Income Tax Slabs and Rates

Income Tax Slabs in India are announced by the finance minister every year. Currently, there are two different Income Tax regimes. Under the new regime, tax benefits cannot be availed. Under the old regime, taxpayers can avail of tax benefits.

Note: You can now file your taxes through the New income tax portal. The new portal comes with a plethora of features and is designed to ease the tax filing process.

What is the Income Tax Slab?

Individual taxpayers will need to pay the income tax based on the slab system they fall under. Depending on the income of the individual, he/she may fall under a different tax slab. Therefore, individuals with a higher income will need to pay more tax. The slab system was introduced to maintain a fair tax system in the country. The slabs tend to change at every budget announcement.

Read about the Union Budget 2021 Highlights:
Income Tax Slabs remain Unchanged
There was no change in income tax slabs for individuals as no announcement was made by Finance Minister Nirmala Sitharaman during the Union Budget 2021. Senior Citizens aged 75 years and above were however exempted from filing income tax if their only source of income was through a pension.

Income Tax Slab for FY 2020-21 (AY 2021-22)

Given below are the various tables for the Revised Income Tax Slabs and rates for the FY 2020-2021 and AY 2021-22:

New Regime Income Tax Slab Rates for for Individual

Income Tax Slab Tax Rate
Up to Rs.2.5 lakh Nil
Above Rs.2.50 - Rs.5 lakh 5% of the total income that is more than Rs.2.5 lakh
Above Rs.5 lakh - Rs.7.50 lakh 10% of the total income that is more than Rs.5 lakh + Rs.12,500
Above Rs.7.50 lakh - Rs.10 lakh 15% of the total income that is more than Rs.7.5 lakh + Rs.37,500
Above Rs.10 lakh - Rs.12.50 lakh 20% of the total income that is more than Rs.10 lakh + Rs.75,000
Above Rs.12.50 - Rs.15 lakh 25% of the total income that is more than Rs.12.5 lakh + Rs.1,25,000
Above Rs.15 lakh 30% of the total income that is more than Rs.15 lakh + Rs.1,87,500

Note: New income tax rates are optional

Things you must keep in mind before opting for the New Tax Slab

There are few things you must keep in mind before opting for the new tax slab:

  • The option can be exercised on or before for every previous year if you as an individual or as a member of a Hindu Undivided Family (HUF) do not have any business income.
  • As a taxpayer, once you choose the next tax regime as your option, you cannot change it during the year. In case you withdraw your option for the next tax regime and revert to the old tax regime, you can opt for the new tax regime during the financial year again.

Given below is an example of how income tax is calculated for FY 2020-21 under the New regime (optional):

Total Income (Gross) Rs.12 lakh
Deductions (80C, 80CCD) -
HRA -
Travel and Medical Allowance -
Income that is Taxable Rs.12 lakh
Up to Rs.2.5 lakh -
Above Rs.2.50 - Rs.5 lakh Rs.12,500
Above Rs.5 lakh - Rs.7.50 lakh Rs.25,000
Above Rs.7.50 - Rs.10 lakh Rs.37,500
Above Rs.10 lakh - Rs.12.50 lakh Rs.40,000
Total Tax that must be Paid Rs.1,15,000

Income Tax slabs & Rates As Per Old Regime FY 2020-21

Given below are the three tables for the alternative Income Tax Slabs:

Income Tax Slab for Individual who are below 60 years

Income Tax slab Tax Rate
Up to Rs.2.5 lakh Nil
Above Rs.2.50 lakh - Rs.5.00 lakh 5% of the total income that is more than Rs.2.5 lakh + 4% cess
Above Rs.5 lakh - Rs.10 lakh 20% of the total income that is more than Rs.5 lakh + Rs.12,500 + 4% cess
Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,12,500 + 4% cess

Individuals who have an income of less than Rs.5 lakh are eligible for tax deductions under Section 87A

Given below is an example of how income tax is calculated under old regime for 3 individuals (A, B, and C):
Components A B C
Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000
Standard Deduction (Rs.) 50,000 50,000 50,000
Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000
House Rent Allowance deductions 82,000 90,000 1,40,000
Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000
Computation of tax on the gross total income
Up to Rs.2.5 lakh (Rs.) Nil Nil Nil
From Rs.2,50,001 to Rs.5 lakh (Rs.) 1,900 12,500 12,500
From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 1,00,000
Above Rs.10 lakh (Rs.) 45,000
Total Tax (Rs.) 1,900 52,500 1,57,500
Deductions under Section 87A (Rs.) 1,900 Nil Nil
Additions of cess (Rs.) Nil 2,100 6,300
Total tax that is payable (Rs.) (Total Tax + cess – Deductions under Section 87A) Nil 54,600 1,63,800

Income Tax Slab between 60-80 years (Senior Citizen)

Income Tax slabs Tax Rate
Up to Rs.3 lakh Nil
Above Rs.3.00 lakh - Rs.5.00 lakh 5% of the total income that is more than Rs.3 lakh + 4% cess
Above Rs.5.00 lakh - Rs.10 lakh 20% of the total income that is more than Rs.5 lakh + Rs.10,500 + 4% cess
Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,10,000 + 4% cess
Given below is an example of how income tax is calculated for 3 individuals (A, B, C):
Components A B C
Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000
Standard deduction (Rs.) 50,000 50,000 50,000
Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000
House Rent Allowance deductions 82,000 90,000 1,40,000
Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000
Computation of tax on the gross total income
Up to Rs.3 lakh (Rs.) Nil Nil Nil
From Rs.3,00,001 to Rs.5 lakh (Rs.) Nil 10,500 10,500
From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 99,500
Above Rs.10 lakh (Rs.) 45,000
Total Tax (Rs.) Nil 50,500 1,55,000
Deductions under Section 87A (Rs.) Nil Nil Nil
Additions of cess (Rs.) Nil 2,020 6,200
Total tax that is payable (Rs.) Nil 52,520 1,61,200

Income Tax Slabs for individual above 80 years (super senior citizen)

Income Tax slabs Tax Rate
Up to Rs.5 lakh Nil
Above Rs.5 lakh - Rs.10 lakh 20% of the total income that is more than Rs.5 lakh + 4% cess
Above Rs.10 lakh 30% of the total income that is more than Rs.10 lakh + Rs.1,00,000 + 4% cess
Given below is an example of how income tax is calculated for 3 individuals (A, B, C):
Components A B C
Annual Salary (Rs.) 5,00,000 10,00,000 15,00,000
Standard deduction (Rs.) 50,000 50,000 50,000
Tax deductions under Section 80C of the Income Tax Act (Rs.) 70,000 1,50,000 1,50,000
House Rent Allowance deductions 82,000 90,000 1,40,000
Gross total income after deductions (Rs.) 2,88,000 7,00,000 11,50,000
Computation of tax on the gross total income
Up to Rs.5 lakh (Rs.) Nil Nil Nil
From Rs,5,00,001 to Rs.10 lakh (Rs.) 40,000 1,00,000
Above Rs.10 lakh (Rs.) 45,000
Total Tax (Rs.) Nil 40,000 1,45,000
Deductions under Section 87A (Rs.) Nil Nil Nil
Additions of cess (Rs.) Nil 1,600 5,800
Total tax that is payable (Rs.) Nil 41,600 1,50,800

For domestic companies, the tax-slabs depend on the turnover, and it is mentioned below:

Turnover Tax Rate
Gross turnover can be a maximum of Rs.250 crore for the previous year 25%
Gross turnover is more than Rs.250 for the previous year 30%
Apart from the above-mentioned tax rate, an additional surcharge and cess are levied. Given below are the details of the surcharge and the cess that will be levied:
  • Cess: 4% of corporate tax
  • Surcharge: In case the taxable income is more than Rs.1 crore but less than Rs.10 crore, the surcharge that will be levied is 7%. In case the taxable income is more than Rs.10 crore, the surcharge that will be levied is 12%.
  • Non-resident Indians: For non-resident Indians, irrespective of their age, the exemption limit is up to Rs.2.5 lakh.

Important Points

  • In case your net income is more than Rs.50 lakh but less than Rs.1 crore, apart from a 4% cess, a 10% surcharge is also levied. If the net is above Rs.1 crore, a 15% surcharge is levied.
  • Compared to last year’s budget, cess has increased from 3% to 4%.

Surcharge rates applicable to Income tax

When an assessee’s income exceeds the limits specified by the Income Tax Department, a surcharge is levied on the amount of the income tax. The rates for a surcharge are being listed below:

For Assessment Year 2021-22

Range of Income Applicable Rate of Surcharge
Rs.50 lakhs to Rs.1 crore 10%
Rs.1 crore to Rs.2 crore 15%
Rs.2 crore to Rs.5 crore 25%
Rs.5 crore to Rs.10 crore 37%
More than Rs.10 crore 37%

For Assessment Year 2022-23

Range of Income Applicable Rate of Surcharge
Rs.50 lakhs to Rs.1 crore 10%
Rs.1 crore to Rs.2 crore 15%
Rs.2 crore to Rs.5 crore 25%
Rs.5 crore to Rs.10 crore 37%
More than Rs.10 crore 37%

FAQs on Income Tax Slabs

  1. Do I need to file Income Tax Return if my annual income is below Rs.2.5 lakh?
  2. You need not file an ITR if your yearly income is below Rs.2.5 lakh but you should file a ‘Nil Return’ just for the record as there are many cases where you can produce them as proof of your employment. For instance, you can provide your ITR while applying for a loan or passport.

  3. How is the income of a taxpayer classified?
  4. Under Section 14 of the Income Tax Act, the taxpayer’s income has been classified under 5 different income heads such as Salaries individuals, Capital gains, Gains/Profits from profession or business, Income from house property, Income from other sources.

  5. Does family pension come under salary income during taxation?
  6. No, family pension will not be taxed under salary income but as ‘income from other sources.’

  7. Who can claim rebate under Section 87A?
  8. Rebate under Section 87A can be claimed by any resident Indian whose total annual income is below Rs.5 lakh. The maximum available rebate under 87A is Rs.12,500.

  9. Will my income be taxed if I am an agriculturist?
  10. Any income which is generated from agriculture or its allied activities will not be taxed. However, it will be considered for rate purpose while calculating tax on any non-agricultural income that you may have.

  11. Is income up to Rs.5 lakh tax-free?
  12. No, income up to Rs.5 lakh is not tax-free. However, individuals who earn an income of up to Rs.2.50 lakh do not have to pay tax.

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