Income Tax Above 10 Lakh

Every year on the 1st of February, the Government of India announces the Union Budget, wherein the income tax slab is discussed and revised along with many other taxes. Income tax is a direct tax that the government levies on the earned income of every individual or other entity in the country. This tax is levied on individuals if their annual income exceeds the defined threshold. Income Tax above 10 lakhs is taxable in the eyes of the Government of India as per the current income tax slab. 

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Let us walk through how deductions are made on the annual earned income and how much income tax above 10 lakhs is levied on individuals per the new and old tax regimes.

What Do You Mean by Income Tax?

Primarily, every individual or entity earning money in India through any means has to make an obligatory contribution of their income to the Government of India, known as Tax. Income tax is a type of tax falling in the Direct Tax category. Taxes are collected by countries for the upliftment of their economy and standards and can be categorized broadly in the following categories:

  • Direct taxes

  • Indirect taxes

  • Other taxes

Here is the list of some taxes falling under the main taxation categories in India:

Taxes
Direct Taxes Indirect Taxes Other Taxes
Income Tax Sales Tax Property Tax
Gift Tax Value Added Tax (VAT) Entertainment Tax
Wealth Tax Goods & Services Tax (GST) Professional Tax
Securities Transaction Tax Coctroi Duty Toll Tax
Capital Gains Tax Custom Duty Education Cess
Corporate Tax Service Tax Registration Fees

Income Tax Above 10 Lakhs

The income tax slabs presented by the Government of India in the union budget define the tax liabilities levied on individuals or entities at the end of the financial year. In the financial year 2020 – 2021, a new income tax slab rate was introduced, allowing the taxpayers to opt for either the old tax regime or the new one as per their convenience.

Income tax above 10 lakhs is taxable at the rate of 30% in the old tax regime, whereas in the case of the new tax regime, the taxable percentage is 20%. Here is a table that will help you understand the taxation percentage under both cases and the taxability of income above 10 lakhs.

Income Tax Slab Old Tax Regime for FY 20-21 (AY 21-22) New Tax Regime for FY 20-21 (AY 21-22)
Hindu Undivided Family & Resident Individuals less than 60 years & NRIs Hindu Undivided Family & Resident Individuals above 60 years but below 80 years Hindu Undivided Family & Resident Individuals more than 80 years Applicable for All Hindu Undivided Family & Resident Individuals
Up till Rs. 2.5 Lakhs 0 0 0 0
More than Rs. 2.5 lakhs till Rs. 3.00 lakhs 5% (rebate on tax under Section87A) 0 0 5% (rebate on tax under Section87A)
More than Rs. 3.00 lakhs till Rs. 5.00 lakhs 5% (rebate on tax under Section87A) 5% (rebate on tax under Section87A) 5% (rebate on tax under Section87A) 
More than Rs. 5.00 lakhs till Rs. 7.5 lakhs 20% 20% 20% 10%
More than Rs. 7.5 lakhs till Rs. 10.00 lakhs 20% 20% 20% 15%
More than Rs. 10.00 lakhs till Rs. 12.50 lakhs 30% 30% 30% 20%
More than Rs. 12.5 lakhs till Rs. 15.00 lakhs 30% 30% 30% 25%
Rs. 15 lakhs and above 30% 30% 30% 30%

Surcharge

A surcharge is a tax above the income tax payable for an assessee falling in the high income bracket. Following are the income ranges on which surcharge is applicable:

Assessment Year 2022-23
Income Range Surcharge
Rs. 50 Lakhs above but less than Rs. 1 Crore 10%
Rs. 1 Crore above but less than Rs. 2 Crores 15%
Rs. 2 Crores above but less than Rs. 5 Crores 25%
Rs. 5 crores above but less than Rs. 10 Crores 37%
Rs. 10 Crores above 37%

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Example for Old Regime Vs. New Regime

It is considered that the new tax regime is beneficial for taxpayers with an annual income of up to Rs. 15 lakhs. On the other hand, the old tax regime is considered better for high income earners. For better understanding, let us understand the taxation of an income of Rs. 10 lakhs under both regimes.

For example, Mr. Prateek has an annual salary of Rs. 10 lakhs. Total investments made by him under Section 80C of the Income Tax Act, 1961, is Rs. 1,50,000 under the following options:

  • ELSS (Equity Linked Savings Scheme)

  • LIC premium

  • PF (Provident Fund)

  • Home loan principal installment (Home loan interest of Rs. 75,000 has been paid by him in the financial year 2020 – 2021)

Mr. Prateek also purchased medical insurance of Rs. 28,000 in the name of himself and his spouse apart from the Section 80C investments.

Mr. Prateek can claim the above deductions if he opts for the old tax regime, whereas deductions are not allowed in the new tax regime. Let us understand the tax flow of Mr. Prateek in both the tax regimes through a table:

Details Old Tax Regime New Tax Regime
Gross Income Rs. 10,00,000 Rs. 10,00,000
Deductions:
Under Section 80C 150,000
Under Section 80D 25,000
Under Section 24(b) 75,000
Total Taxable Income 750,000 1,000,000
Old Tax Slab Regime
0 to 2.5 Lakh
2.5 to 5 Lakh @ 5% 12,500
5 Lakh to 10 Lakh @ 20% 50,000
More than 10 Lakhs @ 30%
New Tax Slab Regime
0 to 5 Lakh
2.5 to 5 Lakh @ 5% 12,500
5 to 7.5 Lakh @ 10% 25,000
7.5 Lakh to 10 Lakh @ 15% 37,500
10 Lakh to 12.5 Lakh @ 20%
12.5 Lakh to 15 Lakh @ 25%
More than 15 Lakhs @ 30%
Income Tax 62,500 75,000
Cess @ 4% 2,500 3,000
Total Tax Levied 65,000 78,000

Sections That Come Under Income Tax

Falling Sections are under the income tax category wherein the taxpayer can claim deductions while the income tax filing process in every financial year.

Sections Maximum Claim Limit
80 C Rs. 1,50,000
80 CCC Rs. 1,50,000
80 CCD Rs. 1,50,000
80 CCF Rs. 20,000
80 CCG Regular Citizens: Rs. 25,000
Senior Citizens: Rs. 50,000
80 D Rs. 20,000
80 DD Normal Disability: Rs. 75,000
Severe Disability: Rs. 1,25,000
80 DDB Senior Citizens: Rs. 1 lakh
Other than Senior Citizen: Rs. 40,000
80 E No limit
80 EE Rs. 3 lakhs
80 GG Rs. 2,000 per month
80 GGA Depends on donation
80 GGB Depends on donation
80 GGC Depends on donation
80 IA No limit
80 IAB No limit
80 IB No limit
80 IC No limit
80 ID No limit
80 IE No limit
80 JJA First 5 years profits
80 QQB Rs. 3 lakhs
80 RRB Rs. 3 lakhs
80 TTA Rs 10,000 per year
80 U Normal Disability: Rs. 75,000
Severe Disability: Rs. 1,25,000

FAQ's

  • Q: Can we save 100% tax?

    Ans: If a taxpayer is in the taxable category as per the income tax slab revised by the Government of India every year, they have to pay tax. However, by investing their money wisely under various investment options available in the market, tax saving is very much possible.
  • Q: Can I invest in more than 1 investment policy and claim Rs. 1,50,000 exemptions each?

    Ans: No. Rs. 1,50,000 is the maximum exemption limit regardless of the number of policies or investments made under Section 80C of the Income Tax Act, 1961.
  • Q: What income is tax free?

    Ans: As per the income tax law by the Government of India, an individual or entity having a gross income of Rs. 2,50,000 and above in a financial year is liable for income tax filing.
  • Q: What is annual income?

    Ans: Annual income is the total money earned by the individual in 1 year.
  • Q: When can I claim my 80C deductions?

    Ans: Deductions under any Section can be claimed during the filing of Income Tax Returns at the end of each assessment year.
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