The Income Tax Act of India formulates slab rates for the payment of income tax by the people. The income tax slab denotes the system that shows different tax rates for various income ranges. The tax rates will increase with your increased income. It is a progressive and fair tax system in the country.
Such income tax slabs will change in every budget. These slab rates are different for different categories of taxpayers. Income tax has classified taxpayers into three categories, such as:
- If you are less than 60 years old, including residents and non-residents
- If you are a resident senior citizen (60 to 80 years of age)
- If you are a resident super senior citizen (aged more than 80 years)
The Finance Minister announces the Income Tax Slabs in India every year. Currently, there are two different Income Tax regimes. Under both the new and the old regime, you can avail of tax benefits.
These are the basics of the term income tax slab. The below article enlightens more on the topic- What is income tax slab.
Let’s dive in.
What Is the Tax Slab in India for 2022 23?
A new tax regime comes into existence with the Union Budget 2023. The following are the specifics of the tax slab in this new regime:
| Income range | Income tax rate – New Regime |
|---|---|
| Up to Rs. 3,00,000 | Nil |
| Rs. 300,000 to Rs. 6,00,000 | 5% on income which exceeds Rs 3,00,000 |
| Rs. 6,00,000 to Rs. 900,000 | Rs 15,000 + 10% on income more than Rs 6,00,000 |
| Rs. 9,00,000 to Rs. 12,00,000 | Rs 45,000 + 15% on income more than Rs 9,00,000 |
| Rs. 12,00,000 to Rs. 1500,000 | Rs 90,000 + 20% on income more than Rs 12,00,000 |
| Above Rs. 15,00,000 | Rs 150,000 + 30% on income more than Rs 15,00,000 |
You can also choose the old tax regime if you wish. The selection of new and old tax regimes is up to you. Calculate the benefits according to your financial details and choose your suitable regime.
| Income Tax Slab | Income Tax Rate – Old Regime |
|---|---|
| Rs 0.0 – Rs 2.5 lakh | NIL |
| Rs 2.5 lakh – Rs 3.00 lakh | 5% (tax rebate u/s 87a is available) |
| Rs 3.00 lakh – Rs 5.00 lakh | |
| Rs 5.00 lakh- Rs 7.5 lakh | 10% |
| Rs 7.5 lakh – Rs 10.00 lakh | 15% |
| Rs 10.00 lakhs – Rs 12.50 lakh | 20% |
| Rs 12.5 lakhs – Rs 15.00 lakh | 25% |
| > Rs 15 lakh | 30% |
These are the various income tax slab rates under a different regime in India for 2022-23.
Who Decides the IT Slab Rates, and Can They Change?
The Government of India decides the IT slab rates. Finance Minister Nirmala Sitharaman announced new income tax slabs and changes under the new tax regime in Budget 2023.
The Finance Minister announced these changes on February 1, 2023. It will go into effect on April 1, 2023, for FY 2023-24 once the Parliament passes the proposals.
The government can change these IT slab rates. If there are changes in IT slab rates for the financial year, they are introduced in the budget for that year and presented in Parliament.
Are There Separate Slab Rates for Different Age Groups?
Yes. There are individual slab rates for the various age groups. The age groups are:
- Below 60 years,
- Between 60 to 80 years (senior citizens) and
- Above 80 years (super senior citizens).
The various income tax slabs for different age groups are below:
Tax Slabs for Individuals below 60 years for AY 22-23 / FY 21-22
| Existing Tax Regime | New Tax Regime u/s 115 BAC | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to ₹ 2,50,000 | Nil | Up to ₹ 2,50,000 | Nil |
| ₹ 2,50,001 – ₹ 5,00,000 | 5% above ₹ 2,50,000 | ₹ 2,50,001 – ₹ 5,00,000 | 5% above ₹ 2,50,000 |
| ₹ 5,00,001 – ₹ 10,00,000 | ₹ 12,500 + 20% above ₹ 5,00,000 | ₹ 5,00,001 – ₹ 7,50,000 | ₹ 12,500 + 10% above ₹ 5,00,000 |
| Above ₹ 10,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | ₹ 7,50,001 – ₹ 10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 |
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 | ||
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 |
Tax Slabs for Senior Citizens (60 to 80 Years) for AY 22-23/ FY 21-22
| Existing Tax Regime | New Tax Regime u/s 115 BAC | ||
| New Tax Regime u/s 115 BAC | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to ₹ 3,00,000 | Nil | Up to ₹ 2,50,000 | Nil |
| ₹ 3,00,001 – ₹ 5,00,000 | 5% above ₹ 3,00,000 | ₹ 2,50,001 – ₹ 5,00,000 | 5% above ₹ 2,50,000 |
| ₹ 5,00,001 – ₹ 10,00,000 | ₹ 10,000 + 20% above ₹ 5,00,000 | ₹ 5,00,001 – ₹ 7,50,000 | ₹ 12,500 + 10% above ₹ 5,00,000 |
| Above ₹ 10,00,000 | ₹ 1,10,000 + 30% above ₹ 10,00,000 | ₹ 7,50,001 – ₹ 10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 |
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 | ||
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,25,000 + 25% above ₹ 12,50,000 | ||
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 |
Tax Slabs for Super Senior Citizens (Above 80 Years) for AY 22-23/ FY 21-22
| Existing Tax Regime | New Tax Regime u/s 115 BAC | ||
| Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
| Up to ₹ 5,00,000 | Nil | Up to ₹ 2,50,000 | Nil |
| ₹ 5,00,001 – ₹ 10,00,000 | 20% above ₹ 5,00,000 | ₹ 2,50,001 – ₹ 5,00,000 | 5% above ₹ 2,50,000 |
| Above ₹ 10,00,000 | ₹ 1,00,000 + 30% above ₹ 10,00,000 | ₹ 5,00,001 – ₹ 7,50,000 | ₹ 12,500 + 10% above ₹ 5,00,000 |
| ₹ 7,50,001 – ₹ 10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 | ||
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 | ||
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,25,000 + 25% above ₹ 12,50,000 | ||
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 |
How Is the Income Tax Slab Calculated?
The income tax slab is determined based on your annual income and your age. It is done to give a fair experience to every person in India. People with more income tend to pay more taxes, while those with lesser income will pay minimal taxes.
Based on your income, the percentage of your tax liability is formulated in the income tax slab. The various slab rates are given above in this article.
Which Income Tax Slab Is Best?
The new income tax slab is attractive because it gives a large rebate. It provides simplified and smaller slabs, lower rates of taxation, and slabs that are broken down well.
However, the tax rates are higher in the old regime when compared to the new regime. But the old one offers several deductions or tax exemptions, such as house rent allowance (HRA), leave travel allowance (LTA) tax exemptions, Section 80C, 80 D deductions, etc.
Under the old system, income up to Rs 2.5 lakh was exempt from personal income tax. The biggest section for deductions for tax-paying individuals is Section 80C, by which you can reduce the taxable income by Rs 1.5 lakh in one go.
So both slabs have pros and cons. You should have a detailed analysis of which tax slab benefits you best based on your financial background.
Choose the most suitable one for you, as the Indian Government is not compelling you to be in a particular income tax slab.
FAQs: What Is Income Tax Slab
1. When are the changes to the income tax slabs in India proposed?
The finance minister of the country announces the changes in the income tax slabs. The finance minister declares these changes during the announcement of the annual budget. It occurs in February every year.
2. Who makes changes to the income tax slabs in India?
The Finance Ministry of India makes changes to the income tax slabs. Once they find a change, it will be implemented in the coming budget and will come into effect after passing the bill in the Parliament of India.
3. Are there separate slab rates for males and females?
No. Currently, the income tax slabs are the same for men and women in India. Before 2012–2013, women had a higher tax exemption limit. Now, both enjoy the same tax exemption limits and rebates.
The income tax slabs depend on your income and age. The rate of increase in income tax payable is directly proportional to your income. It is inversely proportional to your age. It means the higher your income, the more tax you will have to pay. Similarly, the higher your age, the lower will be your income tax.
4. Can I save tax on my salary?
Yes, you can save tax if you invest your money in shares and mutual funds. If you earn below Rs. 12 Lakhs annually you are eligible for an additional deduction if you invest money in shares of certain companies and some specified mutual funds under Section 80CCG of the Income Tax Act.
Bottom line
The income tax slab comes into effect to provide an equal experience to everyone in the country in paying taxes. Analyze in detail your finances and choose your income tax slab under the old or new regime. Thus, you would have gained a vast knowledge about the what is income tax slab from this article.
Let us know if you have any doubts. Feel free to get in touch.