Income Tax Above 10 Lakh

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:

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.

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:

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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:

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.

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