Income tax is the tax levied on the income earned by an individual through any source and hence is taxable in the eyes of law if it passes the tax slab category limit. There are many taxes from local to national that are applicable on all levels and considered as one of the major sources of income for the Government of India. Let us walk through what are taxes and its types, offering our prime focus on the Income tax, how deductions are made on income earned, income tax above 5 lakhs keeping in mind the old and new regime.
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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.
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.
Taxes | ||
Direct Taxes | Indirect Taxes | Other Taxes |
Income Tax | Sales Tax | Property Tax |
Wealth Tax | Goods & Services Tax (GST) | Professional Tax |
Gift Tax | Value Added Tax (VAT) | Entertainment Tax |
Capital Gains Tax | Custom Duty | Education Cess |
Securities Transaction Tax | Coctroi Duty | Toll Tax |
Corporate Tax | Service Tax | Registration Fees |
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
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.
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 |
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.
Income Tax Slab | New Regime Income Tax Slab Rates FY 2020 -2021 (Applicable on All Categories of Individuals & HUF) |
Up to Rs. 2.5 Lakhs | NIL |
Rs. 2.5 lakhs to Rs. 3.00 lakhs | 5% (tax rebate u/s 87A is available) |
Rs. 3.00 lakhs to Rs. 5.00 lakhs | |
Rs. 5.00 lakhs to Rs. 7.5 lakhs | 10% |
Rs. 7.5 lakhs to Rs. 10.00 lakhs | 15% |
Rs. 10.00 lakhs to Rs. 12.50 lakhs | 20% |
Rs. 12.5 lakhs to Rs. 15.00 lakhs | 25% |
Rs. 15 lakhs and above | 30% |
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.
The cess and surcharge on income tax payable are applicable if the total income of the assessee exceeds the below-mentioned limits:
Assessment Year 2022-23 | |
Income Range | Surcharge |
Above Rs. 50 Lakhs but less than Rs. 1 Crore | 10% |
Above Rs. 1 Crore but less than Rs. 2 Crores | 15% |
Above Rs. 2 Crores but less than Rs. 5 Crores | 25% |
Above Rs. 5 crores but less than Rs. 10 Crores | 37% |
Above Rs. 10 Crores | 37% |
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Gross Total Income | Rs.12 lakh |
Deductions under Section 80 and 80CCD | NIL |
House Rent Allowance (HRA) | NIL |
Medical and Travel Allowance | NIL |
Taxable Income | Rs.12 lakh |
Up to Rs.2.5 lakh | NIL |
Above Rs.2.50 but less than Rs.5 lakh | Rs.12,500 |
Above Rs.5 lakh but less than Rs.7.50 lakh | Rs.25,000 |
Above Rs.7.50 but less than Rs.10 lakh | Rs.37,500 |
Above Rs.10 lakh but less than Rs.12.50 lakh | Rs.40,000 |
Total Tax Paid | Rs.1,15,000 |
Income Tax Slab | Old Tax Regime for FY 20-21 (AY 21-22) | New Tax Regime for FY 20-21 (AY 21-22) | ||
Resident Individuals & HUF less than 60 years & NRIs | Resident Individuals & HUF more than 60 but less than 80 years | Resident Individuals & HUF above 80 years of age | Applicable for All Individuals & HUF | |
Up to Rs. 2.5 Lakhs | NIL | NIL | NIL | NIL |
Rs. 2.5 lakhs to Rs. 3.00 lakhs | 5% (rebate on tax under Section87A) | NIL | NIL | 5% (rebate on tax under Section87A) |
Rs. 3.00 lakhs to Rs. 5.00 lakhs | 5% (rebate on tax under Section87A) | NIL | ||
Rs. 5.00 lakhs to Rs. 7.5 lakhs | 20% | 20% | 20% | 10% |
Rs. 7.5 lakhs to Rs. 10.00 lakhs | 20% | 20% | 20% | 15% |
Rs. 10.00 lakhs to Rs. 12.50 lakhs | 30% | 30% | 30% | 20% |
Rs. 12.5 lakhs to Rs. 15.00 lakhs | 30% | 30% | 30% | 25% |
Rs. 15 lakhs and above | 30% | 30% | 30% | 30% |