Income Tax Slabs and RatesUpdated On - 01 Feb 2023

Income Tax Slabs

Income Tax Slabs and Rates

Updated On - 01 Feb 2023

Income Tax Slabs in India are announced by the finance minister every year. Currently, there are two different Income Tax regimes. Under the new regime, tax benefits cannot be availed. Under the old regime, taxpayers can avail of tax benefits.

This year, the finance minister Nirmala Sitharaman has announced the Union Budget for 2022 on 1 February 2022. In the latest budget, no changes have been proposed for the existing income tax slabs and rates.

Note: You can now file your taxes through the New income tax portal. The new portal comes with a plethora of features and is designed to ease the tax filing process.

What is Income Tax Slab?

Income Tax Slab defined as the Individual taxpayers will need to pay the income tax based on the slab system they fall under. Depending on the income of the individual, he/she may fall under a different tax slab.

 Therefore, individuals with a higher income will need to pay more tax. The slab system was introduced to maintain a fair tax system in the country. The slabs tend to change at every budget announcement.

Incomea Tax Slabs remain Unchanged

There was no change in income tax slabs for individuals as no announcement was made by Finance Minister Nirmala Sitharaman during the Union Budget 2022. Senior Citizens aged 75 years and above were however exempted from filing income tax if their only source of income was through a pension.

New Income Tax Slab for FY 2022 - 2023 (AY 2023 - 2024)

Given below are the various tables for the Revised Income Tax Slabs and rates for the FY 2022 - 2023 and AY 2023 – 2024

New Regime Income Tax Slab Rates for Individual

Income Tax Slab Tax Rate

Up to Rs.2.5 lakh Nil

Above Rs.2.50 - Rs.5 lakh 5% of the total income that is more than Rs.2.5 lakh

Above Rs.5 lakh - Rs.7.50 lakh 10% of the total income that is more than Rs.5 lakh + Rs.12,500

Above Rs.7.50 lakh - Rs.10 lakh 15% of the total income that is more than Rs.7.5 lakh + Rs.37,500

Above Rs.10 lakh - Rs.12.50 lakh 20% of the total income that is more than Rs.10 lakh + Rs.75,000

Above Rs.12.50 - Rs.15 lakh 25% of the total income that is more than Rs.12.5 lakh + Rs.1,25,000

Above Rs.15 lakh 30% of the total income that is more than Rs.15 lakh + Rs.1,87,500

Note: New income tax rates are optional

Things you Must Keep in Mind before opting for New Tax Slab

There are few things you must keep in mind before opting for the new tax slab:

• The option can be exercised on or before for every previous year if you as an individual or as a member of a Hindu Undivided Family (HUF) do not have any business income.

• As a taxpayer, once you choose the next tax regime as your option, you cannot change it during the year. In case you withdraw your option for the next tax regime and revert to the old tax regime, you can opt for the new tax regime during the financial year again.

Given below is an example of how income tax is calculated for FY 2022-23 under the New regime (optional):

Total Income (Gross) Rs.12 lakh

Deductions (80C, 80CCD) -

HRA -

Travel and Medical Allowance -

Income that is Taxable Rs.12 lakh

Up to Rs.2.5 lakh -

Above Rs.2.50 - Rs.5 lakh Rs.12,500

Above Rs.5 lakh - Rs.7.50 lakh Rs.25,000

Above Rs.7.50 - Rs.10 lakh Rs.37,500

Above Rs.10 lakh - Rs.12.50 lakh Rs.40,000

Total Tax that must be Paid Rs.1,15,000

Income Tax slabs & Rates as Per Old Regime FY 2022 - 2023

Given below are the three tables for the alternative Income Tax Slabs:

Income Tax Slab for Individual who are below 60 years

Income Tax slab Tax Rate

Up to Rs.2.5 lakh Nil

Above Rs.2.50 lakh - Rs.5.00 lakh 5% of the total income that is more than Rs.2.5 lakh + 4% cess

Above Rs.5 lakh - Rs.10 lakh 20% of the total income that is more than Rs.5 lakh + Rs.12,500 + 4% cess

Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,12,500 + 4% cess

Individuals who have an income of less than Rs.5 lakh are eligible for tax deductions under Section 87A

Example of How Income Tax is Calculated under Old Regime for 3 individuals (A, B, and C)

Components A B C

Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000

Standard Deduction (Rs.) 50,000 50,000 50,000

Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000

House Rent Allowance deductions 82,000 90,000 1,40,000

Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000

Computation of tax on the gross total income

Up to Rs.2.5 lakh (Rs.) Nil Nil Nil

From Rs.2,50,001 to Rs.5 lakh (Rs.) 1,900 12,500 12,500

From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 1,00,000

Above Rs.10 lakh (Rs.) 45,000

Total Tax (Rs.) 1,900 52,500 1,57,500

Deductions under Section 87A (Rs.) 1,900 Nil Nil

Additions of cess (Rs.) Nil 2,100 6,300

Total tax that is payable (Rs.) (Total Tax + cess - Deductions under Section 87A) Nil 54,600 1,63,800

Income Tax Slab Between 60-80 years (Senior Citizen)

Income Tax slabs Tax Rate

Up to Rs.3 lakh Nil

Above Rs.3.00 lakh - Rs.5.00 lakh 5% of the total income that is more than Rs.3 lakh + 4% cess

Above Rs.5.00 lakh - Rs.10 lakh 20% of the total income that is more than Rs.5 lakh + Rs.10,500 + 4% cess

Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,10,000 + 4% cess

Given below is an Example of How Income Tax is Calculated for 3 individuals (A, B, C)

Components A B C

Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000

Standard deduction (Rs.) 50,000 50,000 50,000

Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000

House Rent Allowance deductions 82,000 90,000 1,40,000

Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000

Computation of tax on the gross total income

Up to Rs.3 lakh (Rs.) Nil Nil Nil

From Rs.3,00,001 to Rs.5 lakh (Rs.) Nil 10,500 10,500

From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 99,500

Above Rs.10 lakh (Rs.) 45,000

Total Tax (Rs.) Nil 50,500 1,55,000

Deductions under Section 87A (Rs.) Nil Nil Nil

Additions of cess (Rs.) Nil 2,020 6,200

Total tax that is payable (Rs.) Nil 52,520 1,61,200

Income Tax Slabs for Individual above 80 years (Super Senior Citizen)

Income Tax slabs Tax Rate

Up to Rs.5 lakh Nil

Above Rs.5 lakh - Rs.10 lakh 20% of the total income that is more than Rs.5 lakh + 4% cess

Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,00,000 + 4% cess

Given below is an example of how income tax is calculated for 3 individuals (A, B, C)

Components A B C

Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000

Standard deduction (Rs.) 50,000 50,000 50,000

Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000

House Rent Allowance deductions 82,000 90,000 1,40,000

Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000

Computation of tax on the gross total income

Up to Rs.5 lakh (Rs.) Nil Nil Nil

From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 1,00,000

Above Rs.10 lakh (Rs.) 45,000

Total Tax (Rs.) Nil 40,000 1,45,000

Deductions under Section 87A (Rs.) Nil Nil Nil

Additions of cess (Rs.) Nil 1,600 5,800

Total tax that is payable (Rs.) Nil 41,600 1,50,800

For Domestic Companies, The Tax-Slabs Depends on Turnover as Mentioned Below

Turnover Tax Rate

Gross turnover can be a maximum of Rs.250 crore for the previous year 25%

Gross turnover is more than Rs.250 for the previous year 30%

Apart from the above-mentioned tax rate, an additional surcharge and cess are levied. Given below are the details of the surcharge and the cess that will be levied:

• Cess: 4% of corporate tax

• Surcharge: In case the taxable income is more than Rs.1 crore but less than Rs.10 crore, the surcharge that will be levied is 7%. In case the taxable income is more than Rs.10 crore, the surcharge that will be levied is 12%.

• Non-resident Indians: For non-resident Indians, irrespective of their age, the exemption limit is up to Rs.2.5 lakh.

Important Points

• In case your net income is more than Rs.50 lakh but less than Rs.1 crore, apart from a 4% cess, a 10% surcharge is also levied. If the net is above Rs.1 crore, a 15% surcharge is levied.

• Compared to last year's budget, cess has increased from 3% to 4%.

Surcharge Rates Applicable to Income Tax

When an assessee's income exceeds the limits specified by the Income Tax Department, a surcharge is levied on the amount of the income tax. The rates for a surcharge are being listed below:

For Assessment Year 2022-23

Range of Income Applicable Rate of Surcharge

Rs.50 lakhs to Rs.1 crore 10%

Rs.1 crore to Rs.2 crore 15%

Rs.2 crore to Rs.5 crore 25%

Rs.5 crore to Rs.10 crore 37%

More than Rs.10 crore 37%

For Assessment Year 2023-24

Range of Income Applicable Rate of Surcharge

Rs.50 lakhs to Rs.1 crore 10%

Rs.1 crore to Rs.2 crore 15%

Rs.2 crore to Rs.5 crore 25%

Rs.5 crore to Rs.10 crore 37%

More than Rs.10 crore 37%

Time to choose Between the New and Old Regime 

Type of income When to choose between the old and new regimes 

Salary income or any other type of income that triggers TDS An employee can opt for the new tax regime at the beginning of financial year. However, once chosen they cannot revert back to the old regime and can only change the option of selecting the tax regime at the beginning of the new financial year 

Income from Profession and Business  In case of income from profession and business, the option to choose between the tax regimes is available only once. 

New Tax Slab Rates for Domestic Companies 

Type  Old regime Tax rates New Regime Tax rates 

Company chooses section 115BAB and is registered on or after 1 October 2019 and has commenced manufacturing on or before 31 March, 2023. – 15% 

Company chooses Section 115BAA, wherein the total income of a company has been calculated where specified deductions, incentives, exemptions and additional depreciation have not been claimed – 22% 

Company chooses section 115BA registered on or after 1 March 2016 and are engaged in manufacture of any item and no deduction claim as specified in the section clause has been made. – 25% 

If a company’s turnover is less than Rs. 400 crore in the previous year 2018-19 25% 25% 

Any other domestic company 30% 30% 

Top Pages on Tax

Articles on Tax

FAQs on Income Tax Slab

1. Do I need to file Income Tax Return if my annual income is below Rs.2.5 lakh?

You need not file an ITR if your yearly income is below Rs.2.5 lakh but you should file a 'Nil Return' just for the record as there are many cases where you can produce them as proof of your employment. For instance, you can provide your ITR while applying for a loan or passport.

2. How is the income of a taxpayer classified?

Under Section 14 of the Income Tax Act, the taxpayer's income has been classified under 5 different income heads such as Salaries individuals, Capital gains, Gains/Profits from profession or business,Income from house property, Income from other sources.

3. Does family pension come under salary income during taxation?

No, family pension will not be taxed under salary income but as 'income from other sources.'

4. Who can claim rebate under Section 87A?

Rebate under Section 87A can be claimed by any resident Indian whose total annual income is below Rs.5 lakh. The maximum available rebate under 87A is Rs.12,500.

5. Will my income be taxed if I am an agriculturist?

Any income which is generated from agriculture or its allied activities will not be taxed. However, it will be considered for rate purpose while calculating tax on any non-agricultural income that you may have.

6. Is income up to Rs.5 lakh tax-free?

No, income up to Rs.5 lakh is not tax-free. However, individuals who earn an income of up to Rs.2.50 lakh do not have to pay tax.

7. Can I switch the Income Tax regime for my tax filing?

Yes, you can choose to file your income tax returns as per the old regime or the new regime as per your preference.

8. Are the income tax slabs in India subject to change?

Yes, the income tax slabs in India are subject to changes.

9. Who makes changes to the income tax slabs in India?

The changes to the income tax slabs in India are proposed by the Finance Ministry of India.

10. When are the changes to the income tax slabs in India proposed?

The changes to the income tax slabs in India are announced by the finance minister of the country. This proposal is usually made when the annual budget is announced every year in the month of February.

News About Income Tax Slab and Rates

Government introduces optional income tax regime with seven tax slabs

The government introduced the optional income tax system with seven tax slabs to assure reduced rates for individuals in the low-income group. The old tax regime allowed each tax assessee to claim seven to ten exemptions, and the income tax rates ranged from 10% to 30%, according to the income threshold. In addition to the old tax regime, the government has designed a parallel system without exemptions but with more straightforward and beneficial tax rates. 

9 January 2023

Government may Raise the Income Tax Exemption to Rs 5 Lakh

Officials at the Union Finance Ministry's North Block headquarters are exploring at the idea of raising the tax-free threshold in the alternative personal income tax system's two-year-old structure to Rs.5 lakh. In this context, it is crucial to note that, according to the present tax legislation, a person must pay tax if his taxable income in India exceeds the basic exemption amount. The annual general exemption cap is Rs.2.50 lakh. 

14 December 2022

Union Budget Update- No revision in income tax slabs

In the Union Budget speech for 2022, finance minister Nirmala Sitharaman has announced that there will be no revision in tax slabs for the financial year 2022-23. Moreover, the income tax rates have not been revised for the financial year 2022-23.

1 February 2022

GST council plans to discuss rationalisation of rate slabs

The upcoming GST council meeting has plans to discuss and find solutions to raise revenue for the state government. It would be an important decision as June 2022 onwards, the Centre would no more be legally bound to provide state government for the shortfall in revenue.

In the meeting, the report provided by the two Group of Ministers (GoM) assigned to find solutions for revenue augmentation and rate rationalisation would be reviewed.

17 November 2021

Taxation rules on gifts during festive season

According to 56(2)(X) of the income tax act, gifts received amidst the festive season will be taxable as per the donee's slab rate. However, all gifts are not subject to tax as the tax rules vary determined by the donee as well as the nature of the gift.

If the total amount of all gifts exceeds Rs.50,000 in a year, it will be liable to tax. If the amount of gifts received in a year is less than Rs.50,000, no tax will be imposed on it. As per the income tax act 1961, the gifts received from relatives will be exempt from tax.

The gifts, regardless of their nature and value, will not be taxable when received from relatives. Note that gifts received from any person under a will or in a wedding are exempt from tax.

27 October 2021

Data analytics and focus on tax slab review to increase revenues

Data analytics and a 'review' of the current tax rate slab structure of Goods and Services Tax (GST) has been incorporated in the Terms of Reference (ToR) of the two ministerial panels which will be working to create a blueprint for GST reforms.

The panel will evaluate 'special rates' within the tax structure, and incorporate measures including the merger of tax rate slabs for simplifying the rate structure. The panel will also review instances of inverted duty structure and an identification of potential sources of evasion to increase revenues.

The Finance Ministry has created a panel which will consist of seven members who will report to Karnataka Chief Minister Basavaraj S Bommai for 'rate rationalisation' and another panel of eight-members who will report to Maharashtra Deputy Chief Minister Ajit Pawar for GST system reforms.