Income Tax: How much tax do you need to pay? Check slab rates here

Income tax is an amount that an individual or organisation has to pay to the government as part of their income. Both residents and non-residents are liable to pay tax on their income. While residents have to pay tax on income earned anywhere in the world, non-residents are responsible to pay tax only on the income accrued in India.

In India, a progressive slab system is followed according to which individuals pay taxes as per the rate of the slab their income falls under. Under the progressive system, the tax rate rises as the taxable income increases. The slab rates are revised and announced for every financial year in the Union budget.

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Income tax slab rates in India

The current slab rates as per the assessment year 2022-23 start from five percent for income within the range of Rs 2.5 lakh – Rs 5 lakh. Individuals who earn less than Rs 2.5 lakh are exempt from paying income tax.

Individuals with an income range of Rs 5 – 10 Lakhs are subject to pay Rs. 12,500 + 20 percent of income that exceeds Rs 5 lakh and those who earn more than Rs 10 lakh are meant to pay Rs. 1,12,500 + 30 percent of income that exceeds Rs 10 lakh.

For example, an individual with taxable income of Rs 11 lakh will have to pay 1,12,500 + 30 percent of 1 lakh (11 lakh - 10 lakh) i.e. 1,25,000 + 30,000. An individual has the option to choose between the old and new tax regime at the time of filing the Income Tax Return (ITR). The slabs for the ‘new’ tax regime are decided for every financial year. In addition, the slab rates are different for senior and super senior citizens.

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Senior citizens are not supposed to pay any income tax up to a limit of Rs 3 lakh. Above that, there is a 5 percent tax on income between Rs 3 lakh to Rs 5 lakh. On income between Rs 5 lakh to Rs 10 lakh, the tax rate is Rs. 10,000 + 20 percent, and Rs. 1,10,000 + 30 percent on income above Rs 10 lakh.

Income tax is an important source of tax revenue for the government. It is the duty of all income-earning individuals to pay the income tax they are meant to pay to fulfil their obligation towards the nation.