INCOME TAX IN INDIA

Income Tax, a tax levied on the incomes generated by the individual, companies and other
entities. It is governed by the Income Tax Act 1961, and managed by the Central Board of
Direct Taxes (CBDT) under the jurisdiction of Ministry of Finance. Income tax one of the
key sources to government’s earnings.

For the FY 2022-2023 the direct tax collections stood has 86.68% majorly contributed by the
Goods and Services Tax (GST) of the total budget estimate for Direct Taxes for FY 2022-
2023. Direct Tax collections up to 10th January, 2023 showed that gross collections were at
Rs. 14.71 lakh crore, a 24.58% increase over the previous year's gross receipts for the same
time. Direct tax collection, net of refunds, was Rs. 12.31 lakh crore, 19.55% more than net
collections for the same period last year. Refunds for the period was calculated at Rs. 2.40
lakh crore which was 58.74% higher than the refunds for the previous financial year.

As per the report of and a reply to a query in Lok Sabha, Pankaj Chaudhury, Minister of State
in the Ministry of Finance said that between the age of 18 to 35 more than 2 crore individuals
have filed for income tax returns and also as many as 4861 number of ITRs were filed by
individuals below the age of 18 years from the financial year 2022-23 to the 31st of January
2023.

In a data shared by the junior finance Minister Pankaj Chaudhury it was disclosed that 19% of
taxpayers are government staff, pensioners. Of the 6.8 crore filed for previous year over 1.3
crore came from this segment.

New vs. Old Tax regime

Every year, the finance minister announces the new income tax slabs. On February 1, 2023,
this year's Union Budget was announced by Finance Minister Nirmala Sitharaman. The latest
budget made certain changes to the present income tax slab. There are now two separate
income tax regimes in place. Taxpayers can take advantage of tax breaks under both the
current and prior regimes.

According to the finance ministry, the income tax refund within the new tax system has been
increased from Rs. 5 lakh to Rs. 7 lakh. There were certain changes under the tax slab for the
new tax regime too. In addition, the surcharge rate on revenue beyond Rs. 5 crore has been
lowered from 37% to 25%.
 Total Income Rate of Tax

up to 3,00,000 Nil

3,00,001- 6,00,000 5%
6,00,001- 9,00,000 10%

9,00,001- 12,00,000 15%

12,00,001- 15,00,000 20%
15,00,001 and above 30%

 Tax rates under both the regimes

Income Slab Old Tax New Tax Regime New Tax Regime
Regime (until 31/03/2023) (From 1/04/2023)
0-250000 - - -
250000- 300000 5% 5% -
300000-500000 5% 5% 5%
500000-600000 20% 10% 5%
600000-750000 20% 10% 10%
750000-900000 20% 15% 10%
900000-1000000 20% 15% 15%
1000000-1200000 30% 20% 15%
1200000-1250000 30% 20% 20%
1250000-1500000 30% 25% 20%
More than 1500000 30% 30% 30%

Additional Changes include the standard deduction of Rs.50000 which was only available
under old regime has now been allowed under the new regime as well. Standard deduction of
50000 and rebate of 700000 the total of 7.5LPA is now the new tax free income.

Family pension: Those receiving family pension can claim a deduction of 15,000 or 1/3rd of
pension, whichever is lower.
Higher Leave Encashment Exemption: The waiver amount for people who are not
government servants has been increased eightfold, from 3 lakhs to 25 lakhs.