Income Tax Slabs 2022 – 2023
The government decides income tax slab rates under the Income Tax Act, 1961.
While partnership firms, corporates, and trusts are being taxed at a fixed rate, individuals and HUFs are taxed at different slab rates.
The slab rates change from time to time, considering different income levels and the basic standard of living of an average Indian through Union Budget.
However, you may find it difficult to understand how to calculate taxes based on different slab rates given.
This blog will discuss how to calculate tax on your income using these slab rates and most importantly, what slab rates will apply to you for the assessment year 2022-23 relating to the financial year 2021-22.
Understanding Tax Slab Rates
Slab rates under the Income Tax Act, 1961 refer to tax rates applicable to individuals and HUFs for different income ranges. The slab rates are divided into four categories:
- Individuals aged below 60 years of age;
- Individuals more than 60 years of age but below 80 years;
- Individuals above 80 years of age;
- Hindu Undivided Families including AOP, BOI, and Artificial Juridical Person (non-human legal entity).
Under the Income Tax Act, 1961, the individuals and HUFs are provided with a basic exemption limit for income below where no tax is levied.
Slab Rates as per New Tax Regime vs. Old Tax Regime
Budget 2020 provided an option to select either new slab rates or the old slab rates with certain conditions.
While there is no concrete evidence of whether new tax rates are beneficial or senior rates, it mainly depends on which income bracket your income falls. Before we discuss which is better, let’s understand are the rates as per new and old tax regimes.
Slab Rates as per New Tax Regime
Individuals and HUFs of all age
Net Income Range | AY 2022-23 |
Up to INR 2,50,000 | Nil |
INR 2,50,001 to INR 5,00,000 | 5% |
INR 5,00,001 to INR 7,50,000 | 10% |
INR 7,50,001 to INR 10,00,000 | 15% |
INR 10,00,001 to INR 12,50,000 | 20% |
INR 12,50,001 to INR 15,00,000 | 25% |
Above INR 15,00,001 | 30% |
Important Notes
- NRIs are given a basic exemption limit of INR 2,50,000 regardless of age;
- The rebate under section 87A is available under the new tax scheme as well, which allows NIL tax liability to taxpayers if their income is less than or equal to INR 5,00,000;
- Deductions under section 80C are not allowed under the new tax regime. Apart from that, many other allowances such as professional tax, standard deduction from salary, relocation allowance, etc., are not allowed.
Surcharge
Range of Income | AY 2022-23 |
INR 50 Lakhs to INR 1 Crore | 10% |
INR 1 Crore to INR 2 Crores | 15% |
INR 2 Crores to INR 5 Crores | 25% |
Exceeding INR 5 Crore | 37% |
Health and Education Cess
It is levied at 4% on the amount of Tax plus Surcharge.
Slab Rates as per Old Tax Regime
Individual’s Slab Rates
Net Income Range | AY 2022-23 |
Up to INR 2,50,000 |
|
INR 2,50,001 to INR 5,00,000 | 5% |
INR 5,00,001 to INR 10,00,000 | 20% |
Above INR 10,00,001 | 30% |
Senior Citizen’s Slab Rates (Above 60 years but below 80 years)
Net Income Range | AY 2022-23 |
Up to INR 3,00,000 |
|
INR 3,00,001 to INR 5,00,000 | 5% |
INR 5,00,001 to INR 10,00,000 | 20% |
Above INR 10,00,001 | 30% |
Super Senior Citizen’s Slab Rates (Above 80 years)
Net Income Range | AY 2022-23 |
Up to INR 5,00,000 |
|
INR 5,00,001 to INR 10,00,000 | 20% |
Above INR 10,00,001 | 30% |
Hindu Undivided Family Slab Rates (Including AOP, BOI, and Artificial Juridical Person)*
Net Income Range | AY 2022-23 |
Up to INR 2,50,000 |
|
INR 2,50,001 to INR 5,00,000 | 5% |
INR 5,00,001 to INR 10,00,000 | 20% |
Above INR 10,00,001 | 30% |
*AOP, BOI: Association of Persons (AOP), and Body of Individuals (BOI) refer to a group of individuals or company or firm to perform an economic activity to generate revenue without forming a company or a partnership firm.
Surcharge
Range of Income | AY 2022-23 |
INR 50 Lakhs to INR 1 Crore | 10% |
INR 1 Crore to INR 2 Crores | 15% |
INR 2 Crores to INR 5 Crores | 25% |
INR 5 Crores to INR 10 Crores | 37% |
Exceeding INR 10 Crore | 37% |
Health and Education Cess
It is levied at 4% on the amount of Tax plus Surcharge.
Note: Rebate under section 87A of 100 percent of income-tax or Rs. 12,500, whichever is less, is available to resident individuals whose net income is less than INR 5,00,000.
Which is Better? – Old vs. New Tax Rates
Let us understand the comparison with the help of an example. Suppose your total income for the Assessment Year 2022-23 is INR 9,80,000. We will assess the tax liabilities under both regimes and understand which regime is more beneficial to you.
Particulars | Old Regime (INR) | New Regime (INR) |
Total Income | 9,80,000 | 9,80,000 |
Deductions:
| (1,50,000) (25,000)
(50,000) | ––
– |
Net Taxable Income | 7,55,000 | 9,80,000 |
Tax Liability:
New Regime Up to INR 2,50,000 (NIL) INR 2,50,001 to INR 5,00,000 @ 5% INR 5,00,001 to INR 7,50,000 @ 10% INR 7,50,000 to INR 9,80,000 @ 15% Old Regime Up to INR 2,50,000 (NIL) INR 2,50,001 to INR 5,00,000 @ 5% INR 5,00,001 to INR 7,55,000 @ 20% | –
– – – – 12,500 51,000 | –
12,500 25,000 34,500 – – – |
Total Tax Liability | 63,500 | 72,000 |
As seen from the above example, if you have invested your money in the tax-savings instruments and have higher income slab rates, you will benefit under the old regime.
However, if you have not invested your money in tax-saving tools, you will benefit from the New Tax Regime as the new administration offers lower slab rates.
Conclusion
It is not fair to suggest which tax regime is more suitable. You need to evaluate your savings, income, and allowable deductions under both tax regimes individually and then conclude which one will benefit you.
To get a perfect idea, we always recommend consulting your chartered accountant, who can perform an evaluation for you and suggest which slab will be better for you.
Happy Winting!