According to the IT Act, 1961, tax payment is mandatory for both individuals and corporate bodies if the annual income exceeds the minimum exemption limit. Taxpayers are also entitled to various deductions under the same Act. However, they must be familiar with the concept of income tax slab and associated tax rates to claim such benefits successfully.
Typically, income tax slab are income limits under which taxpayers are divided based on their annual earnings. An individual’s age is also a deciding factor when it comes to grouping them under a specific slab. Each of such income segregation comes with different tax rates, and the same may be amended and revised yearly during the budget session.
These following highlights the current Income Tax Slab - a complete guide about tax slabs in India under the old regime for those below 60 years of age.
● An yearly income of up to Rs.2.5 lakh remains exempt from any tax implication.
● Income between Rs.2,50,001 to Rs.5,00,000 is taxable at the rate of 5%.
● Income between Rs.5,00,001 to Rs.10,00,000 attracts tax at the rate of 20% + Rs.12,500.
● An income above Rs.10,00,001 attracts Rs.1,12,500 along with 30% of the aggregate income, minus the Rs.10,00,000, as tax.
The new regime comes with a different slab rate for income tax, which also foregoes 70 deductions and exemptions.
A fair understanding of which slab rate one belongs to comes in handy while filing for income tax returns and becoming familiar with related clauses. For instance, home loan borrowers may benefit from the same information and proceed with their tax deduction claim on the credit accordingly.