Income Tax Slabs ensure a fair tax system and encourage financial advancement in India. Every year, income tax brackets in India undergo scrutiny for necessary changes during the budget.
Income tax is underlined by the Income-tax Act of India, which levies upon income earned by LLPs, Corporates, HUF, partnership expected firms and all individuals upon crossing the minimum threshold limit or exemption limit for their income. Different tax slabs in India refer to different ranges of income and the taxes levied on each of them. This article will walk you through the income tax slab for 2023.
Did You Know? Tax rates in India are levied on individual taxpayers based on the income tax slab.
What is an Income Tax Slab?
An income tax slab refers to varying tax rates determined for different income ranges. This is so that tax rates increase with increased income. The tax slab can differ for different taxpayer categories, such as:
- Individuals (less than 60 years of age), including non-residents and residents
- Resident senior citizens (between the age range of 60 and 80
- Resident Super Senior citizens (more than 80 years of age).
Also Read: Income Tax in India: Basics, Slabs and E-filing Process 2023
Income Tax Rates in India for FY 2023-24 (AY 2024-25)
Finance Minister Nirmala Sitharaman introduced the new income tax slab rates under the new tax regime in the 2023 budget. Tax rates are significantly different from previous years for the benefit of the masses.
|
The new rate was announced on 1st February 2023 and will come into action for FY 2023-24 once approved by the parliament by 1st April 2023. |
Income Tax Slabs for FY 2023-24 (AY 2024-25) - As Per Budget 2023-24
The following tables show the revised income tax slabs as presented in Budget 2023.
|
Income Slab |
Income Tax Rates |
|
Up to ₹ 3 Lakhs |
NIL |
|
₹ 3 Lakhs to ₹ 6 Lakhs |
5% on income that exceeds ₹ 3,00,000 |
|
₹ 6 Lakhs to ₹ 9 Lakhs |
10% [₹ 15,000 + 10% on income more than ₹ 6,00,000] |
|
₹ 9 Lakhs to ₹ 12 Lakhs |
15% [₹ 45,000 + 15% on income more than ₹ 9,00,000] |
|
₹ 12 Lakhs to ₹ 15 Lakhs |
20%
[₹ 90,000 + 20% on income more than ₹ 12,00,000] |
|
Above ₹15 Lakh |
30% [₹ 150,000 + 30% on income more than ₹ 15,00,000] |
|
Rebate Limit of Personal Income Tax Increased to ₹7 lakhs Under Section 87A is Available: As per the 2023 budget speech, if you earn less than 7 lakhs in a year, you don't have to pay income tax. The twist is that you will only be eligible for this exemption if you choose the new tax regime. |
Income Tax Slab for People Between 60 to 80 Years of Age
|
Income Slabs |
Income Tax Rates |
|
₹ 3 lakhs |
NIL |
|
₹ 3 lakhs - ₹ 5 lakhs |
5% |
|
₹ 5 lakhs - ₹ 10 lakhs |
20% |
|
₹ 10 lakhs and more |
30% |
Income Tax Slab for People Above 80 Years of Age
|
Income Slabs |
Income Tax Rates |
|
₹ 0 - ₹ 5 lakhs |
NIL |
|
₹ 5 lakhs - ₹ 10 lakhs |
20% |
|
Above ₹10 lakhs |
30% |
Tax Slabs for Domestic Companies
|
Particulars |
Existing or Old regime Tax Rates |
New Regime Tax Rates |
|
Company opts for section 115BAB
(not covered in section 115BA and 115BAA) & is registered on/after October 1, 2019, and has started manufacturing on/before 31st March 2023 |
- |
15% |
|
Company opts for Section 115BAA , where the total income of a company has been calculated without claiming specified deductions, exemptions, incentives, and additional depreciation |
- |
22% |
|
Company opts for section 115BA registered on/after March 1, 2016, and is in the manufacture of any article or thing and does not claim a deduction as specified in the section |
- |
25% |
|
Turnover/gross receipt of the company is less than ₹ 400 crores in the previous year |
25% |
25% |
|
Other Domestic Company |
30% |
30% |
Also Read: All About Income Tax and Tds Password Format With Examples
Surcharge Applicable for Companies
- 7% of Income tax where total income is more than ₹ 1 crore.
- 12% of Income tax where total income is more than ₹ 10 crores.
- 10% of income tax where domestic company opted section 115BAA and 115BAB
Additional Health & Education Cess Rate - 4%
Income Tax Rate for Partnership Firm or LLP as Per Old/New Regime
Partnership firm or an LLP is taxable at 30%
Note:
- A Surcharge of 12% is levied on incomes above ₹ 1 crore.
- Health and Education Cess Rate - 4%
Deductions and Exemptions Applicable under the New Tax Regime
It is necessary to forgo certain deductions and exemptions available under the old tax regime to opt for concessions under the new tax regime. Here is a list of exemptions and deductions allowed and not allowed under the new tax regime.
|
Not Allowed |
Allowed |
|
|
Comparison of Deductions and Exemptions
|
Deductions/Exemptions |
Old Tax Regime |
New Tax Regime (Applicable till 31st March 2023) |
New Tax Regime introduced in Budget 2023 (Applicable From 1st April 2023) |
|
Income Level for Rebate |
₹ 5 lakhs |
₹ 5 lakhs |
₹ 7 lakhs |
|
Standard Deduction |
₹ 50,000 |
– |
₹ 50,000 |
|
Effective Tax-Free Salary income |
₹ 5.5 lakhs |
₹ 5 lakhs |
₹ 7.5 lakhs |
|
Rebate Under Section 87A |
₹ 12,500 |
₹ 12,500 |
₹ 25,000 |
|
HRA Exemption |
✓ |
X |
X |
|
Leave Travel Allowance (LTA) |
✓ |
X |
X |
|
All Contributions to Agniveer Corpus Fund – 80CCH |
✓ |
Did not exist |
✓ |
|
Conveyance Allowance |
✓ |
✓ |
✓ |
|
Daily Allowance |
✓ |
✓ |
✓ |
|
Deduction on Family Pension Income |
✓ |
✓ |
✓ |
|
Deduction u/s 80C (EPF /LIC / ELSS / PPF / FD / Children’s Tuition Fee etc) |
✓ |
X |
X |
|
Disabled Individual Under 80U |
✓ |
X |
X |
|
Donation to Political Party/Trust Under 80G |
✓ |
X |
X |
|
Employee’s (own) Contribution to NPS |
✓ |
X |
X |
|
Employer’s Contribution to NPS |
✓ |
✓ |
✓ |
|
Entertainment Allowance Deduction and Professional Tax |
✓ |
X |
X |
|
Exemption on Gratuity u/s 10(10) |
✓ |
✓ |
✓ |
|
Exemption on Leave Encashment u/s 10(10AA) |
✓ |
✓ |
✓ |
|
Exemption on Voluntary retirement 10(10C) |
✓ |
✓ |
✓ |
|
Gifts up to ₹ 5,000 |
✓ |
✓ |
✓ |
|
Interest on Education Loan Under 80E |
✓ |
X |
X |
|
Interest on Electric Vehicle Loan Under 80EEB |
✓ |
X |
X |
|
Interest on Home Loan u/s 24b on Let-out Property |
✓ |
✓ |
✓ |
|
Interest on Home Loan u/s 24b on Self-occupied or Vacant property |
✓ |
X |
X |
Also Read: State-wise Professional Tax in India 2023 | Application, Exemption
|
What is a Financial Year? In India, the financial year starts on April 1st of a calendar year and ends on March 31st of the following year. |
|
What is an Assessment Year? Assessment Year (AY) is a term used in Indian income tax laws referring to the period during which income earned by an individual or business is assessed for tax purposes. On the other hand, the Financial Year (FY) is the period during which financial transactions are recorded for tax purposes. |
The Indian Tax Rate for FY 2022-23 is Optional
The latest regime leaves taxpayers free to choose from two options:
- You can forgo certain exemptions and available deductions suggested under income tax to pay a lower income tax.
Or
- Continue to follow the current tax rates and pay accordingly. The taxpayer can get exemptions and rebates by following the old regime while paying tax according to the existing higher tax rate.
Income Tax Bracket in India Under the New Tax Regime FY 2023-24 (AY 2024-25)
|
Slab (₹) |
Tax Regime Before Budget 2023 (applicable till 31st March 2023) |
New Tax Regime After Budget 2023 (applicable from 1st April 2023) |
|
0- 2,50,000 |
- |
- |
|
2,50,000 - 3,00,000 |
5% |
- |
|
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% |
|
>15,00,000 |
30% |
30% |
- Under the new regime, tax rates remain the same for individuals and HUF under 60, seniors between 60 and 80, and super seniors over 80. Thus, there will be no increase in basic exemption limits benefits for super seniors and senior citizens.
- Individuals whose Net Taxable income equals or less than ₹ 5 lakhs are eligible for tax exemption under section 87A. This is under both the old and new tax regimes.
- NRIs, irrespective of age, can avail of the basic exemption limit of ₹ 2.5 lakhs.
- Additional education and health cess at a 4% rate will be added to the tax liability.
- The surcharge rate is reduced from 37% to 25% under the new tax regime, and the applicable charges are
- 10% of tax if the total earning more than ₹ 50 lakh
- 15% of tax if the total earning more than ₹ 1 crore
- 25% of tax if the total earning is more than ₹ 2 crore
- 25% of tax if the total earning more than ₹ 5 crores
Tax Slabs Under the Old Tax Regime
The Old Tax Regime is the tax system that prevailed before the new regime. Under this regime, more than 70 deductions and exemptions, including HRA and LTA, can reduce taxable income and tax payments. Section 80C of this regime allows a reduction of taxable income up to ₹ 1.5 lakhs. Here are some aspects to consider so that you can decide which regime is better for you and choose to pay taxes under that regime.
Income Tax Slabs for Individuals Aged Below 60 Years & HUF
|
Income Slabs |
Income Tax Slabs for Individuals Below The Age Of 60 Years |
|
Up to ₹ 2.5 lakhs |
NIL |
|
₹ 2.5 lakhs - ₹ 5 lakhs |
5% (tax rebate under section 87a is available) |
|
₹ 5 lakhs – ₹ 10 lakhs |
20% |
|
More than ₹ 10 lakhs |
30% |
- The tax exemption is limited to ₹ 2,50,000 for HUF and individuals below 60 years, including NRIs.
- Additional education and health cess at 4% will be applied to the above-mentioned tax amount.
- The applicable surcharge is
- 10% of tax when the total income ranges between ₹ 50 lakh and ₹ 1 crore.
- 15% of income tax if the total earning exceeds ₹ 1 crore.
Income Tax Slab for Individuals Aged Between 60 to 80 Years
|
Income Slabs |
Tax Tax Slabs for Senior Citizens (60 to 80 Years of Age) |
|
₹ 0 – ₹ 3 lakhs |
NIL |
|
₹ 3 lakhs – ₹ 5 lakhs |
5% |
|
₹ 5 lakhs – ₹ 10 lakhs |
20% |
|
More than ₹ 10 |
30% |
Old Tax Regime vs New Tax Regime - Which is Beneficial?
|
Aspects |
Old Tax Regime |
New Tax Regime |
|
Income |
It is better for high-income individuals. |
It is the most suitable fit for middle-class taxpayers with taxable income of up to ₹15 lacs. |
|
Investment plans |
This regime is best if you invest in tax-saving schemes. |
It offers seven lower-income tax slabs. Anyone who pays taxes without claiming tax deductions can benefit by paying the lower rate tax under the new regime. |
|
Tax calculation |
Tax calculations are complicated. |
Tax calculation is simple. |
Conclusion
Understanding and calculating income tax slabs in India under the new regime is simplified. You can find your specific categories depending on your age, citizenship, income and tax-saving investments during the financial year. Hopefully, this article has helped you understand income tax rates, surcharges and other technicalities of financial decisions.
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