Government taxes personal income based on the tax rates fixed in our union budget. Personal income tax rates begin at 5% for the financial year 2022-23, then gradually increase to 10%, 15%, 20%, 30% based on your income slab and the option you have selected.
Each tax rate applies to a specific range of taxable income, referred to as a “tax bracket” or “income slab”. Taxable income is what is left after you claim various tax deductions based on your eligibility.
Before getting into the income tax rates for the financial year 2022-23 (AY 2023-24), let us understand what is the difference between a financial year and assessment year. How incomes are taxed in India.
Financial Year Vs. Assessment Year
In India, the financial year starts from 1st April and ends on 31st March. This means, a one year period starting from 1st April 2022 to 31st March 2023, is known as financial year 2022-2023.
Income earned in one financial year is charged to tax based on the tax rates applicable to that financial year. However, a tax return for a financial year is filed with the government in the next following financial year, that means after completion of the financial year, a tax return can be filed. The next following financial year in which income tax return is filed is referred to as assessment year.
For the financial year 2022-23, the next following financial year is 2023-24, in which the assessee is required to file the income tax return and clear tax dues, therefore, the assessment year for the financial year 2022-23 is the year 2023-24.
In simple terms, the income tax return for the income earned in the financial year 2022-23 is filed with the Government in assessment year 2023-24.
Financial year is also referred to as Previous Year or FY or PY. The assessment year is referred to as AY.
Same concept is applicable to the following financial year and earlier years.
To understand the income tax rates applicable to your income earned from 1st April 2022 to 31st March 2023, we have to know the income tax rates fixed by the government for financial year 2022-23 (Assessment year 2023-24).
Now you know what the financial year and assessment year is. Let us know the income tax rates applicable to the financial year 2022-23 (AY 2023-24).
Income tax rates for financial year 2022-23 (Assessment year 2023-24)
For the financial year 2022-23, an Individual has two options to choose the income tax rates. Based on his choice, incomes will be charged to tax.
The first option is to go for the old tax regime that was applicable earlier or the new tax regime as per the provisions of section 115BAC.
Here are the income tax rates that are applicable if you choose for the old tax regime. In the old tax regime, income tax rates are defined based on the age of the assessee.
Rate of income tax applicable to resident Individuals who are less than 60 years of age anytime during the financial year 2022-23:-
| Total Income | Income tax rate for FY 2022-23 (AY 2023-24) |
| Up to 2,50,000 rupees | NIL |
| Where the total income exceeds 2,50,000 rupees but does not exceed 5,00,000 rupees (i.e. 2,50,001 to 5,00,000) | 5% of the amount by which the total income exceeds 2,50,000 rupees |
| Where the total income exceeds 5,00,000 rupees but does not exceed 10,00,000 rupees (i.e. 5,00,001 to 10,00,000) | 20% of the amount by which the total income exceeds 5,00,000 rupees plus 12,500 rupees (i.e. 5% on 2,50,000 rupees) |
| Exceeds 10,00,000 rupees | 30% of the amount by which the total income exceeds 10,00,000 rupees plus 1,12,500 (i.e. 5% on 2,50,000 + 20% on 5,00,000) |
Income tax rates for senior citizens
Followings are the rate of income tax applicable to resident Individuals who are of the age of 60 years or more but less than 80 years of age at any time during the previous year 2022-23 (AY 2023-24).
| Total income | Income tax rate for FY 2022-23 (AY 2023-24) |
| Up to 3,00,000 rupees | NIL |
| Where total income exceeds 3,00,000 rupees but does not exceed 5,00,000 rupees (i.e. 3,00,001 to 5,00,000) | 5% of the amount by which the total income exceeds 3,00,000 rupees |
| Where total income exceeds 5,00,000 rupees but does not exceed 10,00,000 rupees (i.e. 5,00,001 to 10,00,000) | 20% of the amount by which the total income exceeds 5,00,000 rupees plus 10,000 rupees (i.e. 5% on 2,00,000 rupees) |
| Exceeds 10,00,000 rupees | 30% of the amount by which the total income exceeds 10,00,000 rupees plus 1,10,000 rupees (i.e. 5% on 2,00,000 + 20% on 5,00,000) |
Income tax rates for super senior citizens
Here are the rates of income tax applicable to every resident individual who is of the age of 80 years or more at any time during the financial year 2022-23.
| Total income | Income tax rate for FY 2022-23 (AY 2023-24) |
| Up to 5,00,000 rupees | NIL |
| Where total income exceeds 5,00,000 rupees but does not exceed 10,00,000 rupees (i.e. 5,00,001 to 10,00,000) | 20% of the amount by which the total income exceeds 5,00,000 rupees |
| Exceeds 10,00,000 rupees | 30% of the amount by which the total income exceeds 10,00,000 rupees plus 1,00,000 rupees (i.e. 20% on 5,00,000) |
New tax regime
For the financial year 2022-23 (AY 2023-24), assess has the option to choose for a new tax regime under section 115BAC.
Tax rates under new tax regime is as follows;
| Total Income Range | Income tax rate for FY 2022-23 (AY 2023-24) |
| Up to 2,50,000 | Nil |
| From 2,50,001 to 5,00,000 | 5% |
| From 5,00,001 to 7,50,000 | 10% |
| From 7,50,001 to 10,00,000 | 15% |
| From 10,00,001 to 12,50,000 | 20% |
| From 12,50,001 to 15,00,000 | 25% |
| Above 15,00,001 | 30% |
Remember, if you choose the new tax regime, you have to forgo almost all tax deductions and exemptions applicable to an individual. Therefore, before choosing any of the above options, we suggest you calculate your tax liability first by using both the options in order to know which option is better.
In addition to above income tax rates, followings are to be added and deducted to find out the financial tax liability.
- Surcharge, if applicable (surcharge is applicable only when taxable income exceeds Rs 50,00,000)
- Health and Education Cess @ 4% on income tax plus surcharge
- Tax Rebate U/s 87A (You can claim tax rebate under old and new tax regime up to Rs 12,500 if your taxable income does not exceed Rs 5,00,000)
- Tax Deducted at Source (TDS)
- Tax Collected at Source (TCS)
- Advance tax
- Self assessment tax paid, if any
