Introduction
The Income Tax Slabs in India applied for Financial Year 2022-23 and Assessment Year 2023-24 will remain unchanged according to the latest Union Budget announced by Finance Minister Nirmala Sitharaman. There are two different tax regimes, the ‘New Regime’ where tax benefits cannot be availed and the ‘Old Regime’, under which taxpayers can avail of tax benefits. Older citizens aged 75 and above were given an exemption from filing income tax if their sole source of income was a pension. An ITR (Income Tax Return) Slab is determined by individuals’ incomes with those earning more paying higher amounts. This bracketed system for calculating taxes owed was established to promote fairness in taxes and is subject to change during budget announcements.
Old tax regime
The old tax regime allowed for the claiming of deductions, exemptions, and allowances, which could be used for effective tax planning and savings. However, the existing tax structure has become complex despite high tax rates. Nevertheless, there are still various strategies that individuals can employ to lower their tax obligation.
The Indian government has included approximately 70 exemptions and deduction choices in the Income Tax Act over the years. These allow taxpayers to reduce their taxable income and pay less tax. Certain exemptions like House Rent Allowance (HRA) and Leave Travel Allowance (LTA) are included in income, while deductions can be used to lower taxes by investment or spending on specific items.
One prominent and widely used deduction is Section 80C which allows a reduction of taxable income by up to Rs.1.5 lakh. There exist several more popular exemptions and deductions that are available for taxpayers to take advantage of.
| Income Tax Slabs (Rs.) | Old Tax Rates | Old Tax Rates (Rs.) |
| 0-2,50000 | 0% | Nil |
| 2,50001-5,00000 | 5% | 12,500 |
| 5,00001-7,50000 | 20% | 50,000 |
| 7,50001-10,00000 | 20% | 50,000 |
| Above 10,00000 | 30% | 75,000 |
Note:
1. The rates of Surcharge and Health & Education cess are the same under both tax regimes
2. Rebate u/s 87-A Resident Individual whose Total Income is not more than ₹ 5,00,000 is also eligible for a Rebate of up to 100% of income tax or ₹ 12,500, whichever is less.
Choosing between the old and the new tax regime
When it comes to deciding between the old and new tax regimes, you need to carefully weigh the pros and cons according to your income. The old tax regime offers more deductions and exemptions than the new one, but it also has higher tax slab rates. To find out which regime will give you the lowest tax liability, use the online calculator provided by the Income Tax Department and compare your liability under both regimes. Then, depending on which one gives you a lower tax burden, make your choice accordingly.
New tax regime u/s 115BAC
The income tax system in India consists of two regimes – old and new. Let’s first take a look at the new tax regime, which features six tax slabs with lower rates on income up to Rs. 15 lakhs. However, to provide these reduced rates, multiple exemptions and deductions aren’t available due to varying income slabs and tax rates. As a result, there are pros and cons to the new regime.
| Up to Rs 3,00,000 | Exempt from tax | 0 |
| Rs 3,00,000 to Rs 6,00,000 | 5% (5% of Rs 6,00,000 less Rs 3,00,000) | 15000 |
| Rs 6,00,000 to Rs 9,00,000 | 10% (10% of Rs 9,00,000 less Rs 6,00,000) | 30000 |
| Rs 9,00,000 to Rs 12,00,000 | 15% (15% of Rs 12,00,000 less Rs 9,00,000) | 45000 |
| Rs 12,00,000 to Rs 15,00,000 | 20% (20% of Rs 15,00,000 less Rs 12,00,000) | 60000 |
| More than Rs Rs 15,00,000 | 30% (30% of Rs 20,42,000 less Rs 15,00,000) | 162600 |
Note:
According to the new tax slab and new regime up to 7,00,000 income no tax is given in which 50,000 standard deduction claim for NPS.
For example, if your income is 7.5 lac, then a standard deduction of 50000 will be available, due to which our income will be 7 lac and from which no tax will be payable at home. This calculated tax amount up to 7 lac tax amount 25000/- rebate u/s 87A.
For example, if your income is 7.5 lac, then a standard deduction of 50000 will be available, due to which our income will be 7 lac and from which no tax will be payable at home.
Income Tax Slab Rates for Old Vs New Tax Regime
| Old tax regime | Tax rate % | new tax regime | tax rate % |
| Up to 2,50,000 Rs | Nil 0% | Up to 3,00,000 Rs | 0% |
| 2,50,001 to 5,00,000 | 5% (12500 Rs ) Rebate u/s 87A | 3,00,000 to 6,00,00 Rs | 5% ( 15,000 Rs) |
| 5,00,001 to 10,00,000 | 20% (12500 Rs + 20% Above 5,00,000 Rs) | 6,00,001 to 9,00,000 | 10 % (15,000 + 10% Above 6,00,000 Rs ) Up to 7,00,000 rs Tax amount 25000 Rs Rebate U/S 87A |
| Above 10,00,000 Rs | 30% ( 1,12,500Rs +30% Above 10,00,000 Rs ) | 9,00,001 to 12,00 000 | 15% (15000 + 30000 + 15 % Above 9,00,000 rs ) |
| 12,00,001 to 15,00,000 | 20% (15,000+30,000+45,000 +20% Above 12,00,000 Rs) | ||
| Above 15,00,000 Rs | 30% (15,000 + 30,000 + 45,000 + 60,000 + 30% Above 15,00,000 Rs |
So, you can see here the difference between old and new tax regimes and choose any one as well as a better option. In the new tax regime, the taxable amount is 7,00,000 Rs Tax rate in rupees 25,000 Rs rebate U/S 87A full refund.
Switching between the old and the new tax regimes
The income tax laws allow you to switch between the old and the new tax regimes. However, the switch is subject to the following conditions
- If you receive income from salary, capital gains, property, or other sources, you can switch between the old and new tax regimes multiple times each financial year.
- if your taxable income comes from a business or profession, then you are only allowed to make the switch once.
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yes, except for business or profession
The old income tax regime continues with the existing tax exemptions and deductions. The new income tax regime offers lower income tax rates and more slabs with no option of availing tax exemptions and deductions.
up to 7,00,000
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