In India, the range of income amongst its citizens is diverse. Therefore, a single tax rate cannot be applicable to every taxpayer. For this purpose, taxpayers are identified in different groups based on their incomes. These groups are called as Tax Slabs. Each group is charged with tax at appropriate varying rates. Every year, Income Tax Rates are revised along with the Budget. The following are the Income Tax Slabs for various taxpayers for the Financial Year 2021-22/ Assessment Year 2022-23.
Note: A financial year starts from the 1st of April of a particular year and ends on the 31st of March of the following year.
Individual Tax Payers
There are three groups of individual taxpayers:
1. Individuals below the age of 60 years. This would comprise of Resident Indians and Non-Resident Indians (any age).
2. Resident Senior Citizens who are 60 years and above but less than 80 years of age.
3. Resident Super Senior Citizens who are above the age of 80 years.
Old Tax Regime
Group 1: In case of an Individual (resident but below the age 60 or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person
Taxable Income
Tax Rate
Up to Rs. 2,50,000
Nil
Rs. 2,50,000 to Rs 5,00,000
5%
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Group 2: In case of a resident senior citizen (who is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year)
Taxable Income
Tax Rate
Up to Rs. 3,00,000
Nil
Rs. 3,00,000 to Rs 5,00,000
5%
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
Group 3: In case of a resident super senior citizen (who is 80 years or more at any time during the previous year)
Taxable Income
Tax Rate
Up to Rs. 5,00,000
Nil
Rs. 5,00,000 to Rs. 10,00,000
20%
Above Rs. 10,00,000
30%
a) Surcharge:
1. The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees, subject to marginal relief
2. The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees but doesn’t exceed two crore rupees subject to marginal relief.
3. The amount of income-tax shall be increased by a surcharge at the rate of 25% of such tax, where total income exceeds two crore rupees but doesn’t exceed five crore rupees subject to marginal relief.
4. The amount of income-tax shall be increased by a surcharge at the rate of 37% of such tax, where total income exceeds five crore rupees subject to marginal relief.
b) Health and Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.
c) Rebate under Section 87A: The rebate is available to a resident individual if his total income does not exceed Rs. 5, 00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less.
New Tax Regime (from FY 2020-2021 onwards)
Basic Exemptions: Normal Rs.2,50,000/-, Senior Citizen Rs.3,00,000/- & Super Senior Citizen Rs.5,00,000/-
Up to Basic Exemption Limit-Nil
Between Basic Exemption-Rs. 5,00,000/--5% (not applicable to Super Senior Citizen)
Between Rs.5,00,000/- to Rs.7,50,000/--10%
Between Rs.7,50,000 to Rs.10,00,000/- - 15%
Between Rs.10,00,000 to Rs.12,50,000/- -20%
Between Rs.12,50,000 to Rs.15,00,000/- -25%
Above Rs.15,00,000/- -30%
Plus Surcharge
1. The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees, subject to marginal relief
2. The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees but doesn’t exceed two crore rupees subject to marginal relief.
3. The amount of income-tax shall be increased by a surcharge at the rate of 25% of such tax, where total income exceeds two crore rupees but doesn’t exceed five crore rupees subject to marginal relief.
4. The amount of income-tax shall be increased by a surcharge at the rate of 37% of such tax, where total income exceeds five crore rupees subject to marginal relief.
Plus Cess-4%
Note: If you select New Tax Regime, then you have to forego many Deductions otherwise available.
Capital Gains Tax
Equity or Equity Oriented MF Scheme
Long Term Capital Gains (holding for a period of more than 12 months) @ 10% without indexation benefits, on long-term capital gains exceeding Rs. 1 lakh provided transfer of such units is subject to STT
Short Term Capital Gains @ 15%
Capital gains arising on sale of equity shares in a company or a unit of an equity oriented fund or a unit of a business Trust liable for securities transaction tax, in the hands of an individual, HUF, AOP, BOI and Artificial Juridical Person (AJP)
Capital gains arising on sale of any security including derivatives, in the hands of Foreign Portfolio Investors (FPIs)
Surcharge:
15% where income exceeds Rs. 1 crore but does not exceed Rs. 2 crores; and
10% where income exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore
Surcharge mentioned above is payable on base tax
Further, Health and Education Cess @4% is to be levied on aggregate of base tax and surcharge
Debt oriented schemes/ Money Market and Liquid Schemes
Units held in debt-oriented schemes for a period of more than 36 months is considered as Long-Term Capital Gains and for a period of 36 months or less is considered as Short-Term Capital Gains.
Long Term Capital Gains @ 20%
Surcharge:
15% where income exceeds Rs. 1 crore but does not exceed Rs. 2 crores; and
10% where income exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore
Surcharge mentioned above is payable on base tax
Further, Health and Education Cess @4% is to be levied on aggregate of base tax and surcharge
Long Term Capital Gains on Property
Holding Period 2 years or more
LTCG @ 20% with indexation benefit and @ 10% without indexation benefits
Short Term Capital Gains on Property
Holding Period less than 2 years
STCG @ Applicable slab without Indexation benefits
Partnership Firm
A partnership firm (including LLP) is taxable at 30%.
Add:
a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees subject to marginal relief.
b) Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge
Domestic Company
A domestic company is taxable at 30%. However, the tax rate would be 25% if turnover or gross receipt of the company does not exceed Rs. 400 crore in the previous year 2017-18.
Add:
a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees subject to marginal relief.
b) Health and Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.
Domestic Manufacturing Company - Not claiming exemptions (income taxable u/s 115BAA)
Income Tax @ 22% of Taxable Income
Plus: Surcharge @ 10% & Health and Education Cess @4%,
Effectively 25.17%
Domestic Manufacturing Company (Incorporated after 1 October, 2019)) - New Company [income taxable u/s 115BAB]
Income Tax @ 15% of Taxable Income
Plus: Surcharge @ 10% & Health and Education Cess @4%,
Effectively17.01%
Company other than a Domestic Company (Foreign Company)
Income Tax @ 40% of Taxable Income
Plus: Surcharge @ 2% of income tax, in case taxable income is above Rs. 1 crore & 5% of income tax, in case taxable income is above Rs. 10 crores
Health and Education Cess @4%,
TDS Rates & Provisions
As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department. The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government within prescribed time limit, which is normally 7th of succeeding month. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
How to pay Tax Deducted/Collected at source?
Tax deducted or collected at source shall be deposited to the credit of the Central Government by following modes:
Electronic mode: E-Payment is mandatory for
ü All corporate assesses; and
ü All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.
Physical Mode: By furnishing the Challan 281 in the authorized bank branch
TAN
Tax Deduction Account Number or Tax Collection Account Number is a 10 -digit alpha-numeric number issued by the Income-tax Department. TAN is to be obtained by all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS).
How to apply for TAN?
There are two modes for applying for TAN:
Ø OFFLINE - An application for allotment of TAN is to be filed in Form 49B in duplicate and submitted to any TIN-FC. Addresses of TIN FCs are available at NSDL TIN website (https://www.tin-nsdl.com).
Ø ONLINE — Online application for TAN can be made from the website of NSDL TIN website.
TDS/TCS Return
TDS stands for tax deduction at source while the TCS stands for tax collected at source. As per Income tax act, if any person makes a payment to the receiver, then TDS is required to be deducted at a prescribed rate and then deposited with the government. While for the TCS, the person receiving the payment has to collect tax from the person making payment and deposit thereafter with the government.
TDS Quarterly Due Dates Quarter Period Last Date of Filing
1st Quarter 1st April to 30th June 31st July
2nd Quarter 1st July to 30th September 31st October
3rd Quarter 1st October to 31st December 31st January
4th Quarter 1st January to 31st March 31st May
For TCS Last date for filling the quarterly returns are 15th July, 15th October, 15th January and 15th May respectively.
TDS rate chart
Commonly used TDS Provision for payments made to persons resident in India (Individuals, Firms, Companies, etc.):-
Section Nature of Payment for
Domestic Transactions
Threshold Limit Individual / HUF Others 15G-15H
Rs. TDS Rate (%) Allowed
192 Salaries Up to Rs.5 lakh As per income tax slabs – NO
193 Interest on Securities 10,000 10 10 YES
194A Interest to other than
Resident Senior Citizen 40,000 10 10 YES
194A Interest to Resident
Senior Citizen 50,000 10 10 YES
194C Contractor–Single Transaction 30,000 1 2 NO
194C Contractor–Aggregated
Transaction during the F.Y. 1,00,000 1 2 NO
194H
Commission / Brokerage 15,000 5 5 NO
194I Rent of Land and Building –F&F 2,40,000 10 10 NO
194I Rent of Plant/Machinery/Equipment 2,40,000 2 2 NO
194IA Transfer of certain immovable
property other than agriculture land 50,00,000 1 1 NO
194J
Professional Fees/Technical Fees / etc. 30,000 10 10 NO
194J Payment to Call Centre
Operator (w.e.f. 01.06.2017) 30,000 2 2 NO
194IB
Rent by Individual/HUF 50,000/PM 5 – NO
194LA Compensation on transfer of certain immovable property other than agricultural land
250000 10 10 NO
Payment to NRI for regular business transactions u/s 195. TDS @ varies from 10% to 30% plus applicable Surcharge & Cess @ 4%
Notes:
a) No TDS on Goods & Service Tax: As per circular no. 23/2017 dated 19.07.2017 of CBEC, TDS is not applicable on Goods and Service Tax (GST) where GST is shown separately
b) No Surcharge, Health & Education Cess is not deductible on payments made to residents, other than salary
Non-deduction of TDS:
Please note that Form No. 15G (15H for Senior Citizen & Super Senior Citizen) can be accepted by the Assessee only when the total interest amount payable is less than the minimum exemption limit, which is Rs. 2.5 lakh for Resident, Rs.3 lakh for Senior Citizen & Rs.5 lakh for Super Senior Citizens. In case the same exceeds the above limit, then TDS is to be deducted as per the applicable provisions.
TDS at higher rate: If a person fails to furnish PAN to the Assessee whose receipts are subject to TDS, then, the TDS is to be deducted at higher of the following rates”
i) The rates in force or
ii) 20%
TDS on Good Transport: TDS shall be applicable on payment to transporters, i.e., contractors in the business of plying, hiring or leasing goods carriages. However, TDS exemption will be available to transporter owning 10 (ten) or less goods carriage at any time during the previous year. For claiming such exemption, transporter would also need to furnish a declaration to the Assessee along with a copy of PAN. For transporter not covered above, TDS is to be deducted at normal rates as given in above table.
Interest on non-deduction/ non-payment of TDS or delay in payment of TDS
As per Sec. 201(1A) of the Income-tax Act, 1961, if the Assessee does not deduct the whole or any part of the TDS or after deducting fails to pay the TDS as required by or under the Act, then the Assessee is liable to pay simple interest on the amount of such TDS, for every month or part of a month, at the rate of:
· 1% from the date on which such TDS was deductible up to the date on which such TDS is deducted; and
· 1.5% from the date on which such TDS was deducted up to the date on which such TDS is paid
4) Penalty for Late filing of TDS Return
As per Sec 234E of Income tax Act 1961, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues, maximum to the amount of tax deducted.