Income Tax Rates: AY 2023-24 (FY 2022-23)

Income Tax Rates applicable for Individuals, Hindu Undivided Family (HUF), Association of Persons (AOP) and Body of Individuals (BOI) in India is as under:

Assessment Year 2023-24, Relevant to Financial Year 2022-23

Kindly note there is no change in Income Tax slabs, Income Tax rates and surcharge rates in AY 2023-24 as compared to previous AY 2022-23.

Effective AY 2021-22 there are two alternative personal income tax regimes available for Individuals and HUFs. Such Individual and HUF taxpayers can either continue with the old regime or choose to shift to new regime. The new income tax regime is completely optional and every Individual or HUF can decide basis what is beneficial for them.

Old regime is essentially the existing income tax rates and slabs, with all the available deductions from income tax. New regime aims to tax income at lower rates albeit with fewer deductions being allowed from the income. The new regime purportedly aims to simplify the income tax framework and make it easier for individuals to estimate their tax liability and file income tax returns.

Let us look at both the old and new income tax regime.

Option 1: Old regime based on all deductions

For Individuals below 60 years age (including Woman Assessees):

Income	Tax Rate
Upto 250,000	Nil
250,000 to 500,000	5% of the amount exceeding 250,000
500,000 to 1,000,000	Rs.12,500 + 20% of the amount exceeding 500,000
1,000,000 & above	Rs.112,500 + 30% of the amount exceeding 1,000,000

For Individuals aged 60 years and above but below 80 years (Senior Citizen):

Income	Tax Rate
Upto 300,000	Nil
300,000 to 500,000	5% of the amount exceeding 300,000
500,000 to 1,000,000	Rs.10,000 + 20% of the amount exceeding 500,000
1,000,000 & above	Rs.110,000 + 30% of the amount exceeding 1,000,000

For Individuals aged 80 years and above (Very Senior Citizen):

Income	Tax Rate
Upto 500,000	Nil
500,000 to 1,000,000	20% of the amount exceeding 500,000
1,000,000 & above	Rs.100,000 + 30% of the amount exceeding 1,000,000

Option 2 : New Income Tax Regime at lower tax with minimal deductions

Income	Tax Rate
Upto 250,000	Nil
250,000 to 500,000	5% of the amount exceeding 250,000
500,000 to 750,000	Rs.12,500 + 10% of the amount exceeding 500,000
750,000 to 1,000,000	Rs.37,500 + 15% of the amount exceeding 750,000
1,000,000 to 1,250,000	Rs.75,000 + 20% of the amount exceeding 1,000,000
1,250,000 to 1,500,000	Rs.125,000 + 25% of the amount exceeding 1,250,000
1,500,000 & above	Rs.187,500 + 30% of the amount exceeding 1,500,000

What deductions are NOT allowed under the new income tax regime?

Essentially most of the deductions currently available to Individual or HUF tax payers will go away. Handful like, employers contribution to National Pension Scheme will continue. Give below is the list of all deductions that are not allowed for any tax payer opting for the new income tax regime.

1. Leave travel concession under section 10 (5)
2. House rent allowance under section 10 (13A)
3. Some of the allowances under section 10 (14)
4. Allowances to MPs/MLAs under section 10 (17)
5. Allowance for income of minor under section 10 (32)
6. Exemption for SEZ unit under section 10AA
7. Standard deduction, deduction for entertainment allowance and employment / professional tax under section 16
8. Interest under section 24 in respect of self-occupied or vacant property. Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law
9. Additional deprecation under section 32 (1) (iia)
10. Deductions under section 32AD, 33AB, 33ABA
11. Various deduction for donation for or expenditure on scientific research under section 35
12. Deduction under section 35AD or section 35CCC
13. Deduction from family pension under section 57 (iia)
14. Any deduction under chapter VIA of the Income Tax Act (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc).

However, deduction under section 80CCD (2) i.e. employer contribution on account of employee in notified pension scheme and section 80JJAA for new employment can be claimed.

Frequency of choosing between old and new income tax regime

Do you get to decide every year between the old and new income tax regime? Answer is yes and no.

Individual or HUF not having business income:

• Get to decide every year between the old and new regime

Individual or HUF having business income:

• One time choice between old and new income tax regime. If for any year option to shift to new income tax regime is exercised, such choice would be applicable for subsequent years also.
• Such individuals and HUF also have one time exit opportunity from the new income tax regime, after they have opted for the same. If the individual or HUF has chosen the option to shift to new income tax regime, they will get one chance in subsequent years to switch back to old income tax regime. However the Individual or HUF will not be able to choose the new income tax regime again.
• In case the Individual or HUF ceases to have any business income, then the Individual or HUF can again choose between old and new income tax regime every year.

Common provisions irrespective of which income tax rates you choose

Following provisions related to Surcharge on Income Tax, Health and Education Cess and Tax Credit under section 87A are applicable, irrespective of whether old or new income tax regime is chosen.

Surcharge on Income Tax: Surcharge on income tax is applicable as under:

Income	Surcharge
Total income including STCG under section 111A and LTCG under section 112A exceeds Rs.50 lakhs but doesn’t exceed Rs.1 crore	10%
Total income including STCG under section 111A and LTCG under section 112A exceeds Rs.1 crore but doesn’t exceed Rs.2 crore	15%
Total income excluding STCG under section 111A and LTCG under section 112A exceeds Rs.2 crore but doesn’t exceed Rs.5 crore	25%
Total income excluding STCG u/s 111A and LTCG under section 112A exceeds Rs.5 crore	37%

In case where the total income includes STCG under section 111A or LTCG under section 112A, the rate of surcharge on the amount of income-tax computed in respect of such STCG or LTCG shall not exceed fifteen per cent.

Surcharge amount of 10% or 15% or 25% or 37% as applicable, shall not exceed the amount of income that exceeds Rs.50 lakhs or Rs.1 crore or Rs.2 crore or Rs.5 crore, as applicable.

Health and Education Cess: 4% of Income Tax plus Surcharge is applicable.

Tax Credit: Section 87A provides for rebate from tax liability. Deduction of upto Rs. 12,500 is allowed from Income Tax payable for a person whose income doesn’t exceed Rs. 500,000. If the total tax payable is less than Rs. 12,500; deduction under Section 87A is restricted to total Income Tax payable.

Budget 2022: Change in Personal Income Tax Rates

There is no change in Income Tax slabs, Income Tax rates and surcharge rates in AY 2023-24 as compared to previous AY 2022-23.