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Paying Income Tax is a duty of every Indian citizen. Under the Income Tax Act, 1961, the percentage of income payable as tax is based on the amount of income you’ve earned during a year. The tax applies to the Range of income, which is called Income Tax Slabs. The income slabs keep changing from year to year. Read the article to know the income tax brackets of 2022.
No changes in income tax slabs or rates have been proposed.
With no change in the income tax slabs and rates and basic exemption limit. An individual tax payer will continue to pay the tax at the same rates applicable in FY 2021-22.
Suppose, you’re a salaried individual and your monthly income is Rs.30,000. Every month your employer will deduct a certain amount from your salary so as to pay the government Taxes on your behalf. Every taxpayer needs to file an Income Tax Return every year to produce evidence for his tax payments. This amount depends on your annual income. More is your annual income, the more tax you need to pay.
The government sets the new income tax rates for every financial year. This rate is based on the estimated budget for the expenses that the government will have to bear for the following year. These slabs are tweaked by the government in the annual budget announcements. The taxpayers are required to pay the subsequent amount based on their respective income tax brackets.
The income tax brackets have three categories for individual payers-
Finance Minister Nirmala Sitharaman has presented the Union Budget 2020 intending to increase income and boost purchasing power. As per her speech, a new slab has been restructured from INR 5 lakh onward.
You can check out the difference in slabs before and after the Union Budget 2020:
Income Range Per Annum | Existing Tax Rate (2019-20) | New Tax Rate (2020-21) |
---|---|---|
Upto INR 2,50,000 | Exempt | Exempt |
INR 2,50,000 to 5,00,000 | 5% | 5% |
INR 5,00,000 to 7,50,000 | 20% | 10% |
INR 7,50,000 to 10,00,000 | 20% | 15% |
INR 10,00,000 to 12,50,000 | 30% | 20% |
INR 12,50,000 to 15,00,000 | 30% | 25% |
Above INR 15,00,000 | 30% | 30% |
If you go by the new tax slab rates announced on 1st February 2020 then, you will not be eligible to claim the following tax benefits:
Tax exemptions have been left untouched:
As per the new tax regime, you need to sacrifice as many as 100 tax exemptions under various sections of the Income Tax Act, including 80C.
But, the proposed slabs in the Union Budget 2020 are purely optional. It is up to the taxpayers to choose the old tax slabs or the new one. To make an opinion on the changes made, you need to do your tax calculations carefully and see which helps you save more.
Here are the tax rates for FY 21 - 22-
Income Range Per Annum | Tax Rate FY 21 - 22 (AY 20-21) | Health and Education Cess |
---|---|---|
Up to INR 2,50,000 | No tax | Nil |
Above INR 2,50,000 to 5,00,000 | 5% | 4% cess |
Above INR 5,00,000 to 10,00,000 | 20% | 4% cess |
Above INR 10,00,000 to 50,00,000 | 30% | 4% cess |
Above INR 10,00,000 to 1 crore | 30% + 10% surcharge | 4% cess |
Above INR 1 crore | 30% +15% surcharge | 4% cess |
As per the amendments to Section 87(A), if your annual Taxable Income is lower than INR 5,00,000, you can avail the Tax Rebate. The existing laws made way for a 2,500 income tax rebate. However, the updated law ensured that the limit was increased to a 12,500 income tax rebate.
Income Range Per Annum | Tax Rate FY 21 - 22 (AY 20-21) | Health and Education Cess |
---|---|---|
Up to INR 3,00,000 | No tax | Nil |
Above INR 3,00,000 to 5,00,000 | 5% | 4% cess |
Above INR 5,00,000 to 10,00,000 | 20% | 4% cess |
Above INR 10,00,000 to 50,00,000 | 30% | 4% of cess |
Above INR 50,00,000 to 1 crore | 30% + 10% surcharge | 4% of cess |
Above INR 1 crore | 30% +15% surcharge | 4% cess |
As per the amendments to Section 87(A), if your annual taxable income is lower than INR 5,00,000, you can avail the tax rebate. The existing laws made way for a 2,500 income tax rebate. However, the updated law ensured that the limit was increased to a 12,500 income tax rebate.
Income Range Per Annum | Tax Rate FY 21 - 22 (AY 20-21) | Health and Education Cess |
---|---|---|
Up to INR 2,50,000 | No tax | Nil |
Up to INR 5,00,000 | No tax | Nil |
Above INR 5,00,000 to 10,00,000 | 20% | 4% cess |
Above INR 10,00,000 to 50,00,000 | 30% | 4% cess |
Above INR 50,00,000 to 1 crore | 30% + 10% surcharge | 4% cess |
Above INR 1 crore | 30% +15% surcharge | 4% cess |
Turnover Particulars | Domestic Companies | Firms |
---|---|---|
Income Tax for turnover upto INR 400 crores | 25% | 30% |
Income Tax for turnover above INR 400 crores | 30% | 30% |
Cess | 3% + surcharge | 3% + surcharge |
Surcharge | 7% if the income is more between INR 1 crore to 10 crore. And, income above INR 10 crore will be taxed 10% | 12% of tax if the total income exceeds INR 1 crore |
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The Income Tax Act, 1961 contains all the required details regarding Income tax in India. The Income Tax Act is applicable to the whole of India and has been effective since 1962. The act explains how the taxable income can be calculated, the Tax Liability, fees and penalties, etc.
Following are the key factors based on which the tax rates are calculated-
You will be applicable to the slab rates only if you fall under one of the categories mentioned below-
A. The income tax brackets are decided in the financial bill which is passed by the parliament for every financial year.
A. The income tax brackets change for every financial year, i.e. starting from April 1 to March 31 (next year).
A. No, the tax rates don’t differ. Both men and women are applying for the equal tax brackets.
A. You can calculate the income tax based on the age category you fall in. Next, check for your salary range and then followed by the respective tax rates. To make your task simple and easy you can always use an online tax calculator instead.
A. You must have an annual salary of less than Rs 2.5 lakhs to get your income tax exempted.
A. ITR means Income Tax Return. An ITR form is filed so as to claim a refund from the income tax department. These forms are available on the official income tax website of the government.
A. The income tax liability is based on the annual income of the person. Your annual income determines what tax bracket you fall under and the respective tax rate that will be applicable.
A. To pay your taxes regularly and easily the Income-tax Act has provisions for tax payment during the year of earning. With this provision, you’ll be able to pay as you earn.
A. Yes, a pensioner is liable to pay tax, unless the pension received is from the United Nations Organisation.
A. Allowances are basically fixed amounts received by salaried personnel by their employers on a periodic Basis. There are three types of allowances for income tax- taxable allowance, fully exempted allowance and partially exempted allowance.
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