Indian Income Tax Slab System & Current applicable Slab Rates

Indian Income-tax levies tax on individual taxpayers on the basis of a slab system. The government imposes Income Tax on all incomes generated by individuals and businesses as per the income generated by them. These ranges of income are known as Income Tax Slabs. Slab system means different tax rates are prescribed for different ranges of income. It means the tax rates keep increasing with an increase in the income of the taxpayer.

Such income tax slabs tend to undergo a change during every budget. These slab rates are different for different categories of taxpayers. As per the Income Tax Act 1961, these tax slabs change from year to year and are bifurcated according to age, income level, and gender.

The New Income tax regime has come into effect from April 1, 2020. This gives an individual taxpayer the option to either continue with the existing tax regime (with tax-exemptions, deductions) or opt for the new tax regime (without 70 tax-exemptions and deductions). 

Salaried individuals, who have no business income, will have to choose between the existing and new tax regimes in every financial year, when filing their Income Tax Returns (IT Returns), as per their convenience.

The following Income Tax slab rates are notified for Individuals (aged less than of 60 years) including Residents and Non-Residents under new tax regime and old tax regime for FY 2020-21:

Income Tax Slab                             Tax Rates as per New Tax Regime

?0 - ?2,50,000                                      Nil

?2,50,001 - ? 5,00,000                         5% of Total Income

?5,00,001 - ? 7,50,000                         ?12500 + 10% of total income exceeding ?5,00,000

?7,50,001 - ? 10,00,000                       ?37500 + 15% of total income exceeding ?7,50,000

?10,00,001 - ?12,50,000                      ?75000 + 20% of total income exceeding ?10,00,000

?12,50,001 - ?15,00,000                      ?125000 + 25% of total income exceeding ?12,50,000

Above ? 15,00,000                              ?187500 + 30% of total income exceeding ?15,00,000

Income Tax Slab                             Tax Rates as per Old Tax Regime

?0 - ?2,50,000                                      Nil

?2,50,001 - ? 5,00,000                         5% of Total Income

?5,00,001 - ? 10,00,000                       ?12500 + 20% of total income exceeding ?5,00,000

Above ? 10,00,000                              ?112500 + 30% of total income exceeding ?10,00,000

In this new regime, taxpayers have the OPTION to choose either:

1. To pay income tax at lower rates as per the New Tax regime on the condition that they forgo certain permissible exemptions and deductions available under income tax, or
2. To continue to pay taxes under the existing tax rates. The assessee can avail rebates and exemptions by staying in the old regime and paying tax at the existing higher rate.

New tax regime slab rates are not differentiated based on age group. However, under the old tax regime, the basic income threshold exempt from tax for senior citizens (aged 60 to 80 years) and super senior citizens (aged above 80 years) is ? 3 lakh and ? 5 lakh respectively.

However, under the new tax regime, a person cannot claim up to 70 income tax deductions while calculating taxes. Hence, every person has to make his/her own calculation as per old and new tax regimes and calculate which one is beneficial based on the type of investments made and returns earned on those investments.

For any questions or queries, comment down below.