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Income Tax Slabs

Income tax payment for individuals and corporate entities is a mandatory requirement as per the Income Tax Act, 1961 if their annual income is above the minimum exemption limit. However, taxpayers can also avail of tax benefits under various sections of the Act. To reap these benefits, one must understand the income tax slab and applicable rates.

What is an Income Tax Slab?

In India, where individuals earn an income within a diverse range, levying a tax on all individuals at a specific rate would not be a fair policy. The Act, therefore, segregates income ranges and levies tax at different rates as per the segregation. These groups are thus known as tax slabs.

The slabs also vary based on age if the taxpayer is an individual and as per the classification of entities. Income tax slabs in India are amended and revised each year during the Central Government’s Budget Session. These amendments and revisions once proposed are approved by the Parliament and implemented as law.v

Income Tax Amendments in FY 2021-22

In this new regime, taxpayers have the Choice of either:

  • To pay income tax at lower rates under the New Tax regime in exchange for foregoing certain allowed exemptions and deductions available under income tax. 

Or

  • To continue paying taxes at the current tax rates.

By remaining in the old regime and paying tax at the present higher rate, the assessee can obtain rebates and exemptions.

Now, let’s take a look at the current income tax slab applicable for resident individuals in FY 2021-22 and AY 2022-23.

Income Tax Slabs for Resident Individuals

An individual resident’s basic exemption limit is decided based on his/her income, with division into three groups.

  • A resident individual within 60 years of age.
  • A resident individual between 60 and 80 years of age.
  • A resident individual above 80 years of age.

The taxability of these individuals as per the latest income tax slab is given in the following tables.

Income Tax Slabs for Individuals within 60 years of Age

Slabs for Taxable Income Applicable Tax Rates & Cess
Within Rs. 2.5 Lakh NIL
From Rs. 2.5 Lakh to 3 lakh 5%
From Rs. 3 Lakh to 5 Lakh 5%
Above Rs. 5 lakh to 7.5 lakh 10%
From 7.5 Lakh to 10 lakh 15%
From 10 Lakh to 12.5 Lakh 20%
From 12.5 Lakh to 15 Lakh 25%
Above 15 Lakh 30%

The Income Tax Act, 1961 also allows for deductions under sections 80(C) and 80(U) as applicable. In such cases, tax is calculated after taking into account such deductions, and cess added to arrive at the total tax payable.

Now, with this understanding of what is income tax slab and how tax is calculated on this basis, have a look at the tax applicability for resident individuals in other age brackets.

Income Tax Slabs for Individuals between 60 and 80 Years (Senior Citizens)

Slabs for Taxable Income Applicable Tax Rates & Cess
Within Rs. 3 Lakh Nil
From Rs. 3 Lakh to 5 lakh 5% on taxable income

plus 4% cess on tax 

From Rs. 5 Lakh to 10 Lakh 5% on taxable income between Rs. 3 Lakh and Rs. 5 Lakh 

+ 20% on taxable income between Rs. 5 Lakh and 10 Lakh 

plus 4% cess on tax 

Above Rs. 10 Lakh 5% for taxable income between Rs. 3 Lakh and Rs. 5 Lakh 

+ 20% on taxable income between Rs. 5 Lakh and 10 Lakh 

+30% on taxable income above Rs. 10 Lakh

plus 4% cess on tax

Income tax slabs for individuals above 80 years (Super senior citizens)

Slabs for Taxable Income Applicable Tax Rates & Cess
Within Rs. 5 Lakh Nil
From Rs. 5 Lakh to 10 Lakh 20% on taxable income between Rs. 5 Lakh and 10 Lakh 

plus 4% cess on tax 

Above Rs. 10 Lakh 20% on taxable income between Rs. 5 Lakh and 10 lakh

+30% on taxable income above Rs. 10 Lakh

plus 4% cess on tax

Also, resident individuals with annual income below Rs. 5 Lakh are eligible for a rebate of Rs. 12,500 under section 87(A) of the Income Tax Act, 1961. Note that these tax calculations are also applicable for Hindu Undivided Family (HUF).

Surcharges Applicable for Resident Individuals

New surcharge rates have also been introduced on the income of the rich. Check the table below to know how it applies.

Annual Income (Taxable) Applicable Surcharge Rates
Between Rs. 50 Lakh and Rs. 1 Crore 10%
From Rs. 1 Crore to 2 Crore 15%
From Rs. 2 Crore to 5 Crore 25%
Rs. 5 Crore and above 37%

Income Tax Slabs for Other Entities

Now, take a look at the income tax slab applicable to other entities.

  • Domestic Company

For a domestic company, tax applicability for a given FY depends on the gross annual turnover it earned in the previous year.

Gross Turnover Limit (For Previous Year) Income Tax Rate
Company elects Section 115BAB (not covered by Sections 115BA and 115BAA) and is registered on or after October 1, 2019, with manufacture beginning on or before March 31, 2023. 15%
Company elects Section 115BAA, which requires that a company’s total income be determined without taking into account specific deductions, incentives, exemptions, and additional depreciation. 22%
Company elects Section 115BA and is registered on or after March 1, 2016, engaged in the manufacture of any article or thing, and does not claim the deduction indicated in the section clause. 25%
Up to Rs. 2.5 Crore 25%
Above Rs. 2.5 Crore 30%

As per the announcement in the latest budget session, the introduction of income tax slab 2022 takes the new gross turnover limit of Rs. 400 Crore for the purpose. Also, surcharge at the rate of 12% is applicable if the income of a domestic company is between Rs. 1 Crore and Rs. 10 Crore. 

A health and education cess of 4% is also levied on the tax calculated.

  • Partnership firm/LLP

For partnership firms and LLPs, there are no variable income tax slabs as the total income is taxable at the rate of 30%. Surcharge levied on firms falls under two categories mentioned below.

  • 7% of tax calculated if the total income is between Rs. 1 Crore and Rs. 10 Crore
  • 12% of tax calculated for total income above Rs. 10 Crore

Additionally, health and education cess at the rate of 4% is also levied on the total tax. 

  • Co-operative Society

The income tax slab rates for a co-operative society are given in the following table.

Income slabs Applicable Rates
Income below Rs. 10,000 10% on income

Plus 4% cess on tax

Between Rs. 10,000 and 20,000 10% on Rs. 10,000

+20% on income between Rs. 10,000 and Rs. 20,000

Plus 4% cess on tax

Above Rs. 20,000 10% on Rs. 10,000

+20% on income between Rs. 10,000 and Rs. 20,000

+30% on income above Rs. 20,000

Plus 4% cess on tax

Also, a surcharge of 12% is applicable on income above Rs. 1 Crore.

  • Local authority

Income earned by a local authority is also taxable. However, there are no slab divisions and any income generated by a local authority is taxed at a flat rate of 30%.

Additionally, health and education cess is also levied at the rate of 4% on the tax calculated. A surcharge of 12% is also levied if the local authority’s annual income exceeds Rs. 1 Crore.

Income tax return filing is mandatory if the income falls under taxable slabs. So, make sure to keep a check on the due dates and file your income tax returns to avoid penalty.

Income Tax Slabs - FAQs

Q1. Can I claim 80C deductions and choose a new income tax slab system?

No, the new tax regime does not permit many of the deductions and exemptions permitted under the old/existing tax regime. Deductions under Section 80C cannot be claimed if the taxpayer chooses the concessional tax slab rates under the New regime.

Q2. What method does the government use to collect taxes?

The government collects taxes in three ways: 

a) voluntary payment by taxpayers into various designated banks. 
b) compulsory payment by taxpayers into various designated banks.
c) compulsory payment by taxpayers into various designated banks. 

Q3. What is the time period taken into account for the purpose of levying income tax?

Income tax is levied on a person’s annual income. According to the Income-tax Law, the year begins on April 1st and ends on March 31st of the following calendar year. The Income-tax Law divides the year into two parts:

 – the previous year and 

 – the assessment year.

Q4. Is a family pension considered salary income for tax purposes?

No, family pensions are not taxed as salary income, but rather as ‘income from other sources.’

Q5. Will my income as an agriculturist be taxed?

Any money earned by agriculture or related activities will not be taxed. However, it will be taken into account for calculating tax on any non-agricultural income you may have.

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