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As of FY 2020-21, India has two income tax regimes – the Old Tax Regime and the New Tax Regime. The two regimes differ significantly in terms of the income tax slab rates for FY 2021-22 (AY 2022-23). A tax payer is free to choose either of these income tax regimes and pay income tax accordingly.
In this article, we will discuss what is an income tax slab is, what are the taxable incomes in India, the eligibility criteria to pay income tax and the different income tax slab rates for FY 2021-22 (AY 2022-23).
Income Tax slabs and rates for FY 2021-22
A number of adjustments and additions were made to the Finance Act of 2020. One of these is the implementation of a new tax regime, which is the most significant development and source of confusion for taxpayers.
The tax department established the concept of a new tax regime in Budget 2020 by inserting a new Section 115 BAC. Individuals and HUFs can choose between the new or old tax regime and applicable income tax slabs and rates for FY 2021-22 (AY 2022-23).
Income Tax Slabs & Rates in FY 2021-22 (AY 2022-23) for Individuals Below 60 years
As already mentioned, the new and old tax regime feature different income tax slabs and rates in FY 2021-22 (AY 2022-23) for Individuals below 60 years and HUF. The same income tax slab rates are also applicable to non-resident Indians (NRI) tax payers who need to pay taxes on their income in India. The below table summarizes the income tax slab rates applicable to HUF, NRI and resident Indians aged less than 60 years for FY 2021-22 i.e. AY 2022-23:
Income Tax Slab |
New Tax Regime Slab Rate FY 2021-22 |
Old Tax Regime Slab Rate FY 2021-22 |
Up to Rs.2,50,000 |
Exempt |
Exempt |
Rs.2,50,001 – Rs.5,00,000 |
5% |
5% |
Rs.5,00,001 – Rs.7,50,000 |
10% |
20% |
Rs.7,50,001 – Rs.10,00,000 |
15% |
20% |
Rs.10,00,001 – Rs.12,50,000 |
20% |
30% |
Rs. 12,50,001 – Rs.15,00,000 |
25% |
30% |
Above Rs. 15 lakh |
30% |
30% |
Income Tax Slabs for individuals between 60 – 80 years
Tax payers above 60 years of age and less than 80 years of age are considered as Senior Citizens as per the Income Tax Act, 1961. Check out the income tax slab rates in AY 2022-23 for senior citizen taxpayers under the old tax regime and the new tax regime:
Old Tax Regime Slab Rates AY 2022-23 (FY 2021-22) |
New Tax Regime Slab Rates AY 2022-23 (FY 2021-22) |
||
Up to Rs 3,00,000 |
Exempt |
Up to Rs.2,50,000 |
Exempt |
Rs 3,00,001 - Rs 5,00,000 |
5% |
Rs 2,50,001 - Rs 5,00,000 |
5% |
Rs 5,00,001 - Rs 10,00,000 |
20% |
Rs 5,00,001 - Rs 7,50,000 |
10% |
Rs 7,50,001 - Rs 10,00,000 |
15% |
||
Above Rs 10,00,000
|
30%
|
Rs 10,00,001 - Rs 12,50,000 |
20% |
Rs 12,50,001 - Rs 15,00,000 |
25% |
||
Above Rs 15,00,000 |
30%
|
||
Income Tax Slab AY 2022-23 for Individuals Aged 80 years and Above
As per the Income Tax Act, 1961, tax payers aged 80 years and above are considered as super senior citizens. Resident super senior citizen taxpayers also have the option to choose between the new and old tax regimes. Below are the income tax slabs and applicable for FY 2021-22 (AY 2022-23) in the case of super senior citizen taxpayers in India:
Old Tax Regime Slab Rates FY 2021-22 (AY 2022-23) |
New Tax Regime Slab Rates FY 2021-22 (AY 2022-23) |
||
Up to Rs 5,00,000 |
Exempt |
Up to Rs.2,50,000 |
Exempt |
Rs 2,50,001 - Rs 5,00,000 |
5% |
||
Rs 5,00,001 - Rs 10,00,000
|
20% |
Rs 5,00,001 - Rs 7,50,000 |
10% |
Rs 7,50,001 - Rs 10,00,000 |
15% |
||
Above Rs 10,00,000
|
30%
|
Rs 10,00,001 - Rs 12,50,000 |
20% |
Rs 12,50,001 - Rs 15,00,000 |
25% |
||
Above Rs 15,00,000 |
30% |
||
Note: There is no difference between the old tax regime and the new tax regime in the following aspects -
- Rate of Surcharge
- Health & Education Cess @4%
- 100% rebate up to Rs. 12,500 annually u/s 87A on annual taxable income up to Rs. 5 lakh
What is Income Tax Slab?
The Indian government levies income tax on the earnings of different types of tax payers like individuals, Hindu Undivided Family (HUF), corporations, etc. The calculation of income tax is based on income tax slab rates in which, different tax rates are applicable based on the type of tax payer and the income earned during the applicable financial year.
In simple terms, it means that you pay taxes based on your income. If you have a higher income, you will have to pay more taxes to the government. This type of taxation policy known as progressive taxation helps reduce the income tax burden on lower income tax payers. The applicable income tax slab rates are announced as part of the Union Budget. As per Budget 2022-23 announcement, both the Old and New Income Tax regimes have been retained and the income tax slabs and rates for Assessment Year 2022-23 (AY 2022-23) are the same as income tax slabs for FY 2020-21.
The Indian government levies income tax on the earnings of different types of tax payers like individuals, Hindu Undivided Family (HUF), corporations, etc. The calculation of income tax is based on income tax slab rates in which, different tax rates are applicable based on the type of tax payer and the income earned during the applicable financial year.
In simple terms, it means that you pay taxes based on your income. If you have a higher income, you will have to pay more taxes to the government. This type of taxation policy known as progressive taxation helps reduce the income tax burden on lower income tax payers. The applicable income tax slab rates are announced as part of the Union Budget. As per Budget 2022-23 announcement, both the Old and New Income Tax regimes have been retained and the income tax slabs and rates for Assessment Year 2022-23 (AY 2022-23) are the same as income tax slabs for FY 2020-21.
Who Is Impacted By Income Tax Slab FY 2021-22 (AY 2022-23)?
Income tax slab rates for FY 2021-22 impact not just individual tax payers but also a number of other entities who are subject to taxation rules specified in the Income Tax Act 1961. Key tax payer groups who are covered under existing Income Tax rules include:
1. Individuals
2. Hindu Undivided Family (HUF)
3. Association of Persons (AOP)
4. Body of Individuals (BOI)
5. Firms
6. Companies
7. Trust
8. Artificial Judicial Person
The Income Tax Act also classifies residents of a country into two segments- residents and non-residents. Resident individuals must pay tax according to the income they earn in India as well as abroad. However, the non-resident Indians (NRIs) are required to pay taxes on the income earned only in India. The residential status must be checked every year for tax purposes.
Resident individuals are classified into three categories and they are required to pay taxes according to the income tax slabs and rates for the applicable fiscal. These categories are:
- Individuals below 60 years of age
- Individuals between 60 and 80 years of years (Senior Citizen Taxpayers)
- Individuals above 80 years (Super Senior Citizen Taxpayers)
Eligibility to Pay Income Tax
As per the Union Budget announcement, lower income individuals in India are required to pay less income tax on their income or they can be exempt from paying income tax altogether. A closer look at the income tax slabs and rates for FY 2021-22 (AY 2022-23) can help identify some key details regarding the eligibility to pay Income Tax in India:
- According to the current rules, no income tax is levied i.e. you are exempt from income tax if you have taxable income of up to Rs. 2.5 lakh per annum.
- For those who earn between Rs. 2.5 lakh to Rs. 5 lakh, income tax slab rate for FY 202-23 is 5%. However, 100% rebate up to Rs. 12,500 u/s 87A is applicable to tax payers in this income tax slab.
- A higher Income Tax Slab rate for AY 2022-23 at 20% is applicable to individuals who earn over Rs. 5 lakhs but less than Rs 10 lakh per annum under the old tax regime.
- The new tax regime has different income tax slabs and rates for income over Rs. 5 lakh to Rs. 7.5 lakh and over Rs. 7.5 lakh to Rs. 10 lakh for FY 2021-22. The slab rates for the new tax regimes are 10% and 15% respectively in these cases.
- Additionally, 4% is charged as health and education cess on income tax payable for the fiscal in all cases.
- According to the current rules, no income tax is levied i.e. you are exempt from income tax if you have taxable income of up to Rs. 2.5 lakh per annum.
- For those who earn between Rs. 2.5 lakh to Rs. 5 lakh, income tax slab rate for FY 202-23 is 5%. However, 100% rebate up to Rs. 12,500 u/s 87A is applicable to tax payers in this income tax slab.
- A higher Income Tax Slab rate for AY 2022-23 at 20% is applicable to individuals who earn over Rs. 5 lakhs but less than Rs 10 lakh per annum under the old tax regime.
- The new tax regime has different income tax slabs and rates for income over Rs. 5 lakh to Rs. 7.5 lakh and over Rs. 7.5 lakh to Rs. 10 lakh for FY 2021-22. The slab rates for the new tax regimes are 10% and 15% respectively in these cases.
- · Additionally, 4% is charged as health and education cess on income tax payable for the fiscal in all cases.
Frequently Asked Questions
Q1. What is Income-tax?
It is a tax levied by the Indian Government on the income earned by individuals as well as other entities such as corporation and trusts in India. Income Tax rules such as slab rates in India are implemented as per the Income Tax Act, 1961.
Q2. What is meant by New Tax Regime Slabs?
A new income tax regime with updated income tax slabs and rates was introduced in Budget 2021. The income tax slab rates specified by this new tax regime are known as the New Tax Regime slabs.
Q3. What is Income Tax Slab Rate?
An Income Tax slab rate is the rate at which you pay income tax for the applicable fiscal and they are subject to periodic change. However, the income tax slab rates for FY 2021-22 are the same as the previous fiscal i.e. FY 2020-21.
Q4. Are the Income Tax Slabs FY 2021-22 same for old and new tax regime?
No. For AY 2022-23 i.e. FY 2021-22, the income tax slabs and rates are significantly different under the old vs the new income tax regime.
Q5. Is rebate under Section 87A available in the New Tax Regime in AY 2022-23?
Yes. For Assessment Year 2022-23 (AY 2022-23), the new tax regime provides 100% rebate up to Rs. 12,500 under Section 87A of the Income Tax Act. This benefit is also available under the old tax regime even though income tax slab rates for FY 2021-22 are markedly different under these two tax regimes.
Sources:
https://economictimes.indiatimes.com/markets/stocks/news/what-is-an-income-tax-tax-slab/articleshow/73827748.cms
https://cleartax.in/s/income-tax
https://www.financialexpress.com/money/income-tax/income-tax-return-filing-by-individuals-who-should-file-and-how-to-file-2/2348463/
https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-1
ARN No: June22/Bg/01A
