Here’s how income tax slabs work in India


In India, taxes vary according to income. And different tax slabs correspond to how much one is liable to pay.

Here’s a look at some key terms:

Income tax slabs

Income tax slabs refer to different levels of income and their corresponding tax liabilities. They apply to individuals, Hindu Undivided Families (HUFs), Body of Individuals (BOIs), Association of Persons (AOPs), and co-operative societies.

Individuals, HUFs, AOPs, BOIs

There are four income tax slabs for individuals, HUFs, AOPs, BOIs. The first slab of income has an upper limit of ₹250,000 and is exempt from tax. Here are the other four slabs:

Income Tax Payable

Slab

Income range

Taxes applicable

1

Income below ₹ 2,50,000

No tax

2

Income between ₹ 2,50,000 and ₹ 5,00,000

10% of income

3

Income between ₹ 5,00,000 and ₹ 10,00,000

20% of income

4

Income above ₹ 10,00,000

30% of income



Case study - 1

Let us assume an individual in India makes an income of ₹7,00,000. In this case, his earnings up to ₹2,50,000 are exempt from tax. However, he will have to pay 10% tax on any income between ₹2,50,000 and ₹5,00,000. That means a tax liability of ₹25,000. For the income above ₹5,00,000, the tax payable will be 20%, which will work out to ₹40,000 (20% of ₹2,00,000). So considering these different income tax slabs, the total tax of ₹65,000 will be payable.

Senior citizens

There are four income slabs for senior citizens in the age group 60 - 80. Different from general individuals, they are not liable to pay any tax up to ₹3,00,000.

Income Tax Payable by senior citizens

Slab

Income range

Taxes applicable

1

Income below ₹ 3,00,000

No tax

2

Income between ₹ 3,00,000 and ₹ 5,00,000

10% of income

3

Income between ₹ 5,00,000 and ₹ 10,00,000

20% of income

4

Income above ₹ 10,00,000

30% of income



Super Senior Citizens

In case of super senior citizens above the age of 80, there are three income slabs. Super senior citizens are not liable to pay any tax until their income crosses the upper limit of ₹5,00,000.

Income Tax Payable by super senior citizens

Slab

Income range

Taxes applicable

1

Income below ₹ 5,00,000

No tax

2

Income between ₹ 5,00,000 and ₹ 10,00,000

20% of income

3

Income above ₹ 10,00,000

30% of income



Co-operative Societies

There are three income slabs considered in case of co-operative societies to calculate income taxes payable.

Income Tax Payable by co-operative societies

Slab

Income range

Taxes applicable

1

Income up to ₹10,000

10% of income

2

Income between ₹10,000 and ₹20,000

20% of income

3

Income above ₹ 20,000

30% of income



In summary, we can say that the Indian taxation laws do not calculate income tax payable on a flat rate. And the slabs help calculate total taxes.
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