New income tax slabs for the year are announced. Find out your current tax bracket here!
If you earn a salary of ₹ 1 lakh or more in a year, you’ll need to pay income tax on salary. The new Income tax slab for the year is ₹1 crore. If your income is between ₹1 crore and ₹5 crore, you’ll need to pay income tax at the marginal rate of 40%. If your income is between ₹5 crore and ₹10 crore, you’ll need to pay income tax at the marginal rate of 30%. And if your income is over ₹10 crore, you’ll need to pay income tax at the highest marginal rate of 20%.
These taxes will apply to all individual taxpayers who earn a salary or wages in India in any financial year, including self-employed individuals who own an enterprise with incomes above ₹ 2 crore in any financial year. There are some exceptions to these new income tax rates: expatriates (including members of the armed forces) who have been living outside India for more than 182 days during the preceding 12 months don’t have to pay Income Tax on Salary; people who are dependent pensioners (i.e. those receiving a pension from a government entity other than their employer or whose pension comes from a retirement fund or annuity ) or those who are under disability are exempt from paying tax on all income (except their wife’s income if they file jointly); and 80 percent of the middle-class Indian taxpayers have deducted tax at the concessional rate of 9.9 percent since 1996, while upper-middle-class Indian taxpayers with taxable incomes above ₹ 1 crore have been able to reduce their standard deductions to 90 percent since then).
What Deductions and Exemptions Are Eliminated in the New Income Tax Slab?
Taxpayers can choose to stick with the old tax regime or switch to the new one. If they choose the new income tax slab, they will not be able to claim the following deductions and exemptions:
- Leave Travel Allowances (LTAs) as outlined in section 10, clause 5 of the Income Tax Act 1961
- Housing Rent Allowances (HRAs) as outlined in section 10, clause 13A
- Deduction up to ₹1,50,000 under section 80C for investments in insurance premiums, provident fund, housing loan repayment, etc.
- Standard deduction of ₹50,000 under section 16
- Professional Tax Deduction under Section 16
- Deduction of interest under section 24 for unoccupied or self-occupied property under section 23 sub-section 2 (loss from house property for a rented house)
- Other deductions/exemptions specified in Chapter VI-A
- Any other deductions/exemptions prescribed from time to time
- You may be wondering if you need to pay income tax on salary of ₹8 lakhs per annum in India as per the budget
- According to the budget, the income Tax rate for individuals with a salary of ₹8 lakhs or more will be 10%. This means that you will need to pay income tax on your salary
- There are a few other things to note about the income tax rates for individuals in India
- Firstly, the extent of zero income tax will be restricted to ₹30 lakhs as per this new set of income tax rates. Thus, irrespective of your salary, you will not pay any income taxes in case your net taxable income is less than ₹30 lakhs.(Note that though we are presently talking about the base salary i.e., without taking benefits into account). After exemption, you will be charged 5% education cess on the net taxable amount at source (NTA-SS) and above ₹ 1 lakh at NTA-PAT = Nil Net Taxable Income (NTI).
Looking for an easy way to compute your taxes? Try our income tax calculator. The salary income tax calculator is perfect for salaried individuals.
What Is the Income Tax on Salary of ₹10 Lakhs per Annum in India?
- The income tax on salary of ₹10 lakhs per annum in India as per the budget is ₹1,40,000/- per annum. This means that if you are earning a salary of ₹10 lakhs per annum, you will have to pay 40% (₹40000/-) of your salary as income tax
- This income tax rate applies to all salaries and is universal regardless of whether you are an employee or self-employed. You will also have to pay the GST on this income. The GST rate for salaries is 18%
- There are various deductions that you can claim to reduce your taxable income. These include deduction for employer contributions towards social security schemes such as EPF and NSC, deduction for medical expenses, and deduction for education expenses
- If you are in a situation where your estimated taxable income is higher than your actual income, you can file a tax waiver application with the Income Tax Department. This will allow you to avoid paying any taxes on the excess amount.
Conclusion
There is no one-size-fits-all answer to this question, as the amount of income tax on salary that you may need to pay will depend on several factors, including your financial situation and the taxable income of your employer. However, if you are earning an annual salary of ₹5 lakhs or more, you will likely be required to pay some form of income tax. It’s also worth noting that changes recommended by pay commission can influence tax brackets and deductions, impacting your overall tax liability. If you have any further questions or concerns about how income tax works in India, please don’t hesitate to get in touch with one of our advisors at Vakilsearch. We would be happy to help put your mind at ease and guide you through the process.
FAQs on Income Tax on Salary
Do I need to file a Form 1099-MISC with my employer?
If you are receiving a salary from an Indian company, you will not need to file a Form 1099-MISC with your employer. This form is only required if you are receiving a salary from a foreign company or self-employment.
Do I need to declare the income on my tax return?
You must declare all income that you earn in India on your tax return. This includes taxable and non-taxable income.
How much tax should I pay?
The amount of taxes that you pay depends on your income and your filing status.
