Income Tax Slabs in India are announced by the finance minister every year. This year, the finance minister Nirmala Sitharaman has announced the Union Budget for 2023 on 1 February 2023. In the latest budget, certain changes to the existing income tax slab has been introduced. Currently, there are two different Income Tax regimes. Under both the new regime and the old regime, taxpayers can avail tax benefits.
The finance minister announced that under the new tax regime the rebate for income tax has been increased to Rs.7 lakh from the earlier limit of up to Rs.5 lakh. There were certain changes under the tax slab for the new tax regime too. Apart from that surcharge rate on income of Rs.5 crore and above has been decreased from 37% to 25%.
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.
New Income Tax Slab for FY 2023 – 2024
Given below are the various tables for the Revised Income Tax Slabs and rates for the FY 2023 – 2024:
| Income Tax Slab | Income Tax Rate |
| Up to Rs.3 lakh | Nil |
| Rs.3 lakh – Rs.6 lakh | 5% |
| Rs.6 lakh – Rs.9 lakh | 10% |
| Rs.9 lakh – Rs.12 lakh | 15% |
| Rs.12 lakh – Rs.15 lakh | 20% |
| Above Rs.15 lakh | 30% |
Note: New income tax rates are optional
Things you Must Keep in Mind before opting for New Regime
There are few things you must keep in mind before opting for the new regime:
- 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.
Deductions and Exemptions under New Tax Regime
Certain deductions and exemptions that are present under the old tax regime will not be applicable under the new tax regime. Around 70 deductions and exemptions that are present in the old tax regime will not be applicable in the new tax regime. Some of the common deductions that are allowed and not allowed in the new tax regime are mentioned below:
Deductions that are Allowed
- Travelling allowance in the case of transfer or for employment
- Apart from additional depreciation, other deductions under Section 32
- Deduction under Section 80JJAA for new employees (employment)
- Any investments that are made in the Notified Pension Scheme (Section 80CCD(2))
- Any conveyance allowance due to work travel
- Specially abled individuals will be provided transport allowance
Deductions that are Not Allowed
- Housing Loan interest under Section 24
- Professional tax
- Standard deduction on salary
- Special allowances under Section 10(14).
- Children education allowance
- Helper allowance
- Relocation allowance
- Conveyance allowance
- House Rent Allowance
- Leave Travel Allowance
Given below is an example of how income tax is calculated for FY 2023-24 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.3 lakh | – |
| Above Rs.3 lakh – Rs.6 lakh | Rs.15,000 |
| Above Rs.6 lakh – Rs.9 lakh | Rs.30,000 |
| Above Rs.9 lakh – Rs.12 lakh | Rs.45,000 |
| Above Rs.12 lakh – Rs.15 lakh | – |
| Total Tax that must be Paid | Rs.90,000 |
Income Tax slabs & Rates as Per Old Regime FY 2023 – 2024
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
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 |
| 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.) | NIL | 40,000 | 1,00,000 |
| Above Rs.10 lakh (Rs.) | NIL | NIL | 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 for Senior Citizens (60 to 80 years)
New and old income tax slabs for senior citizens are as follows:
| 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 |
| 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.) | Nil | 40,000 | 99,500 |
| Above Rs.10 lakh (Rs.) | Nil | Nil | 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 Depends on Turnover as 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%.
New Tax Slab Rates for Domestic Companies
| Type | Old regime Tax rates | New Regime Tax rates |
| Company chooses section 115BAB and is registered on or after 1 October 2019 and has commenced manufacturing on or before 31 March, 2023. | – | 15% |
| Company chooses Section 115BAA, wherein the total income of a company has been calculated where specified deductions, incentives, exemptions and additional depreciation have not been claimed | – | 22% |
| Company chooses section 115BA registered on or after 1 March 2016 and are engaged in manufacture of any item and no deduction claim as specified in the section clause has been made. | – | 25% |
| If a company’s turnover is less than Rs. 400 crore in the previous year 2018-19 | 25% | 25% |
| Any other domestic company | 30% | 30% |