New Income Tax Slabs & Tax Rates in India for FY 2022-23

The budget has tried to profit the taxpayers by limiting the incentives to save. As per the new income tax rule, the income between Rs.5 lakh-Rs.7.5lakh will be taxed at 10%, which is cut down from 20%. The income between Rs.7.5 lakh-Rs.10lakh will be taxed 15%, which is cut down from 20% and income between Rs.10lakh-Rs12.5 lakh will be taxed 20%, which is cut down from 30%. The income between Rs.12.5lakh-Rs.15 lakh will be taxed 25%, which is cut down from the current 30%. Let’s take a look at the income tax slab rate 2022-2023.

In the interim budget 2020, no tax exemption has been given to income up to Rs.5 lakh.

*The cess and surcharge on income tax payable in the new proposed tax law are same as the existing tax rules.

The budget 2020 has offered the option to the individual taxpayers to choose between the existing income tax rules (which allow availing the existing tax deductions and exemptions) and new tax rules with reduced income tax rates and new income tax slabs but no tax deductions and exemptions.

According to the Finance Minister, the new tax law offers lower tax slab rates and at the same time removes the tax exemption. This will result in the lower tax outgo for the taxpayers.

For the better knowledge of readers, here we have shown what has been removed from the income tax regime.

Some of 70 deduction and exemptions that are removed in the new regime are:

• Section 80C

• House Rent Allowance

• Leave Travel Allowance

• Housing Loan Interest

• Standards Deductions

• Medical Insurance Premium

• Education Loan Interest

• Savings bank Interest

Some of 50 deduction and exemptions that have been left untouched are:

• Agriculture Income

• Standard Deduction on Rent

• Income from Life Insurance

• VRS Proceeds

• Retrenchment Compensation

• Leave Encashment on Retirement

The option given to the taxpayers to switch between new tax structures is a good move because as per their financial situation the taxpayers will be able to make the right choice. However, the taxpayers who avail various deductions and exemptions like 80C deductions and HRA (House Rent Allowance) may not be benefitted much from switching to the new tax regime.

As per the new budget, the surcharge on income tax has not been changed. The taxpayers with income between Rs.50lakhs and Rs.1 crore will continue to pay 10% surcharge on the tax. On the other hand, the surcharge of 15% will be applicable for the income between Rs.1 crore –Rs.2 crore, 25% for income between Rs.2 crore-Rs.5 crore and 37% for income above Rs. 5 crores. Thus, the individuals who are earning below these limits will not receive any benefit if they give up the tax exemptions and move to a new tax regime.

Tax Regime Impact on Taxpayers

Let’s take a look at how new tax rules will affect the tax outgo of taxpayers at different levels of income.

For income of Rs.15 lakh

Tax exemptions assumed: Rs.15 lakh under 80C; Rs.50,000 standard deduction.

For Income 30 Lakh

*Tax exemptions under section 80C is applicable up to the maximum limit of Rs.1.5 lakh for Rs.30 lakhs, Rs.60 lakhs, Rs.1.2 crore; Rs.50,000 and Rs 25,000 under section 80D is applicable;  home loan of interest up to Rs.2 lakh under section 24.

For Income Rs.60 lakh

Surcharge @10%

For Income of Rs.1.2 crore

Surcharge @15%