FY 2022-23 (AY 2023-24) Income Tax Rates: Understanding the Applicable Slabs and Regimes

Income Tax Slabs FY 2022-23 (AY 2023-24) for Senior Citizen Taxpayers

For the financial year 2022-23 (assessment year 2023-24), senior citizen taxpayers in India refer to individuals above 60 years but below 80 years of age. These taxpayers enjoy a higher basic exemption limit of Rs. 3 lakh compared to individuals below 60 years under the old tax regime. However, this benefit is not available for senior citizen taxpayers who opt for the new tax regime. The table below summarizes the income tax slab rates for senior citizens in India:

Income Tax Slabs in AY 2023-24 (FY 2022-23) for Super Senior Citizens

As per current tax regulations, super senior citizen taxpayers are individuals who are aged 80 years or more. Under the old tax regime, super senior citizens are entitled to a higher basic exemption limit of Rs. 5 lakh as per the income tax slab rates for the financial year 2022-23. However, this benefit is not applicable under the new tax regime, even though the slab rates for assessment year 2023-24 are lower compared to the old tax regime. The table below provides a summary of the income tax slab rates that apply to super senior citizens in FY 2022-23:

New Income Tax Slab Rates Announced in Budget 2023

The comparison of income tax slab rates for FY 2023-24 (AY 2024-25) between the old tax regime (taxpayer aged less than 60 years) and the new tax regime has been affected by changes announced in the Union Budget 2023. The changes include an increase in the tax exemption limit to Rs. 3 lakh and a modification to the number of income tax slabs applicable to the new tax regime. However, these changes do not apply to the old tax regime for FY 2023-24. The revised comparison of the income tax slab rates between the old and new tax regimes is presented in the following table:

What is Income Tax Slab?

Income tax is a tax paid on income during a financial year. India’s income tax system is progressive – low income is taxed at a lower rate, and high income is taxed at a higher rate. The government uses income tax slabs and rates to determine the applicable rate of taxation. Taxpayers can choose between the old tax regime and the new tax regime, each with different income tax slabs and rates for FY 2022-23 (AY 2023-24).

Types of Taxable Income in India

Different types of taxpayers such as individuals, trusts, and corporations are subject to income tax in India. Income tax can be levied on several sources of income. Here are some examples:

1. Income from Salary or Pension: This includes basic salary, allowances, and profit from salary. Pension received after retirement is also taxed based on the income tax slab. The applicable income tax slab rates for FY 2022-23 (AY 2023-24) vary based on the age of the individual receiving salary or pension.
2. Income from Business: Profits from businesses are also taxable. The tax is based on the presumptive or actual income of the business or profession, after deductions. FY 2022-23 has different tax rates for individuals and corporations with business income.
3. Income from House Property: Rental income from owning more than one house property is treated as part of the taxpayer’s income and taxed as per the income tax slab rates for FY 2022-23.
4. Income from Winning Lottery, Horse Races, etc.: These earnings are taxable in India but are taxed separately and not based on income tax slab rates for FY 2022-23.
5. Income from Capital Gains: Profit obtained from selling assets like gold, house property, mutual funds units, stocks, debentures, etc. are classified as either long-term or short-term capital gains. Capital gains tax rules for 2022-23 are independent of the income tax slab rates for AY 2023-24.

Things to Keep in Mind Before Opting for the New Tax Slab

Here are 5 things to keep in mind before choosing between the new and old tax regimes in India for individual taxpayers:

1. Consider tax saving deductions and exemptions, as the new regime offers lower income tax slab rates but fewer exemptions and deductions compared to the old regime.
2. Note that the old regime provides higher tax exemption for senior citizens and super senior citizens compared to the new regime.
3. Consider benefits beyond tax savings, as investments like life insurance policies and retirement plans provide dual benefits under the old regime but no tax saving benefit under the new regime.
4. Remember that tax benefits of investments are limited up to Rs. 2 lakh in a fiscal after including the Rs. 50,000 benefit offered u/s 80 CCD (1B).