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.Read more
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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.
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:
Here is the list of some taxes falling under the main taxation categories in India:
|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|
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)||0||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%|
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|
|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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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)
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|
|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%||–||–|
|Cess @ 4%||2,500||3,000|
|Total Tax Levied||65,000||78,000|
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
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