Income Tax Slab Rates for AY 2023-24 – Income tax as the word says income and tax is a kind of tax that is imposed on any person individual or any entity on the income or the profits that they have earned. The income tax is imposed on that taxable income. Talking about the calculation of income tax we can say that income tax is generally a computer or calculated with a very basic and simple formula that is a product of the tax rate multiplied by the times of the taxable income earned by any person.
Income tax is not uniform throughout and for every person in a country the rate of income tax varies according to the type or the characteristics of the individual or the taxpayer and it basically depends on the income of that particular individual or entity as to what they are earning how much there earning and that is calculated accordingly. The basic property of income tax is that rate of tax increases with an increase in the income of the person. This phenomenon is referred to as graduated or progressive tax rates.
Why are Income taxes Slab Rates imposed?
As we have discussed, income tax is imposed on a person’s income or the profits earned by him/her. Income taxes are generally imposed due to the following reasons
- Government revenue- Income tax is the significant revenue of the government of any country. The government collects income tax from the public, used for the public. Government raises the revenue through income tax and other taxes as well for their expenditures. These expenditures are for the development and social service of the country.
- Development of infrastructure- the government uses Income tax revenue to develop the infrastructure of the country. The development of infrastructure is divided into different parts such as energy, roads, telecommunication, information technology, railways, education, etc. Government plays a major role in standing in money collected through taxes on developing the infrastructure.
- Social Development- the government also uses the revenue to bring the balance in the income distribution of the citizens. They also provide different facilities to different income groups in order to develop citizens’ overall per capita income.
- Defense Expenses- the government also uses the revenue generated from taxes in defense expenditures. As it is very important to keep the defense will be equipped because this is the only way a country can be safe from any kind of terrorist attacks.
- Budget Allocations- the government uses tax revenue in budget allocation as well. They provide different budgets for different departments from the revenue collected through taxes.
Not only this government also uses this revenue in any kind of crisis in the market. The government may intervene if the market is unstable.
Types of Income Tax
let’s discuss what are the different types of income imposed in India. There are three types of income tax as follows:
- Wealth Tax- these are the direct taxes that are generally paid for an individual income. The income tax is required to be paid even if an individual owns a property is respective of the fact if they are earning from the property or not.
- Corporate Tax- In India, even International corporate organizations also are required to pay corporate tax. The corporate taxes of generally for the domestic companies which have different entities from holders or any foreign company who is doing business in India and are earning are also entitled to pay corporate tax to the government. They are required to pay taxes like FBT, MAT, STT, etc.
- Capital Gains Tax- this task is generally imposed on the activity that includes the sales of any kind of asset or any investments. This is can be good like property, machinery, equipment, etc. It is also imposed on sales of investments like shares, bonds, etc.
Income tax evolution
The income tax in India has been evolving since 1860. There were a lot of changes made since then, to know the history of income tax let’s start from the year 1860.
In 1860
- The income tax was introduced by James Wilson in the year 1860. Initially introduced the union budget in order to recover the losses beard by the government which is a military mutiny in 1857. They initially introduced taxes on income like property, professions and trades, security and salaries, and pensions.
In 1886
- Aaj to Income tax required a lot of amendments so there were few amendments made such as the taxable impose on 4 types of income. This income is from salaries, pension, gravity, net profits of the organization, interest on security by the Government of India, and other sources of income.
In 1918
- There were new taxes that would be introduced in 1918 and other server important changes are made.
In 1922
- In this year again the amendments were made but these amendments were innumerable there for the women look at law commission in 1956 and also prevent evasion of taxes.
In 1961
- In the year 1961, the amendment was again needed, and this time the Income-tax act 1961 was applicable in the whole of India including Jammu and Kashmir.
The Income-tax Act is mentioned in the union budget every year.
Currently, income tax acts or is imposed on the incomes like salary, house property, profits and gains of business or profession, capital gains, and other sources of income.
What is Slab System?
A slab system is a system that shows what are the different percentages and different ranges of income. The government has imposed higher tax dates rates on higher incomes and lower on lower incomes. The income tax is generally taken from an individual who earns more than 2.5 lakh per annum. These clubs are different for different income groups as well as for different categories of taxpayers.
We also need to understand that there are three types of taxpayers in India:
- Individuals whose age is less than 60 years. These individuals can be residents and non-residents.
- Resident Senior citizens whose age is between 60 years to 80 years.
- Resident Super Senior citizens whose age is greater than 80 years
One of the major and important conditions of the Income-tax act 1961 is that the slabs for each taxpayer are different from each other in the old tax regime whereas in a new tax regime the rates are the same for all the taxpayers.
Income Tax Slab Rates of New Tax Regime
Discuss the new Income tax labs read financial year 20 21 to 2022 (AY 2022-2023).
First, we will discuss the new tax regime
- We can say for individuals who are earning between Rs. 0 to Rs. 2.5 lakhs for annum is not required to pay any taxes on their income, due to very less income.
- For individuals earning between Rs. 2.5 lakh to Rs. 5 lakhs are liable to pay 5% (tax rebate u/s 87a is available), which means they do not have to pay any tax under this act.
- For those individuals whose income is between Rs. 5 lakhs to Rs. 7.50 lakhs how to pay 10% of their income to the government.
- For the individuals whose income is between Rs. 7.5 lakhs to Rs. 10 lakhs has to pay 15% of the income.
- For the individuals whose income is between Rs. 10 lakhs to Rs. 12.50 lakhs are liable to pay 20% tax on their income.
- The individuals whose income is between Rs. 10 lakhs to Rs. 12.5 lakhs have to pay 25% of their income and tax to the government.
- The individuals whose income is between Rs. 12.5 lakhs to Rs. 15 lakhs have to pay 25% of their income and tax to the government.
- Those individuals whose income is more than 15 lacs have to pay 30% of the income as taxes to the government.
Surcharge tax
Rates as per the new tax regime are as follows:
- For the person having a total income of less than Rs. 50 lacs will be charged at 10%.
- The person having a total income of less than Rs. 1 crore will be charged 15%.
- The person having a total income of less than Rs. 2 crores will be charged 25%.
- The person having a total income of less than Rs. 5 crores will be charged 37%.
We can also observe that is an additional health and education cess that applies to all income tax situations at the rate of 4%.
Slabs for Old Tax Regime
These slabs in the old tax region were divided into three parts: individuals under 60 years, individuals between 60 to 80 years that are resident seniors, and individuals that are residence super seniors each more than 80 years.
For Individuals under 60 years old the slabs were as follows:
- The individual whose total income per annum is up to Rs 2.5 lakhs was not liable to pay any tax, due to low income.
- For the individuals earning between Rs. 2.5 lakhs to Rs. 5 lakhs, were charged tax at the rate of 5% on their income per annum.
- The individuals earning between Rs. 5 lakhs to Rs. 10 lakhs, were charged tax at the rate of 20% on their income per annum.
- The individuals earning more than Rs. 10 lakhs, were charged tax at the rate of 30% on their income per annum.
Surcharge Rates
- For the individuals earning more than Rs. 50 lacs up to Rs 1 crore will be charged 10% of the income tax.
- The individuals who are total income is more than Rs. 1 crore will be charged at the rate of 15%.
For individuals above 60 years, up to 80 years of tax slabs were
- The individual whose total income per annum is up to Rs 2.5 lakhs was not liable to pay any tax, due to low income.
- For the individuals earning between Rs. 2.5 lakhs to Rs. 5 lakhs, were charged tax at the rate of 5% on their income per annum.
- The individuals earning between Rs. 5 lakhs to Rs. 10 lakhs, were charged tax at the rate of 20% on their income per annum.
- The individuals earning more than Rs. 10 lakhs, were charged tax at the rate of 30% on their income per annum.
- Senior citizens who are above 60 years up to 80 years are exempted to the limit of Rs. 3 lacs.
Surcharge Rates
- For the individuals earning more than Rs. 50 lacs up to Rs 1 crore will be charged 10% of the income tax.
- The individuals who are total income is more than Rs. 1 crore will be charged at the rate of 15%.
For individuals above 80 years, the tax slabs were
- For the individuals earning between Rs. 0 to Rs. 2.5 lakhs, were not charged at tax rate for their annual income.
- For the individuals earning between Rs. 2.5 lakhs to Rs. 5 lakhs, were charged tax at the rate of 5% on their income per annum.
- The individuals earning between Rs. 5 lakhs to Rs. 10 lakhs, were charged tax at the rate of 20% on their income per annum.
- The individuals earning more than Rs. 10 lakhs, were charged tax at the rate of 30% on their income per annum.
Surcharge Rates
- For the individuals earning more than Rs. 50 lacs up to Rs 1 crore will be charged 10% of the income tax.
- The individuals who are total income is more than Rs. 1 crore will be charged at the rate of 15%.
In New Tax Regime there is a list of common exemptions and dedications that are not allowed are as follows:
Leave travel allowance, House rent allowance, conveyance allowance, daily expenses in the course of employment, children’s education allowance, professional tax, relocation allowance, helper allowance, etc.
The list of deductions that are allowed as per the new tax regime is
Transportation allowances for persons with disabilities, transportation allowances to cover expenses incurred during traveling for work, investments in notification pension schemes under section 80CCD(2), new employment deductions under 80JJAA, depreciation laws under section 32 of the Income Tax excluding additional depreciation, or allowance for travel or travel.
Domestic Companies- Income Tax Slab
The tax slabs are divided into two parts such as normal tax rate and special tax rates for the domestic Companies.
Normal Tax Rates
For the assessment year 2021-22
- In the case with gross receipt of the company does not exceed Rs. 400 crore in the previous year (2018-2019), the tax rate will be charged at 25%.
- In the case with gross receipt of the company does not exceed Rs. 400 crore in the previous year (2019-2020), no taxes will be charged.
- In the case of any other domestic company, the tax rate was 30%.
For the assessment year 2022-23
- In the case with gross receipt of the company does not exceed Rs. 400 crore in the previous year (2018-2019), no tax will be charged.
- In the case with gross receipt of the company does not exceed Rs. 400 crore in the previous year (2019-2020), the tax rate will be charged at 25%.
- In the case of any other domestic company, the tax rate was 30%.
For Special Tax Rates
For the year 2021-2022 and 2022-2023
- When the domestic company has opted for section 115BA, 25% will be charged to them.
- When the domestic company has opted for section 115BAA, 22% will be charged to them.
- When the domestic company has opted for section 115BAB, 15% will be charged to them.
Surcharge
- For the business earning between Rs 1 crore to Rs. 10 crores, the tax will be charged at the rate of 7%.
- A company having more than Rs. 10 crore income will be charged at the rate of 12%.
Conclusion
This data is directly collected from the government’s website, therefore it is reliable data. These are the slabs of income tax published by the government of a square here 2022-23 (AY 2023-24).
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