Individual taxpayers in India are taxed based on a slab system. Income tax slabs refer to different tax rates applied to different income ranges. These tax rates increase as the taxpayer’s income increases. Typically, this type of taxation allows for progressive and fair tax systems. Every year, the tax slab structure changes during the Union budget.
“Individual taxpayers” can be classified into three categories as per Indian Income Tax:
- Individuals under the age of 60, including residents and non-residents
- Resident Senior citizens (60 to 80 years of age)
- Resident Super senior citizens (aged more than 80 years)
Income Tax Slabs & Rates as Per Old Regime FY 2023 – 24
Income Tax Slab for Individuals who are below 60 years
| Income Tax slab | Tax Rate |
|---|---|
| Up to ₹ 2.5 lakh | Nil |
| Above ₹ 2.50 lakh – ₹ 5.00 lakh | 5% of the total income that is more than ₹ 2.5 lakh + 4% cess |
| Above ₹ 5 lakh – ₹ 10 lakh | 20% of the total income that is more than ₹ 5 lakh + ₹ 12,500 + 4% cess |
| Above ₹ 10 lakh | 30% of the total income that is more than ₹ 10 lakh + ₹ 1,12,500 + 4% cess |
Individuals who have an income up to ₹ 5 lakh are eligible for tax deductions under Section 87A
Example – Given below is an example of how income tax is calculated under old regime for 3 individuals (A, B, and C):
| Components | A | B | C |
|---|---|---|---|
| Annual Salary (₹) | 5,00,000 | 10,00,000 | 15,00,000 |
| Standard Deduction (₹) | 50,000 | 50,000 | 50,000 |
| Tax deductions under Section 80C of the Income Tax Act (₹) | 70,000 | 1,50,000 | 1,50,000 |
| House Rent Allowance deductions | 92,000 | 100,000 | 1,50,000 |
| Gross total income after deductions (₹) | 2,88,000 | 7,00,000 | 11,50,000 |
| Computation of tax on the gross total income | |||
| Up to ₹ 2.5 lakh (₹) | Nil | Nil | Nil |
| From ₹ 2,50,001 to ₹ 5 lakh (₹) | 1,900 | 12,500 | 12,500 |
| From ₹ 5,00,001 to ₹ 10 lakh (₹) | 40,000 | 1,00,000 | |
| Above ₹ 10 lakh (₹) | 45,000 | ||
| Total Tax (₹) | 1,900 | 52,500 | 1,57,500 |
| Deductions under Section 87A (₹) | 1,900 | Nil | Nil |
| Additions of cess (₹) | Nil | 2,100 | 6,300 |
| Total tax that is payable (₹) (Total Tax + cess – Deductions under Section 87A) | Nil | 54,600 | 1,63,800 |