Income Tax Rates in India for financial year 2022-23

Published Tue, 21 Mar 2023

India has a progressive method of taxation i.e. higher taxes for higher income. The tax rates are decided based on residential status of person, type of taxable person, nature and quantum of income. We have summarized below the applicable tax rate for different type of persons for financial year 2022-23 (Assessment Year 2023-24) onwards:

A.    Tax Rates for Individuals/HUFs

Option–I   With all Available Exemptions 

Tax Rates applicable for Individuals/ HUF (including Non Resident individuals) for Financial Year 22-23)
Total Income		Rates of Income Tax
S. No.	Total Income	Individual (Age less than 60 Years)/HUFs	Senior Citizen (Age 60 Years or above)	Super Senior Citizen (Age-80 Years or above)
1	Up to Rs.2,50,000	Nil	Nil	Nil
2	Rs.2,50,000 to Rs.3,00,000	5%	Nil	Nil
3	Rs.3,00,000 to Rs.5,00,000	5%	5%	Nil
4	Rs.5,00,000 to Rs.10,00,000	20%	20%	20%
5	Above Rs.10,00,000	30%	30%	30%

                                                                                                             OR

Option 2: Under section 115BAC of the Act (without certain deductions/exemptions) (Applicable from Financial Year 2020-21 and onwards)

Tax Rates applicable for Individuals/HUFs (including non-resident individuals) in Financial Year 22-23
S. No.	Total Income	Tax rates
1	Up to Rs.2,50,000	Nil
2	Rs.2,50,001 to Rs.5,00,000	5%
3	Rs.5,00,001 to Rs.7,50,000	10%
4	Rs.7,50,001 to Rs.10,00,000	15%
5	Rs.10,00,001 to Rs.12,50,000	20%
6	Rs.12,50,001 to Rs.15,00,000	25%
7	Rs.15,00,001 and above	30%

 

In case the assessee opts for Option-2, Certain exemptions/deduction (such as LTA, HRA, Standard Deduction on salary, Interest on housing loan, deduction under section 80) shall not be available except followings:

• Deduction of depreciation under section 32 is allowed but additional depreciation @ 20% on plant and Machinery will not be allowed.
• Salaried individuals are allowed a deduction of the contributions made by the employer towards the National Pension Scheme during the computation of his total income provided total deduction shall not exceed 10% of their salary. (Section 80CCD(2))
• Deduction in respect of additional employee cost incurred for employment of new employees is allowed. Deduction is available for 3 assessment years starting from the year in which the employment is provided. (Section 80JJAA)
• Deduction under section 80LA shall also be available in case of a person, having a Unit in the International Financial Services Centre with respect to the income from its business for which it has been approved for setting up in such a Centre in a Special Economic Zone for 10 consecutive AYs out of 15 years beginning with the AY in which permission has been obtained and has exercised the option under section 115BAC only if Assessee furnishes along with return of Income, a report of Chartered Accountant in Form No. 10CCF, certifying that deduction has been correctly claimed in accordance with the provisions of the section. 

Additional conditions in relation to option 2

Carried forward losses or unabsorbed additional depreciation, if any, shall not be eligible to be set-off or carried forward to future years if such loss is attributable to any of the above referred deductions which are not allowed in option-2.

If the person fails to satisfy the conditions of this section in any previous year, the option shall become invalid in that previous year and tax will be calculated as per old provisions of Income tax in assessment year relevant to that previous year as well as subsequent assessment years.

The concessional rate (Option 2) shall not apply unless option is exercised by the individual/HUF in the prescribed manner on or before the time specified as hereunder: -

• Having business income: on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the returns of income for any previous year relevant to the assessment year
• Having income other than the business income along with the return of income to be furnished under sub-section (1) of section 139 for furnishing the returns of income for a previous year relevant to the assessment year

Rebate u/s 87A: -

Persons having a total income of less than INR 5,00,000 shall be eligible for the benefit of rebate under Section 87A of the Act for an amount upto INR 12,500. Accordingly, there will not be any tax liability for the assessee having income upto INR 5,00,000 under both options.

Surcharge Applicable to the Individuals/HUFs:-

Income limit	Rate of surcharge*
Total income exceeds Rs 50 lakh but doesn’t exceed Rs 1 crore	10%
Total income above Rs 1 crore but doesn’t exceed Rs 2 crore	15%
Total income exceeds Rs 2 crore but doesn’t exceed Rs 5 crore	25%
Total income exceeds Rs 5 crore	37%

*if total income includes any dividend income, income chargeable u/s 111A, 112A and 112, the rate of surcharge on the amount of Income tax computed on that part of income shall not exceed 15%.

Moreover, surcharge is subject to a marginal relief (in order to ensure that increase in tax should in no case be more than increase in income).

 

B. Tax Rates for AOP/ BOI/ Artificial Judicial Person 

Tax Rates applicable for AOP/ BOI/Artificial Judicial Person for  Financial Year 2022-23/ Assessment Year 2023-24
S. No.	Total Income	Tax rates	Surcharge
1	Upto 2,50,000	Nil	Nil
2	From 2,50,001- 5,00,000	5%	Nil
3	From 5,00,001-10,00,000	20%	Nil
4	From 10,00,001-50,00,000	30%	Nil
5	From 50,00,001-100,00,000	30%	10%
6	Above 1,00,00,000 but upto 2,00,00,000	30%	15%
7	Above 2,00,00,000 but upto 5,00,00,000	30%	25%
8	Above 5,00,00,000	30%	37%

*In case of an AOP (consisting of only companies as its members), the rate of surcharge on the amount of income tax shall not exceed 15% for the AY 2023-24

C. Income Tax Slab for Partnership Firm/ LLP and Local Authority 

Income	Income Tax Rate
LTCG u/s 112A	10%
LTCG u/s 112	20%
STCG u/s 111A	15%
Casual Income	30%
Other Income	30%

*Surcharge @ 12% will be applicable if total income of the firm/ LLP or Local authority exceeds Rs. 1 crore.

Important points to be consider for taxation of Firm/ LLP or Local Authority

• The benefit of adjustment of deficiency in normal income is not available to a local authority.
• The benefit of rebate u/s 87A is not available to a local authority.
• Marginal relief to be checked in order to ensure that increase in tax should in no case be more than increase in income.
• The provision relating to Heath & Education Cess and rounding- off tax liability u/s 288B shall apply to a local authority in the same manner as they apply to an individual.

D. Tax Rates for Companies

D.1       Tax Rates for Domestic Companies  

Domestic Company means an Indian Company or any other Company which in respect of its income liable to taxed in India and has made the prescribed adjustments for the declaration and payment of dividend within India. 

The corporate tax rate for domestic companies are as below:       

Income	Domestic Company with turnover less than 400Cr in previous year 2020-21	Domestic Company with turnover of 400Cr or more in previous year 2020-21
Total Income less than 1 Crore in current year	25% plus cess 4%	30% plus cess 4%
Total income more than 1 Crore but less than 10 Crore in current year	25% plus surcharge of 7% plus cess 4%	30% plus surcharge of 7% plus cess 4%
Total income more than 10 Crore in current year	25% plus surcharge of 12% plus cess 4%	30% plus surcharge of 12% plus cess 4%

 

Further domestic companies has following options for lower tax rates subject to satisfaction of prescribed conditions:

Type of company	Tax Rate
All domestic companies u/s 115BAA without availing prescribed deduction/exemption	22 % plus surcharge of 10 % and cess of 4 %, thus effective tax rate of 25.17 % irrespective of amount of income
Manufacturing companies incorporated on or after 1st October 2019 u/s 115BAB (without availment of prescribed deductions/exemption)	15 % plus surcharge of 10 % and cess of 4 %, thus effective tax rate of 17.16 % irrespective of amount of income

 

Further, provisions relating to MAT/ AMT shall not apply to the companies opting for concessional rates of tax.

Read this article to know more on corporate tax rates

D.2      Tax rates for Foreign companies

As per income tax law, Foreign Company is a company which is not a domestic company as defined ie. the Company which is registered outside India. A foreign Company can become a domestic company if it makes arrangement for declaration & payment of dividend in India. Following are the applicable tax rates for foreign companies: 

Type of Income	Income upto Rs. 1 Crore	Income of more than Rs 1 Crore and upto Rs 10 crore	Income of more than Rs 10 Crore
Royalty received from Government or an Indian concern or fees for rendering technical services where such agreement has, in either case, been approved by the Central Government after the date of March 31, 1961 but before April1,1976.	50% plus cess of 4%	50% plus surcharge of 2% plus cess of 4%	50% plus surcharge of 5% plus cess of 4%
Dividend and Interest income from Government or an Indian concern other than as referred above	20% plus cess of 4%	20% plus surcharge of 2% plus cess of 4%	20% plus surcharge of 5% plus cess of 4%
Interest income on infrastructure debt fund or bonds	5% plus cess of 4%	5% plus surcharge of 2% plus cess of 4%	5% plus surcharge of 5% plus cess of 4%
Royalty or fees for rendering technical or professional services received from Government or an Indian concern where such agreement has, in either case, been approved by the Central Government after the date of April 1, 1976 (other than as prescribed u/s 44DA of the Act)	10% plus cess of 4%	10% plus surcharge of 2% plus cess of 4%	10% plus surcharge of 5% plus cess of 4%
Any other income	40% plus cess of 4%	40% plus surcharge of 2% plus cess of 4%	40% plus surcharge of 5% plus cess of 4%

 

E.       Tax rate for Cooperative societies

 👉 Amendment to Tax Slab Rates f

Income	Income Tax Rate
Upto 10,000	10%
10,001 to 20,000	20%
Above 20,000	30%

*Further, surcharge shall be levied @ 12% if total income exceeds Rs. 1 crore

 

Under new tax regime cooperative societies resident in India may pay tax at the rate of 22% for AY 2021-22 onwards in respect of its total income subject to complying certain conditions under section 115BAD. Surcharge shall be applicable @ 10% for Cooperative Society opting for this option. The Option so exercised cannot be withdrawn. Further, following deductions/ exemptions would not be available:

• Deductions u/s 10AA or depreciation u/s 32(1) (iia) or section 32AD or section 33AB or section 33ABA or section 35(2AA) or section 35AD or section 35CCC or under any provisions of chapter VI-A other than section 80JJAA.
• Without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; and
• No further deduction of loss or depreciation shall be provided for any subsequent year.
• The concessional rate shall not apply unless option is exercised by the co-operative society in the prescribed manner on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after 1st April, 2021 and such option once exercised shall apply to subsequent assessment years.
• If the person has a Unit in the International Financial Services Centre (IFSC), as referred to in sub-section (1A) of section 80LA, the deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in that section; and 
• The option so exercised cannot be withdrawn.

Further, provisions relating to MAT/ AMT shall not apply to the Cooperative Societies opting for concessional rates of tax.