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It’s time for income tax returns filing and the eternal question of income tax slab rates is back. So here is a quick snapshot of Income Tax slab rates for an annual income or Rs.10 lakhs, for the F.Y. 2021-22
This guide answers the question for salaried individuals with an annual income of Rs. 10 lakhs. We show you how much tax you will pay in both regimes, with a clear explanation.
Before we calculate the tax for the value of Rs. 10 lakhs, here’s a sneak peek into the income tax slabs under the old and new tax regimes.
Income Tax Slabs for individuals below 60 years – Old and New Tax Regimes
|
Existing Tax Regime |
New Tax Regime u/s 115BAC |
||
|
Income Tax Slab |
Income Tax Rate |
Income Tax Slab |
Income Tax Rate |
|
Up to ₹ 2,50,000 |
Nil |
Up to ₹ 2,50,000 |
Nil |
|
₹ 2,50,001 - ₹ 5,00,000 |
5% above ₹ 2,50,000 |
₹ 2,50,001 - ₹ 5,00,000 |
5% above ₹ 2,50,000 |
|
₹ 5,00,001 - ₹ 10,00,000 |
₹ 12,500 + 20% above ₹ 5,00,000 |
₹ 5,00,001 - ₹ 7,50,000 |
₹ 12,500 + 10% above ₹ 5,00,000 |
|
Above ₹ 10,00,000 |
₹ 1,12,500 + 30% above ₹ 10,00,000 |
₹ 7,50,001 - ₹ 10,00,000 |
₹ 37,500 + 15% above ₹ 7,50,000 |
|
|
|
₹ 10,00,001 - ₹ 12,50,000 |
₹ 75,000 + 20% above ₹ 10,00,000 |
|
|
|
₹ 12,50,001 - ₹ 15,00,000 |
₹ 1,25,000 + 25% above ₹ 12,50,000 |
|
|
|
Above ₹ 15,00,000 |
₹ 1,87,500 + 30% above ₹ 15,00,000 |
Income Tax Slab |
||
|
New |
Income |
Old |
|
NIL |
Up to Rs. 5 lakhs |
NIL |
|
10% |
Rs. 5 lakhs to Rs. 7.5 lakhs |
20% |
|
15% |
Rs. 7.5 lakhs to Rs. 10 lakhs |
20% |
|
20% |
Rs. 10 lakhs to Rs. 12.5 lakhs |
30% |
|
25% |
Rs. 12.5 lakhs to Rs. 15 lakhs |
30% |
|
30% |
Rs. 15 lakhs and above |
30% |
So, what’s the income tax you will have to pay with an annual income of Rs. 10 lakhs?
|
Income tax for Annual Income of Rs. 10 lakhs |
|
|
Income Tax Previously (without claiming any deductions and exemptions) |
Income Tax Currently |
|
Rs. 1,12,500 |
Rs. 75,000 |
At first glance, it appears that opting for the new tax regime will result in tax savings of Rs. 37,500 (Rs. 1,12,500 – Rs. 75,000). However, the standard deductions and the various exemptions that were calculated under the old tax regime will not be included here.
Let’s see how the tax pans out when you claim deductions and the exemptions available under the old tax regime.
|
Particulars |
Tax payable under the old regime |
Tax payable under the new regime |
|
Basic salary + daily allowance |
Rs. 3,88,600 |
Rs. 3,88,600 |
|
Other taxable allowances |
Rs. 6, 11,400 |
Rs. 6,11,400 |
|
Gross salary |
Rs. 10,00,000 |
Rs. 10,00,000 |
|
Standard deduction |
Rs. 50,000 |
NIL |
|
Taxable income under the head Salary |
Rs. 9,50,000 |
Rs. 10,00,000 |
|
Deductions under Section 80C |
Rs. 1,50,000 |
NIL |
|
Taxable income under the head Salary |
Rs. 8,00,000 |
Rs. 10,00,000 |
|
Income tax |
Rs.72,500 |
Rs. 75,000 |
*It is to be noted that a 4% cess is levied on the calculated income tax.
Also Read: How to Calculate Your Income Tax?
Which regime should a taxpayer with an annual income of Rs. 10 lakhs choose?
As you can see from the above table, your income tax is reduced when you opt for the old regime, and by availing of the various deductions and exemptions available.
The regular deductions under the old tax regime include:
- Standard deduction of Rs. 50,000 for salaried taxpayers
- Deductions up to Rs. 1.5 lakhs under Section 80C
- Health insurance premium deductions under Section 80D
- Under Section 80TTA, deductions from the interest earned from a post office or bank savings account.
- Other exemptions include HRA (House Rent Allowance), LTA (Leave Travel Allowance), etc.
When the deductions claimed total Rs. 1,87,500, a taxpayer with an annual income of Rs. 10 lakhs will pay the same tax under both the new and old regimes. This means that if you claim deductions and exemptions totaling less than Rs. 1,87,500 in a year, the new tax regime will be more beneficial to your income tax bracket. Staying with the old tax regime, on the other hand, will help you pay lower taxes if your claimed deductions and exemptions exceed Rs. 1,87,500.
It is Recommended to Calculate Your Deductions and Exemptions If You Want to Choose Between the Old or New Tax Regimes
The tax payable varies between the new and old tax regimes. However, it is not really possible to specifically identify which is the better option, as it depends on the individual taxpayer. Given that you are a salaried taxpayer earning an annual income of Rs. 10 lakhs, it is advised to calculate your total deductions and exemptions that you can claim. This would help you to decide between the two tax regimes.
FAQs of Income tax on Rs.10 lakh annual income :
1:When is the due date to file my IT returns for F.Y.2021-22?
Considering the current pandemic situation and the revamp of the IT returns website, the IT Department has extended the last date to file your IT Returns for F.Y 2021-22 to July 31st, 2022.
2:Does the New Tax Regime allow any kind of deductions for home loans?
No, the new tax regime doesn’t allow any kind of exemptions or deductions. It comes with a fixed tax rate per each slab.
3:Should I declare at the beginning of the year if I am choosing the new tax regime?
Yes, for salaried individuals, you need to declare if you are choosing the new tax regime so that your employer can deduct TDS as per that.
4:Can I change my tax regime at the time of filing my returns?
Yes, you can choose to file your tax as per the old regime or new tax regime at the time of filing returns. The taxes deducted or the tax to be paid shall be considered based on your choice.
5:Is the new tax regime truly beneficial to taxpayers?
A taxpayer with an annual income of Rs. 10 lakhs will pay the same tax under both the new and old regimes if the deductions claimed total Rs. 1,87,500 or less. If your claimed deductions and exemptions exceed Rs. 1,87,500, staying with the old tax regime will help you pay lower taxes.