scorecardresearchBudget 2023: Current income tax slabs in India; Check details

Budget 2023: Current income tax slabs in India; Check details

Updated: 06 Dec 2022, 10:32 AM IST
TL;DR.
  • The Government of India has laid down certain income tax slabs according to which taxes are to be paid by individuals, companies, and other entities. For individuals below 60 years of age, income up to 2.5 lakhs is exempt from tax, 5% tax is applicable on income between 2.5 lakhs and 5 lakhs, 20% tax is applicable on income between 5 lakhs and 10 lakhs, and 30% tax is applicable on income above 10 lakhs.
The Centre has granted income tax exemption to CERSAI (Photo: iStock)

The Centre has granted income tax exemption to CERSAI (Photo: iStock)

Income tax is an important source of revenue for the Government of India. It is a form of direct taxation which is levied on the income of an individual or business entity. The Government of India has laid down certain income tax slabs according to which the tax is calculated. These income tax slabs are revised from time to time and the current income tax slabs applicable for the financial year 2020-21 (AY 2021-22) are discussed in this article.

The Indian Income Tax Act provides for four different tax slabs under which taxes are to be paid. These tax slabs vary according to the age, gender, and tax residency status of the taxpayer.

Income Tax Slab for Individuals (below 60 years of age):

1. Income up to 2.5 lakhs is exempt from tax.

2. Income between 2.5 lakhs and 5 lakhs is taxed at 5%.

3. Income between 5 lakhs and 10 lakhs is taxed at 20%.

4. Income above 10 lakhs is taxed at 30%.

Income Tax Slab for Senior Citizens (above 60 years of age):

1. Income up to 3 lakhs is exempt from tax.

2. Income between 3 lakhs and 5 lakhs is taxed at 5%.

3. Income between 5 lakhs and 10 lakhs is taxed at 20%.

4. Income above 10 lakhs is taxed at 30%.

Income Tax Slab for Super Senior Citizens (above 80 years of age):

1. Income up to 5 lakhs is exempt from tax.

2. Income between 5 lakhs and 10 lakhs is taxed at 20%.

3. Income above 10 lakhs is taxed at 30%.

Income Tax Slab for Domestic Companies:

1. Income up to 10 lakhs is taxed at 25%.

2. Income above 10 lakhs is taxed at 30%.

Income Tax Slab for Foreign Companies:

1. Income up to 10 lakhs is taxed at 40%.

2. Income above 10 lakhs is taxed at 45%.

In addition to the above income tax slabs, there are certain deductions and exemptions available under the Indian Income Tax Act which can reduce an individual’s or a company’s tax liability. These include deductions under Section 80C of the Act, deductions for interest paid on home loans, investments in Public Provident Fund and National Savings Certificate, deductions for medical insurance premiums, and deductions for donations to certain charitable organisations.

The Government of India has also introduced certain tax reforms in the recent past which have helped to reduce the tax burden of individuals and companies. These reforms include the introduction of the Direct Tax Vivad Se Vishwas Scheme, which allows taxpayers to settle their tax disputes with the Government without any penalty or interest; the introduction of the Tax Collected at Source (TCS) scheme, which requires buyers to deduct tax at source when making payments to suppliers; and the introduction of the Goods and Services Tax (GST) regime, which has replaced multiple indirect taxes with a single unified tax.

In conclusion, it can be said that the Government of India has laid down certain income tax slabs according to which taxes are to be paid by individuals, companies, and other entities. These tax slabs vary according to the age, gender, and tax residency status of the taxpayer. In addition, there are certain deductions and exemptions available under the Indian Income Tax Act which can reduce an individual’s or a company’s tax liability. Furthermore, the Government of India has also introduced certain tax reforms in the recent past which have helped to reduce the tax burden of individuals and companies.

 

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First Published: 06 Dec 2022, 10:32 AM IST