Income Tax Above 10 Lakh

Let us walk through the income tax calculator on how much tax will be deducted for 10 lakhs income as per the new income tax slabs and old tax regime slabs.

What is 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 Income Tax. Income tax is a type of tax falling in the Direct Tax category of the income tax rules enforced by the Income Tax Department. 

Taxes are collected by countries for the development of their economies and growth in the standard of living of their citizens.

The various taxes charged by the Income Tax Department can be categorized broadly into 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 new income tax slabs announced by the Government of India in the Union Budget 2023 define the tax liabilities levied on individuals or entities at the end of the financial year of 2023-24. Individuals with income above 10 lakhs but less than 12 lakhs are levied tax at 15%.

Old Income Tax Slabs for AY 2022-23

Here is a table that will help you understand the old regime tax slabs under both cases and the tax on 10 lakh income and above.

New Income Tax Slab for 2022-23 Under the Union Budget 2023

The new income tax slab rate introduced on 1st February 2023 reduced the number of tax slabs and increased the tax exemption limits from Rs. 2.5 lakhs to Rs. 3 lakhs, and increased the tax rebate limits to Rs. 7 lakhs from Rs. 5 lakhs.

From AY 2020-21, the Government of India introduced an optional new tax regime u/S 115BAC. 

Income tax above 10 lakhs is taxable at the rate of 30% in the old tax regime, whereas the tax on 10 lakhs income up to Rs. 12 lakhs is taxed at a 15% rate. 

The old vs. new income tax regime slab rates for the taxpayer as per Union Budget 2023 is as follows:

Surcharge

A surcharge is a tax over the income tax payable for an assessee falling in the high-income bracket. 

Following are the income ranges for which the applicable surcharge rates are:

*Union Budget 2023 limits the highest surcharge rates @ 25% per annum.

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Income Tax on 10 Lakhs for Old Regime Vs. New Regime

The government allows the taxpayers to either opt for the old tax regime or the new tax regime will be applicable by default.

The new tax regime with a low tax rate is beneficial for taxpayers with an annual income of Rs. 12 lakhs and above. On the other hand, the old tax regime is considered better for lower and mid-level income earners, as one could claim various tax exemptions. However, these exemptions/ deductions are not allowed in the new income tax regime. 

The new tax regime increased the income limit for tax rebates to Rs. 7 lakhs and the standard deductions limit to Rs. 52,000. 

For better understanding, let us understand how much tax will be deducted for 10 lakhs income under both regimes.

Illustration of Tax on 10 Lakh Income

For example, Mr. Prateek has an annual salary of Rs. 10 lakhs. 

As per the old tax regime, the 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 instalment (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 tax regimes through a table:

Tax Exemptions Available under New Income Tax Regime

The new tax regime removes all the common tax exemptions available with the old tax regime. An individual can claim the following tax deductions if he does not opt for the previous tax regime:

• Standard tax deductions up to Rs. 52,000 (earlier Rs. 50,000)

• Tax rebate claim if income up to Rs. 7 lakhs (earlier Rs. 5 lakhs)

• Deductions u/S 80CCD (2) of the Income Tax Act, 1961.

Deductions Available under Old Income Tax Regime

If you are curious to know how to save the tax for a salary above 10 lakhs, the following are the Sections of the Income Tax Act, 1961, available to taxpayers for tax deductions every financial year under the old income tax regime:

Summing It Up!

The new income tax regime brings lots of hope for High Net-worth Individuals (HNIs) by lowering the applicable tax slab and surcharge rates. But, low-income taxpayers must deeply analyse the benefits of opting for the new tax slab rates, as the commonly availed tax exemptions won't be available to them now. The removal of tax deductions may significantly increase the overall income tax.

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