tax regime are given below:
| Income slabs | Individuals ( for all age categories) |
|---|---|
| Up to ₹ 2,50,000 | Nil |
| ₹2,50,001 – ₹ 5,00,000 | 5% |
| ₹5 00,001 – ₹7,50,000 | 10% |
| ₹7 50,001 – ₹10,00,000 | 15% |
| ₹10,00,001 – ₹12,50,000 | 20% |
| ₹12,50,001- ₹15,00,000 | 25% |
| ₹15,00,001 and above | 30% |
If the Individual’s income slab doesn’t exceed ₹5 00,000, then they have to pay off ₹12 500 as a rebate.
Changes Announced in the New Tax Regime in Budget 2023
Specific changes have been made in the new tax regime in budget 2023. However, those changes are:
- The new tax regime is basically the default tax regime. In this system, if an individual doesn’t necessarily choose the type of regime, their income will be only charged based on the new tax regime.
- The new tax regime charges the pensioners an explicit deduction of ₹15 000
.
- The essential new tax regime starts from 3 lakhs. Previously, it was 2,50,000 based on the old tax regime.
- The previous surcharge rate was 37%, but now it has been reduced to 25%.
- An individual who gets a salary and pension is charged with a deduction of ₹ 50,000 under the New tax regime.
- Old tax regime
The old tax regime applies to people above the age of 60 years and belongs to HUF. However, we have provided the income slab below based on the old regime.
| Income slabs | Individuals of age < 60 years and NRI |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| ₹10,00,000 and above | 30% |
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Tax slab for domestic companies
The income tax slab for domestic companies is given below:
| Particulars | Existing or old tax regime | New tax regime |
|---|---|---|
| The companies working under section 115BAA and registered after 1 October 2019 and have started manufacturing since 31 March 2023 | – | 15% |
| The companies under 115BA were registered after 1 March 2016 and have been working for education in the claim for any article. | 25% | |
| When the gross receipt of the company’s previous year is more than 400 crore | 25% | 25% |
| Rate of other domestic companies | 30% | 30% |
Comparison of income tax slab under the New regime – before and after the budget
Here, we have provided you with a comparison in the table of the New regime before and after the budget rate:
| Slab | New tax regime (before budget 2023 – until 31 March 2023 | New tax regime ( after budget 2023 – 1 April 2023 |
|---|---|---|
| 0 – 2,50,000 | Nil | Nil |
| 2,50,000 – 3,00,000 | 5% | Nil |
| 3,00,000 – 5,00,000 | 5% | 5% |
| 5,00,000- 6,00,000 | 10% | 5% |
| 6,00,000 – 7,50,000 | 10% | 10% |
| 7,50,000 – 9,00,000 | 15% | 10% |
| 9,00,000- 10,00,000 | 15% | 15% |
| 10,00,000- 12,00,000 | 20% | 15% |
| 12,00,000- 12,50,000 | 20% | 20% |
| 12,50,000 – 15,00,000 | 25% | 20% |
| More than 15,00,000 | 30% | 30% |
Conditions for voting for the New tax regime
There are some guidelines in both the New and Old tax regimes. However, anyone interested in paying taxes through the new tax regime must bear some of the deductions mentioned in the new tax regime guidelines. Here are some of the compulsory deductions from the new tax regime.
- Children education allowance
- Leave travel allowance
- House rent allowance
- Conveyance allowance
- Relocation allowance
- Profession tax
- Helper allowance
- Daily expenses in the course of employment
- Standard deduction on salary
- Interest on housing loan
- Other special allowance
Ordinary deductions that are allowed under the New tax regime
Some of the most common deductions under the New tax regime are below.
- Depreciation is charged under section 32 income tax, excluding the additional charge.
- Transportation allowance is for specially-abled people.
- Deduction from the salary slip of the new employee under section 80JJAA.When an individual invests in a Notified Pension scheme under 80CCD(2).
- Allowance charged for the transfer or traveling for employment.
Kinds of taxable income sources in India
India is diverse, and you will find people with a wide range of employment options. Nowadays, various people have an idea about the source of income they want to choose. But you have to pay income tax in all these income sources. Whether you are a businessman or a salaried employee, you do have to pay income tax. Here are some of the taxable income sources in India.
- Salary or pension
The taxes have been charged on the salary and salary allowance. When you are a salaried employee, you must pay some percentage of your monthly income. Moreover, for the pensioners who are paid up with pension after their retirement, some tax is also applied to an individual. The tax slab may differ from one person to another based on age, salary, pension, individual earnings, etc.
- Businesses
If you’re a businessman, the profit earned from your income is also considered taxable. Businesses are charged taxes through the actual income and the profit generated. The tax rate may differ from one company to another.
- Property income
Property income is gained when you own many houses and have been getting rent from them. According to the income tax law, renting a home is considered the taxpayer’s income.
- Lottery, races, and more income
In India, many people who race and play other games and win prizes through them are also considered taxpayers. A separate income tax slab is made for these activities.
- Capital gains income
Income is generated through capital gains after selling assets such as gold, mutual funds, real estate, etc. These incomes may be based upon short- and long-term financial income and are charged with taxes.
Conclusion
There are a large number of people who often need clarification about choosing the Old and New tax regimes. This says that one should go for the New tax regime, which provides lower tax rates and much fewer exemptions. It even has a more straightforward tax structure and saves time and effort. This article has provided all the necessary details about the old and new tax regimes.