Income Tax Slab FY 2022-23 (AY 2023-24)

 

Income Tax Slab FY 2022-23 (AY 2023-24)

The calculation of income tax in India is based on income tax slabs and rates for the applicable financial year (FY) and assessment year (AY). The income tax slabs for FY 2022-23 were announced as part of the Union Budget 2022-23 and the income tax slab rates for FY 2022-23 (AY 2023-24) are the same as income tax slabs and rates in FY 2021-22 (AY 2022-23).

But before we check out the income tax slab rates for FY 2022-23 (AY 2023-24), let’s first take a closer look at what an income tax slab is, the types of taxable income in India and some of the key differences between the new and the old tax regime.

Income Tax Slab Rates AY 2023-24 for Individuals Below 60 Years, NRIs and HUFs 

Now let us take a look at the income tax slabs for FY 2022-23 (AY 2023-24) under both tax regimes for resident individuals aged less than 60 years, Hindu Undivided Family (HUF) and Non-Resident Indians (NRI) with income in India: 

Net Taxable Income

New Tax Regime Income Tax Slab Rates FY 2022-23

Old Tax Regime Income Tax Slab Rates FY 2022-23

Up to Rs 2.5 lakh

Exempt

Exempt

Rs 2,50,001 to Rs 5 lakh

5%

5%

Rs 5,00,001 to Rs 7.5 lakh

10%

20%

Rs 7,50,001 to Rs 10 lakh

15%

Rs 10,00,001 to Rs 12.5 lakh

20%

30%

Rs 12,50,001 to Rs 15 lakh

25%

Over Rs. 15 lakh

30%

Income Tax Slabs FY 2022-23 (AY 2023-24) for Senior Citizen Taxpayers

In India, Senior Citizen tax payers are individuals above 60 years of age but below 80 years of age. These tax payers enjoy a higher basic exemption limit of Rs. 3 lakh as compared to individuals aged below 60 years under the old tax regime. However, this benefit of higher exemption is not available for senior citizen tax payers opting for the new tax regime. The below table summarizes the Income Tax slab rates in AY 2023-24 (FY 2022-23) for senior citizens in India: 

 

Net Taxable Income

Income Tax Slab Rates FY 2022-23 (Old Tax Regime)

Income Tax Slab Rates FY 2022-23

(New Tax Regime)

Up to Rs 2.5 lakh

Nil

Nil

Rs 2,50,001 to Rs 3 lakh

5%

Rs 3,00,001 to Rs 5 lakh

5%

 

Rs 5,00,001 to Rs 7.5 lakh

20%

10%

Rs 7,50,001 to Rs 10 lakh

15%

Rs 10,00,001 to Rs 12.5 lakh

30%

20%

Rs 12,50,001 to Rs 15 lakh

25%

Over Rs. 15 lakh

30%

Income Tax Slabs in AY 2023-24 (FY 2022-23) for Super Senior Citizens

Under current tax rules, super senior citizen tax payers are individuals who are aged 80 years or more. Under the old tax regime, super senior citizens have a higher basic exemption limit of Rs. 5 lakh as per income tax slab rates for the financial year 2022-23. This benefit is however not applicable under the new tax regime even though the slab rates for AY 2023-24 are lower as compared to the old tax regime. The below table summarizes the income tax slab and rates applicable to super senior citizens in FY 2022-23:  

Net Taxable Income

Old Tax Regime Income Tax Slab Rates (FY 2022-23)

New Tax Regime Income Tax Slab Rates (FY 2022-23)

Up to Rs 2.5 lakh

Nil

 

Nil

Rs 2,50,001 to Rs 5 lakh

5%

Rs 5,00,001 to Rs 7.5 lakh

20%

10%

Rs 7,50,001 to Rs 10 lakh

15%

Rs 10,00,001 to Rs 12.5 lakh

30%

20%

Rs 12,50,001 to Rs 15 lakh

25%

Over Rs. 15 lakh

30%

Beyond the income tax liability computed using the Income Tax slab rates for FY 2022-23, you also have to pay a 4% health and education cess as part of your overall tax outgo for the fiscal.

What is Income Tax Slab?

Income tax is simply the tax you need to pay on income during a financial year. In India, the income tax system is progressive in nature i.e. if you have low income, you pay lower tax and if you have high income, you pay tax at a higher rate.

In order to determine the rate at which income tax needs to be paid, the Government of India has introduced income tax slabs and applicable rates. The income tax slab specifies a range within which a pre-determined rate of taxation is applicable. Based on the income tax slab a taxpayer falls in, the applicable income tax rate is identified which is used to calculate the income tax liability for the applicable fiscal.

Currently Indian tax payers can choose between 2 different tax regimes – the old tax regime and the new tax regime. The income tax slabs and rates for FY 2022-23 (AY 2023-24) are different based on whether the tax payer has chosen the new or the old tax regime to compute tax liability for the fiscal.

Types of Taxable Income in India

Income tax is applicable to various types of tax payers like individuals, trusts, corporations, etc. Therefore, there are multiple sources of income that can be subject to income tax in India. Here are some of the different types of taxable income in India as per the Income Tax Act, 1961:

· Income from Salary or Pension

Under this category, the taxes are usually applied to the basic salary, allowances, and profit made from the salary. An individual's pension after retirement is also taxed based on the income tax slab. The income tax slab rates FY 2022-23 (AY 2023-24) differ based on the age of the individual who is receiving a salary or pension during the fiscal.  

· Income from Business

The profits made from businesses are also included as an income that is taxable. The tax in this particular category is obtained from the presumptive or actual income that the profession or business may incur. However, it is only done after the adjustments to the allowable deductions are made. In FY 2022-23, different rates are applicable to business income of individuals and corporations. While corporations are subject to corporation tax, individuals with business income will be taxed as per income tax slabs and rates for AY 2023-24.  

· Income from House Property 

· Income from Business

The profits made from businesses are also included as an income that is taxable. The tax in this particular category is obtained from the presumptive or actual income that the profession or business may incur. However, it is only done after the adjustments to the allowable deductions are made. In FY 2022-23, different rates are applicable to business income of individuals and corporations. While corporations are subject to corporation tax, individuals with business income will be taxed as per income tax slabs and rates for AY 2023-24.  

· Income from House Property 

Owning more than one house property and giving them up for rent is an easy way to make extra income. However, in such cases, income received from rental of house property is treated as part of the taxpayer’s income. So this income is taxable as per the income tax slab rates for FY 2022-23.  

· Income from Winning Lottery, Horse Races, etc.

The income from winning lottery, horse races etc., are taxable in India. However, under prevailing tax laws, these earnings are taxed separately and not as per income tax slab rates of FY 2022-23.

· Income Generated from Capital Gains

Capital Gains income can be obtained from the sale of assets such as gold, house property, mutual funds units, stocks, debentures, etc. Depending on the type of asset and the profits made on it over time, it can be classified as a long-term or short-term capital gain. Even though these incomes are part of the income tax regime, capital gains tax rules of 2022-23 are independent of the income tax slabs for AY 2023-24. 

Key Differences Between New & Old Tax Regimes 

In FY 2020-21, a new tax regime was introduced in addition to the prevailing old tax regime. In FY 2022-23 (AY 2023-24), tax payers can choose to opt for either of these income tax regimes and pay tax accordingly. There are 2 key differences between these two income tax regimes in India: .

  • Firstly, the new tax regime includes more tax slabs with lower tax rates as compared to the old tax regime. Hence, the income tax slabs for FY 2022-23 (AY 2023-24) are different based on whether you opt for the new or the old tax regime.   
  • ·Secondly, all the major deductions and exemptions such as Section 80C, Section 80D, etc. that are available under the old tax regime are not allowed if you opt for the new tax regime.

In FY 2020-21, a new tax regime was introduced in addition to the prevailing old tax regime. In FY 2022-23 (AY 2023-24), tax payers can choose to opt for either of these income tax regimes and pay tax accordingly. There are 2 key differences between these two income tax regimes in India: 

  • Firstly, the new tax regime includes more tax slabs with lower tax rates as compared to the old tax regime. Hence, the income tax slabs for FY 2022-23 (AY 2023-24) are different based on whether you opt for the new or the old tax regime.   
  • Secondly, all the major deductions and exemptions such as Section 80C, Section 80D, etc. that are available under the old tax regime are not allowed if you opt for the new tax regime.

Deductions and exemptions allow tax payers to reduce their taxes by investing, saving or spending on specific financial instruments. The new tax regime offers you very few exemption or deduction options even though the income tax slab rates for AY 2023-24 are lower compared to the old tax regime. In contrast, the old tax regime provides up to 70 deductions or exemptions to lower your taxable income and income tax liability for FY 2022-23.

Surcharge on Income Tax in AY 2023-24

Taxpayers in the high income group with net taxable income exceeding 50 lakhs in assessment year 2023-24 i.e. financial year 2022-23, have to pay a surcharge on their income tax computed based on the income tax slab rates for FY 2022-23. The applicable rate of surcharge is as follows for FY 2022-23: 

Net Taxable Income (AY 2023-24)

Rate of Surcharge on Income Tax (%)

Rs. 50 lakh to Rs 1 crore

10

Rs. 1 crore to Rs. 2 crore

15

Rs. 2 crore to Rs. 5 crore

25

Rs. 5 crore and above

37

Things to Keep in Mind Before Opting for the New Tax Slab 

The option to choose between either the new tax regime or the old tax regime is currently available to individual tax payers in India. But before you make your choice, here are 5 key things you should keep in mind:

· Consider Tax Saving Deductions and Exemptions

In FY 2022-23, the new tax regime has lower income tax slab rates and more income tax slabs compared to the old regime. But the new tax regime offers very few exemptions and deductions. These include about 70 deductions and exemption like HRA, Section 80C deductions and home loan interest benefit that can be claimed under the old tax regime but cannot be claimed under the new regime. 

The option to choose between either the new tax regime or the old tax regime is currently available to individual tax payers in India. But before you make your choice, here are 5 key things you should keep in mind:

· Consider Tax Saving Deductions and Exemptions 

In FY 2022-23, the new tax regime has lower income tax slab rates and more income tax slabs compared to the old regime. But the new tax regime offers very few exemptions and deductions. These include about 70 deductions and exemption like HRA, Section 80C deductions and home loan interest benefit that can be claimed under the old tax regime but cannot be claimed under the new regime.

· Lower Tax Exemption Limit Based on Age

The old tax regime provides higher tax exemption for senior citizens and super senior citizens of Rs. 3 lakh and Rs. 5 lakh respectively as per income tax slab rates in AY 2023-24. This higher limit is not available under the new tax regime, which offer the same Rs. 2.5 lakh exemption limit irrespective of the taxpayer’s age.

· Consider Benefits Beyond Tax Savings

Tax saving investments and expenses like a term life insurance policy, Public Provident Fund, National Pension System provide a dual benefit under the old tax regime. On the one hand, you decrease your tax outgo, on the other hand they also provide benefits like financial security of loved ones or long-term wealth creation. In the case of the new tax regime, you do not receive the tax saving benefit at all.

However, the tax benefits of these investments are limited up to Rs. 2 lakh in a fiscal after including the Rs. 50,000 benefit offered u/s 80 CCD (1B). So, you need to use an income tax calculator to compute your tax outgo under both the new and old regime in order to determine which is suitable for you based on the income tax slab rates for FY 2022-23.   

FAQs 

1. Do I have to mandatorily opt for the new tax regimes and applicable Income Tax Slabs for AY 2023-24? 

No. As a taxpayer, you can choose to either opt for the new or the old tax regime and pay your taxes based on the applicable income tax slab rates for FY 2022-23 i.e. AY 2023-24.

2. Do I need to file Income Tax Return (ITR) if my annual income is below Rs 2.5 lakh? 

It is mandatory to file your ITR only if your total annual income exceeds the maximum exempt amount of Rs 2.5 lakh.

3. Are the income tax slabs for AY 2023-24 in the case of new tax regime same for all tax payers irrespective of age?

Yes, the new income tax slabs for AY 2023-24 (FY 2022-23) under the new tax regime does not change based on the age of the tax payer. So, the limit of maximum tax-exempt income is Rs 2.5 lakh regardless of the individual taxpayer's age.

4. Can you avail the standard deduction on salary of Rs. 50,000 under the new tax regime? 

The standard deduction of Rs. 50,000 annually on salary cannot be claimed under the new tax regime. You have to opt for the old tax regime to avail this benefit.

5. Are there any changes made for the income tax slab for FY 2022-23 in the latest budget? 

The income slab rates for FY 2022-23 (AY 2023-24) are currently the same as the slab rates announced for AY 2022-23.

Source:

https://cleartax.in/s/income-tax-slabs   

https://www.creditmantri.com/article-what-types-of-incomes-are-taxable-in-india/

https://www.livemint.com/money/new-income-tax-regime-vs-old-income-tax-regime-what-should-you-opt-for-in-2022-11644713424562.html

https://www.taxmann.com/post/blog/income-tax-slab-rates/

https://www.incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia.gov.in/charts++tables/tax+rates.htm&k&IsDlg=0

https://www.valueresearchonline.com/stories/47951/choosing-between-the-old-and-new-tax-slabs/  

ARN No: Nov22/Bg/04

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