ITR

• Income Tax Slab
• Income Tax in India
• Residential Status
• Tax Regime Old Vs New
• Deduction
• House Rent Allowance (HRA)

Income Tax Slab, Types of Tax Payers

 

Income Tax Slab

As per Income Tax Act, 1961, Income tax is levied on individual taxpayers on the basis of a slab system where different tax rates have been applied for different slabs. These slabs are tweaked by the government in the annual budget announcements.

Types of Tax payers for the purpose of income tax in India includes:

  ·  Individuals, Hindu Undivided Family (HUF), Association of Persons(AOP) and Body of Individuals (BOI)

  ·  Firms

  ·  Companies

As per Income Tax Act 1961 each of these taxpayers is taxed differently. The income earned individuals will determine the income tax slabs under which they fall. The lower the income, the lower the tax liability, and those who earn less than Rs.2.5 lakh p.a. are exempt from tax. While Indian companies and Firms have a fixed rate of tax of 30% of profits, the individual, HUF, AOP and BOI taxpayers are taxed based on the income slab they fall under.

Individual categories on taxpayers

Individuals have been categorized into three categories of taxpayers:

  1.  Individuals who are below the age of 60 years

  2.  Senior citizens who are between 60 years and 80 years old.

  3.  Super senior citizens who are above 80 years old.

 

Income Tax slab and rates for Financial Year 2021-22

Option 1 (New Tax Regime)

Income tax slab for individuals who are less than 60 years old (FY 2021-22 AY 2022-23)

 

Income tax slab for Senior Citizens individuals who are more than 60 years old but less than 80 years old (FY 2021-22 AY 2022-23) :

 

Income tax slab for Super Senior Citizens individuals who are more than 80 years old (FY 2021-22 AY 2022-23):

 

Note:

1.    An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

2.    10% surcharge is applicable on income tax if income exceeds Rs. 50 lakh but upto Rs. 1 crore.

3.    15% surcharge is applicable on income tax if income exceeds Rs. 1 crore

 

Option 2 (Old Tax Regime)

Income tax slab for individuals who are less than 60 years old (FY 2021-22 AY 2022-23)

 

Income tax slab for Senior Citizens individuals who are more than 60 years old but less than 80 years old (FY 2021-22 AY 2022-23) :

 

Income tax slab for Super Senior Citizens individuals who are more than 80 years old (FY 2021-22 AY2022-23):

 

Note:

1.    An additional 4% Health & education cess will be applicable on the tax amount calculated as above.

2.    10% surcharge is applicable on income tax if income exceeds Rs. 50 lakh but upto Rs. 1 crore.

3.    15% surcharge is applicable on income tax if income exceeds Rs. 1 crore

 

Note : Taxpayer can opt any one option (Option 1 or Option 2) for Tax Slab Rate

 

Income Tax Rebate under section 87A

A resident Individual whose total income after deduction under section 80 does not exceed Rs. 5 lakh, can claim Rebate u/s 87A of Income Tax Law in India.

The rebate under section 87A is limited to Rs 12,500. This means that if the total tax payable is lower than Rs 12,500, then that amount will be the rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess (4%).

Exceptions to the Tax Slab

One must bear in mind that not all income can be taxed on slab basis. Capital gains income is an exception to this rule. Capital gains are taxed depending on the asset you own and how long you’ve had it. The holding period would determine if an asset is long term or short term. The holding period to determine nature of asset also differs for different assets. A quick glance of holding periods, nature of asset and the rate of tax for each of them is given below.

Residents and non residents:

Levy of income tax in India is dependent on the residential status of a taxpayer. Individuals who qualify as a resident in India must pay tax on their global income in India i.e. income earned in India and abroad. Whereas, those who qualify as Non-residents need to pay taxes only on their Indian income. The residential status has to be determined separately for every financial year for which income and taxes are computed. Click here to know more about Residential Status.