Income Tax Above 5 Lakh

What is Tax?

Taxes are considered as an obligatory contribution every individual has to make who earns income in India in any form and falls under the tax slab category. Taxes are collected from the citizens of the country to upgrade the Indian economy and standard of living. They can be applicable only after the State Legislative or the Indian Parliament passes the law.

Types of Taxes

There are 2 types of taxes applicable on the citizens of India, namely:

• Direct taxes

• Indirect taxes

• Other taxes

Both direct taxes and indirect taxes have many sub-categories and different implementations from one another that helps in avoiding double taxation problems.

Apart from the traditional direct and indirect taxes, there are other taxes too that are launched keeping specific agenda in mind by the Government of India. Other taxes are applicable on both direct as well as indirect taxes like Infrastructure Cess, Swachch Bharat Cess Tax, Krishi Kalyan Cess, etc.

Below mentioned are some of the main taxes levied by the Government of India on their citizens.

Overview of the Tax Slab

Here is the overview of Income Tax Slab Rates for the Financial year 2022 – 2023 (Assessment Year 2023 – 2024). It is important to note that as there were no significant changes made in the Union Budget this year by our Finance Minister, the Income Tax Slab Rates remain unchanged.

• There is no change in the Income Tax Slab rates

• Taxpayers continue paying taxes following the previous year’s tax regime

• Either the Old or the New tax regime can be followed for the payment of tax

• Tax rebate of up to Rs. 12,500 is offered under Section 87A of the Income Tax Act, 1961

• Individual earning up to Rs. 5,00,000 does not fall under the tax paying category irrespective of the tax regime followed

• Once opted for a new tax regime, a taxpayer can never switch back to the old regime in their lifetime

• If no investments are made throughout the financial year along with income not exceeding Rs. 5,00,000, an individual does not fall under the tax paying category

Sections That Come Under Income Tax

Here is list of sections that fall under the income tax category along with the maximum claims an individual can make while filing the income tax return.

New Income Tax Slab Rate Table

New income tax slab rates were introduced in the Financial Year 2020 – 2021. It has given the option to individual taxpayers whether to go for the new income tax regime or continue with the old income tax regime. Here is the table with new tax rates as applicable on the annual income.

It Is Important to Know That:

• New income tax regime is same for all the categories of individuals and HUFs, be it below 60 years or above 80 years of age.

• Individuals earning equal to or less than Rs. 5 lakhs annually are eligible for tax rebate under Section 87A, making the tax liability NIL.

• Exemption limit in case of NRIs (Non-Resident Indians) is Rs. 2,50,000 irrespective of the age.

• 4% health and educational cess is applicable to the income tax liability.

Surcharge

The cess and surcharge on income tax payable are applicable if the total income of the assessee exceeds the below-mentioned limits:

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Example of Income Tax Rate Calculated Under New Regime

Income Tax Slab Rates: New Tax Regime Vs Old Tax Regime

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