Paying taxes is a civic duty that enables the government to provide facilities and infrastructure for the benefit of all citizens. While some may see taxes as a burden, an optimized tax structure ensures that all citizens contribute their fair share based on their income levels. So how much Income is Taxable in India?
In India, the income tax is calculated based on a slab system where different tax rates apply to different income slabs or ranges. The Income Tax Act, 1961 and subsequent Union Budgets by the central government determine these income tax slabs which are revised periodically.
Table of Contents
- What are Income Tax Slabs?
- Income Tax Slabs for FY 2022-23 (AY 2023-24)
- New Tax Regime
- Old Tax Regime
- Resident Indians Below 60 Years
- Resident Senior Citizens (60-80 Years)
- Resident Super Senior Citizens (Above 80 Years)
- Income Tax Slabs for FY 2023-24 (AY 2024-25)
- How to Calculate Income Tax?
- Key Points About the New Tax Regime
- When to Choose Between Old and New Tax Regimes?
- Income Tax Rates for Companies
- Income Tax Rates for Partnerships & LLPs
- Comparison of Tax Slabs Before and After Budget 2023
- Frequently Asked Questions
Also read: How to Register for Your Startup Registration in India: 7 Steps. – FilingWala.Com
What are Income Tax Slabs?
To know how much income is taxable in India, you first need to know the Income Tax slabs. Income tax slabs refer to the predefined income ranges on which a specific tax rate is applicable. These slabs are divided into different ranges based on increasing income levels. The tax percentage also increases for higher income slabs.
As the taxable income increases and surpasses a predefined slab threshold, it falls into a higher slab that attracts an increased tax rate.
This mechanism enables a progressive tax structure making it fair for citizens. Those with higher incomes pay higher taxes while lower-income groups pay lower taxes. The income tax slabs are revised by the central government from time to time. Keep reading to understand how much income is taxable to you if you live in India.
Income Tax Slabs for FY 2022-23 (AY 2023-24)
The income tax slabs for the financial year 2022-23 (Assessment Year 2023-24) are as follows:
New Tax Regime India
The new tax regime was introduced in Budget 2020 to provide lower tax rates but with fewer deductions and exemptions.
| Income Slabs | New Tax Rates FY 2022-23 |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 – Rs 5,00,000 | 5% |
| Rs 5,00,001 – Rs 7,50,000 | 10% |
| Rs 7,50,001 – Rs 10,00,000 | 15% |
| Rs 10,00,001 – Rs 12,50,000 | 20% |
| Rs 12,50,001 – Rs 15,00,000 | 25% |
| Above Rs 15,00,000 | 30% |
- Surcharge of 10% is applicable if net taxable income is between Rs 50 lakh to Rs 1 crore
- Surcharge of 15% is applicable if net taxable income is between Rs 1 crore to Rs 2 crore
- Surcharge of 25% is applicable if net taxable income is above Rs 2 crore
- 4% Health and Education Cess is also applied on total tax
Old Tax Regime India
The old tax regime provides higher basic exemptions and more deductions/rebates, resulting in lower tax outgo compared to the new regime in certain cases.
How much income is taxable to Resident Indians Below 60 Years
This slab is applicable for individuals below 60 years of age and Hindu Undivided Families (HUFs).
| Income Slabs | Tax Rates for Individuals & HUF below 60 years |
|---|---|
| Up to Rs 2,50,000 | Nil |
| Rs 2,50,001 – Rs 5,00,000 | 5% |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
- Surcharge of 10% is applicable if net taxable income is between Rs 50 lakh to Rs 1 crore
- Surcharge of 15% is applicable if net taxable income is between Rs 1 crore to Rs 2 crore
- Surcharge of 25% is applicable if net taxable income is above Rs 2 crore
- 4% Health and Education Cess is also applied on total tax
Also Read: How to Easily Register a Private Limited Company in Pune – FilingWala.Com
How much income is taxable to Resident Senior Citizens (60-80 Years)
Senior citizens between 60-80 years of age get slightly higher exemptions.
| Income Slabs | Tax Rates for Senior Citizens (60-80 years) |
|---|---|
| Up to Rs 3,00,000 | Nil |
| Rs 3,00,001 – Rs 5,00,000 | 5% |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
- Surcharge and Cess same as mentioned above
How much income is taxable to Resident Super Senior Citizens (Above 80 Years)
The highest exemption is available for super senior citizens above 80 years of age.
| Income Slabs | Tax Rates for Super Senior Citizens (Above 80 years) |
|---|---|
| Up to Rs 5,00,000 | Nil |
| Rs 5,00,001 – Rs 10,00,000 | 20% |
| Above Rs 10,00,000 | 30% |
- Surcharge and Cess same as mentioned above
Income Tax Slabs for FY 2023-24 (AY 2024-25) India
The new income tax slabs for FY 2023-24 under the new regime are:
| Income Slabs | New Tax Rates FY 2023-24 |
|---|---|
| Up to Rs 3,00,000 | Nil |
| Rs 3,00,001 – Rs 6,00,000 | 5% |
| Rs 6,00,001 – Rs 9,00,000 | 10% |
| Rs 9,00,001 – Rs 12,00,000 | 15% |
| Rs 12,00,001 – Rs 15,00,000 | 20% |
| Above Rs 15,00,000 | 30% |
- Surcharge and Cess same as FY 2022-23
- No changes were made in slabs or rates under the Old Tax Regime
How to Calculate Income Taxable in India?
Let’s take an example to understand how to calculate income tax. With this example we will understand how much income is taxable to you in India
Samir has a gross total income of Rs 12,40,000 for FY 2022-23. He has deductible investments of Rs 1,50,000 under Section 80C.
- Gross Total Income = Rs 12,40,000
- Deductions under Section 80C = Rs 1,50,000
- Net Taxable Income = Rs 10,90,000
Samir opts for the Old Tax Regime. His tax calculation will be:
- Income up to Rs 2,50,000 – Nil
- Income from Rs 2,50,001 to Rs 5,00,000 – 5% of (Rs 2,50,000) = Rs 12,500
- Income from Rs 5,00,001 to Rs 10,00,000 – 20% of (Rs 5,00,000 – Rs 2,50,000) = Rs 50,000
- Income above Rs 10,00,000 – 30% of (Rs 10,90,000 – Rs 10,00,000) = Rs 27,000
- Total Tax = Rs 12,500 + Rs 50,000 + Rs 27,000 = Rs 89,500
- Add Health & Education Cess of 4% on Rs 89,500 = Rs 3,580
- Total Tax Liability = Rs 89,500 + Rs 3,580 = Rs 93,080
How much income is taxable to samir?
So Samir’s total tax liability for the year is Rs 93,080
Key Points About the New Tax Regime in India
- The new tax regime provides lower tax rates compared to the old regime but with fewer deductions and exemptions
- Standard deduction of Rs 50,000 is allowed under the new regime
- Rebate under Section 87A is available if net taxable income is below Rs 5 lakhs
- Surcharge is applicable if net taxable income exceeds Rs 50 lakhs
- 4% Health and Education Cess is applied on total tax
When to Choose Between Old and New Tax Regimes?
- The new regime benefits taxpayers with income up to Rs 15 lakhs and minimal investments/expenses eligible for tax deduction
- The old regime benefits taxpayers above Rs 15 lakhs income or with substantial tax-saving investments/expenses
- Taxpayers should evaluate their tax liability under both regimes and choose the one where the liability is lower
- Business professionals cannot switch between regimes year on year, they have to choose one regime
- Salaried employees can switch regimes annually while filing ITR
Income Tax Rates for Companies in India
The corporate tax rates for domestic companies for FY 2022-23 are:
- New Manufacturing Companies opting for Section 115BAB: 15%
- Tax on income of certain domestic companies (covered u/s 115BAA)- 22%
- Other Domestic Companies with turnover up to Rs 400 crores – 25%
- Other Domestic Companies – 30%
Surcharge of 7% is applicable if net taxable income is between Rs 1-10 crores.
Surcharge of 12% is applicable if net taxable income exceeds Rs 10 crores.
Income Tax Rates for Partnerships & LLPs India
The standard income tax rate is 30% for both Partnership Firms and Limited Liability Partnerships (LLPs).
Surcharge of 12% is applicable if income exceeds Rs 1 crore.
Comparison of Tax Slabs Before and After Budget 2023 India
Budget 2023 only revised the new regime income tax slabs:
| Income Slab | FY 2022-23 | FY 2023-24 |
|---|---|---|
| Up to Rs 2.5 lakh | Nil | Nil |
| Rs 2.5 lakh – 3 lakh | 5% | Nil |
| Rs 3 lakh – Rs 5 lakh | 5% | 5% |
| Rs 5 lakh – Rs 7.5 lakh | 10% | 5% |
| Rs 7.5 lakh – Rs 9 lakh | 15% | 10% |
| Rs 9 lakh – Rs 10 lakh | 15% | 15% |
| Rs 10 lakh – Rs 12 lakh | 20% | 15% |
| Rs 12 lakh – Rs 15 lakh | 25% | 20% |
| Above Rs 15 lakh | 30% | 30% |
Frequently Asked Questions
Q1. Who decides the income tax slab rates in India?
The income tax slab rates are decided by the central government and are announced during the Annual Budget presentation. The slabs can be revised each year based on economic conditions.
Q2. Can I switch between the old and new tax regimes every year in India?
For salaried individuals, the tax regime can be selected each year at the time of filing ITR based on which is more beneficial. However, business professionals have a one-time option to choose between the regimes.
Q3. Is there tax exemption for senior citizens in India?
Yes, senior citizens (60-80 years) have higher tax exemption limits under both old and new regimes. Super senior citizens (above 80 years) have the highest exemption limits.
Q4. Is rebate under Section 87A applicable under both tax regimes?
Yes, the rebate of up to Rs 12,500 under Section 87A for income up to Rs 5 lakhs can be claimed under both old and new tax regimes.
Q5. Which tax regime is better for high income earners?
The old tax regime is more beneficial for high income earners as it provides more deductions and lower effective tax rates compared to the new regime.
Q6. Is agriculture income taxable in India?
No, income earned from agricultural activities is exempt from tax in India. However, if agriculture income is over Rs 5,000, it must be reported in the ITR even if it is tax-exempt.
I hope this detailed guide helps you understand the latest income tax slabs applicable for individuals and companies in India. Do consult a tax expert to determine the optimal regime and minimize your tax outgo.
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