Income tax rates are defined based on the type of assessee and total income earned for the financial year starting from 1st April to 31St March.
In this article, we will tell you income tax rates applicable to a resident individual for the financial year 2021-22 (Assessment Year 2022-23) and financial year 2022-23 (Assessment Year 2023-24).
We will also summarize surcharge, health and education cess and rebate applicable to a resident individual for the financial year 2021-22 (AY 2022-23) and financial year 2022-23 (AY 2023-24).
Since there is no change in income tax rates in the finance bill 2022, tax rates applicable to an individual for the financial year 2021-22 and 2022-23 are the same.
Income tax rates applicable to a resident individual for the financial year 2021-22 and FY 2022-23
If an individual has opted for the old tax regime, then income tax rates will be different from the tax rates that are defined in the new tax regime under section 115BAC.
In the old tax regime we have different tax rates for individuals based on their age.
Here are the tax rates applicable to an individual who is less than 60 years of age.
| Total income range (Amount in Indian rupees) | Rate of income tax for FY 2021-22 and 2022-23 |
| Up to 2,50,000 | Nil |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
In the case of a senior citizen, who is of the age of 60 years or more but less than 80 years at any time during the financial year, income tax rates will be the same with the only difference in exemption limit.
Here are the tax rates applicable to a senior citizen for the financial year 2021-22 and 2022-23.
| Total income range (Amount in Indian rupees) | Rate of income tax for FY 2021-22 and 2022-23 |
| Up to 3,00,000 | Nil |
| 3,00,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
In case of every individual being a resident in India who is of the age of 80 years or more (super senior citizen) at any time during the financial year, the basic exemption limit has been increased to Rs. 5, 00,000.
This means, a super senior citizen is not liable to pay tax up to his/her total income of Rs. 5, 00,000.
Here are the income tax rates applicable to a super senior citizen for the financial year 2021-22 and 2022-23.
| Total income range (Amount in Indian rupees) | Rate of income tax for FY 2021-22 and 2022-23 |
| Up to 5,00,000 | Nil |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Government has introduced a new income tax rate structure under section 115BAC, which is also referred to as the new tax regime. In this structure, we do not have any age limit. They have defined one tax rate for all individuals. However, if you opt for new tax regime, you will not be eligible for most of the tax deductions and exemptions like HRA, secton 80C deductions.
New tax regime has been introduced in the finance act 2020. Due to this new tax regime is applicable from assessment year 2021-22 and onwards.
Here are the income tax rates if the individual opts to be taxed under the new regime under section 115BAC.
| Total income range (Amount in Indian rupees) | Rate of income tax for FY 2021-22 and 2022-23 |
| Up to 2,50,000 | Nil |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 7,50,000 | 10% |
| 7,50,001 to 10,00,000 | 15% |
| 10,00,001 to 12,50,000 | 20% |
| 12,50,001 to 15,00,000 | 25% |
| Above 15,00,000 | 30% |
Surcharge applicable to a resident individual for the financial year 2021-22 and 2022-23
Surcharge is applicable only when total income is 50 Lakhs or more. If the total income is below 50 Lakhs rupees, then surcharge is not applicable.
The amount of income tax shall be increased by a surcharge at the following rates;
| Range of Total Income (Amount in Indian rupees) | Surcharge rate for FY 2021-22 and 2022-23 |
| 50 lakhs to 1 Crore | 10% |
| 1 Crore to 2 Crores | 15% |
| 2 Crores to 5 Crores | 25% |
| Exceeding 5 Cores | 37% |
25% and 37% surcharge is not levied on income by way of dividend or the income under the provisions of section 111A, 112 and 112A. In cases where the total income includes any income by way of dividend or income chargeable under sections 111A, 112 and 112A of the Income tax act, the rate of surcharge on the amount of income tax computed in respect of that part of income shall not exceed 15%.
Marginal relief is also provided in cases where surcharge is to be levied.
Health and education cess for FY 2021-22 (AY 2022-23) and FY 2022-23 (AY 2023-24)
In addition to income tax and applicable surcharge, the resident individual is also liable to pay health and education cess at the rate of 4% on the amount of income tax plus surcharge.
If surcharge is nil, then health and education cess will be calculated on income tax.
Tax rebate under section 87A
A resident individual is eligible to claim tax rebate under section 87A of the income tax act, 1961 only when the net income does not exceed 5, 00,000 rupees. The amount of tax rebate for the financial year 2021-22 and 2022-23 is 12,500 or the actual tax liability, whichever is lower.
Tax rebate under section 87A is deducted from your income tax liability before charging health and education cess.
If after deducting tax rebate under section 87A, your net tax liability is nil, then health and education cess will also be calculated as nil, as a result you will not be liable to pay tax even if your income is above the basic exemption limit.
