In the Union Budget 2020, the Indian government announced a new income tax regime with revised income tax slabs for individuals. This new tax regime offers lower tax rates for those willing to forego tax exemptions and deductions. Let’s take a look at the new income tax slabs in India.
Income tax slabs for FY 2021-22
The income tax slabs for FY 2021-22 (assessment year 2022-23) under the new tax regime are as follows:
- For individuals below 60 years of age:
| Income Range | Tax Rate |
|---|---|
| Up to Rs. 2.5 lakh | Nil |
| Rs. 2.5 lakh – Rs. 5 lakh | 5% |
| Rs. 5 lakh – Rs. 7.5 lakh | 10% |
| Rs. 7.5 lakh – Rs. 10 lakh | 15% |
| Rs. 10 lakh – Rs. 12.5 lakh | 20% |
| Rs. 12.5 lakh – Rs. 15 lakh | 25% |
| Above Rs. 15 lakh | 30% |
- For senior citizens (aged between 60 and 80 years):
| Income Range | Tax Rate |
|---|---|
| Up to Rs. 3 lakh | Nil |
| Rs. 3 lakh – Rs. 5 lakh | 5% |
| Rs. 5 lakh – Rs. 7.5 lakh | 10% |
| Rs. 7.5 lakh – Rs. 10 lakh | 15% |
| Rs. 10 lakh – Rs. 12.5 lakh | 20% |
| Rs. 12.5 lakh – Rs. 15 lakh | 25% |
| Above Rs. 15 lakh | 30% |
- For super senior citizens (aged 80 years and above):
| Income Range | Tax Rate |
|---|---|
| Up to Rs. 5 lakh | Nil |
| Rs. 5 lakh – Rs. 7.5 lakh | 10% |
| Rs. 7.5 lakh – Rs. 10 lakh | 15% |
| Rs. 10 lakh – Rs. 12.5 lakh | 20% |
| Rs. 12.5 lakh – Rs. 15 lakh | 25% |
| Above Rs. 15 lakh | 30% |
As per the new income tax slabs, individuals with an annual income of up to Rs. 5 lakh will not be required to pay any income tax. However, those earning between Rs. 5 lakh and Rs. 7.5 lakh will have to pay a 5% tax, while those with an annual income between Rs. 7.5 lakh and Rs. 10 lakh will have to pay a 10% tax. For individuals earning between Rs. 10 lakh and Rs. 12.5 lakh, the tax rate is 20%, and those earning between Rs. 12.5 lakh and Rs. 15 lakh will have to pay a 25% tax. Finally, individuals earning above Rs. 15 lakh will be required to pay a 30% tax.
It is important to note that the new tax regime is optional. Taxpayers can choose between the old tax regime and the new one based on their financial situation and tax planning needs. Those who choose to stick with the old regime will continue to pay taxes according to the previous income tax slabs.
Final Thoughts
The new income tax slabs in India offer lower tax rates for those willing to give up exemptions and deductions. This is a move towards a simplified and less complicated tax regime. Taxpayers can choose between the old and new tax regimes based on their income, expenses, and financial goals. Before deciding on the best option, it is recommended to consult with a tax professional or financial advisor.