New Income Tax Slab Regime for FY 2021-22 & AY 2022-23

bySurobhi BoseLast Updated: August 17, 2022
New Income Tax Slab Rate

Every salaried individual needs to pay income tax based on the slab system they fall under. The income tax is imposed on the income earned by all individuals, HUF, partnership firms, corporates and LLPs as per the Income Tax Act of India. The income tax slab shows different tax rates prescribed for different ranges of income.

As per the current budget 2022, no changes have been made to the income tax bracket. The new income tax regime was introduced in budget 2020, which came into effect from the financial year 2020-21. The taxpayers can choose between the old regime, which includes various deductions and exemptions and the new regime which offers lower tax rates for those who are willing to forgo exemptions and deductions. Let’s take a look at the new income tax slab rates for FY 2021-22 & AY 2022-23.

Income Tax Slab Rate for FY 2021-2022- Applicable for New Tax Regime

Income Slab (in Rs.)Income Tax Rate
Upto 2,50,000NIL
2,50,000- 5,00,0005% of the amount exceeding Rs. 2,50,000 (Tax rebate U/S 87A is available)
5,00,000- 7,50,00010% of the amount exceeding Rs. 5,00,000 + Rs. 12,500
7,50,000- 10,00,000 & above15% of the amount exceeding Rs. 7,50,000 + Rs. 37,500
10,00,000 – 1,250,00020% of the amount exceeding Rs. 10,00,000 + Rs. 75,000
12,50,000-1,500,00025% of the amount exceeding Rs. 12,50,000 + Rs, 1,25,000
1500,000 & above30% of the amount exceeding Rs. 1,500,000 + Rs. 1,87,500


  • The tax rates in the new tax regime are the same for all categories of individuals i.e. individuals & HUF up to 60 years of age, senior citizens above 60 years to 80 years of age and super senior citizens above 80 years of age. Thus, no benefit of increased basic exemption limit benefit will be available to senior and super senior citizens in the new tax regime
  • Individuals with net taxable income less than or equal to Rs. 5 lakh will be eligible for tax exemption U/S 87A of the IT Act. The tax liability will be nil for such individuals in both new and old tax regimes
  • Irrespective of age, the basic exemption limit for NRIs is of Rs. 2.5 lakh
  • In all cases, additional health and education cess of 4% will be added to the income tax liability
  • A surcharge is applicable as per the tax rates mentioned above in all categories
  • 10% of income tax where total income exceeds Rs. 50,00,000
  • 15% of income tax where total income exceeds Rs. 1,00,00,000
  • 25% of income tax where total income exceeds Rs. 2,00,00,000
  • 37% of income tax where total income exceeds Rs. 5,00,00,000

Conditions for Opting New Tax Regime

The taxpayers opting for lower rates in the new tax regime will have to forgo certain deductions and exemptions available in the old tax regime. In total, there are 70 exemptions and deductions that are not allowed. Let’s take a look at the list of most commonly used exemptions and deductions-

List of Common Exemptions and Deductions ‘Not Allowed’ Under New Tax Rate RegimeList of Common Exemptions and Deductions ‘Allowed’ Under New Tax Rate Regime
House Rent Allowance (HRA)Conveyance allowance for expenditure incurred for traveling to work
Leave Travel Allowance (LTA)Transport allowance for specially-abled people
Relocation AllowanceDeduction for employment for new employees U/S 80JJAA
Conveyance AllowanceInvestment in Notified Pension Scheme U/S80CCD(2)
Daily Expenses in course of employmentAny allowance for traveling for employment or on transfer
Other Special Allowance [Section 10(14)]Depreciation U/S 32 of the Income Tax Act except for additional depreciation
Children education allowance
Standard Deduction on Salary
Interest on Housing Loan (Section 24)
Deduction under chapter VI-A (section 80C, 80D, 80 E and so on) ( Except section 80CCD(2))

New Tax Slab Rates for Domestic Companies for FY 2021-22

ParticularsNew Tax Regime Rates
The company opts for section 115 BAB(Not covered in section 115BA & 115 BAA) & is registered on or after 1st October 2019 and has commenced manufacturing on or before 31st March 202315%
Companies opt for Section 115 BAA, wherein the total income of a company has been computed without claiming specific incentives, deductions, additional depreciation and exemptions22%
The company opts for Section 15BA registered on or after March 1st 2016and engaged in the manufacture of any article or thing and does not claim a deduction as specific in the section clause25%
Gross receipt or turnover of the company is less than Rs. 400 crore in the previous year 2018-1925%
Any other domestic company30%


CompanyRange of Total Income
Rs. 1 crore or lessAbove Rs.1 crore but upto Rs. 10 croreAbove 10 crore
Domestic company opting for section 115BANil7%12%
Domestic company opting for section 115 BAA10%10%10%
Domestic company opting for section 115 BAB10%10%10%
Any other domestic companyNil7%12%

*Health and Education Cess:- 4% of income tax and surcharge

Income Tax Rate for FY 2021-22 & AY 2022-23 for Partnership Firm as per Old/ New Regime

A partnership firm including Limited Liability Partnership (LLP) is taxable at 30%. Plus, a surcharge of 12% of tax is applicable where the total income exceeds Rs.1 crore.

Note- There are no concession rates introduced for LLPs/ firms in the new tax regime.

Old Tax Regime Vs New Tax Regime, Which is Better?

The new tax regime can be beneficial for middle-class taxpayers who have a taxable income of up to Rs. 15 lakh. The old regime is a better option for high-income earners.

The new tax regime includes seven lower income tax slabs, thus it is beneficial for taxpayers who make low investments. Any individual paying taxes without claiming any tax exemption can benefit from new tax slab rates. For example- a taxpayer having a total income of up to Rs. 12 lakh before deduction will have a higher tax liability under the old tax regime if he/she has investments less than Rs.1.9 lakh. Thus, individuals who invest less in tax-saving schemes should go for the new regime.

On the other hand, for taxpayers who have a strong investment portfolio and have invested in various tax saving instruments such as mediclaim, life insurance, ULIP, payment of children tuition fees, payment of EMI on education loan, purchasing a house with a home loan, etc. should opt for the old tax regime as it helps with a higher tax deduction and lower tax outgo.

Overall, it is important to do a comparative analysis and evaluation of both regimes to choose the most beneficial one as per one’s own requirements and suitability.

Let’s take an example of the old & new tax regime of an assessee with Rs. 10 lakh income-

Mr. Vikas has a salary income of Rs.10 lakh. His total investment under Section 80C is Rs.1.7 lakh under ELSS, LIC Premium, PF and principal installment of home loans. Besides this, he pays a medical insurance premium for himself and his wife of Rs. 28,000. If Mr. Vikas chooses the old tax regime, he can claim the above deductions; however, if he wishes to go for a new regime then these deductions will not be available. Note that Mr. Vikas has also paid a home loan interest of Rs. 75000 in FY 2021-22. Let’s take a look at the tax outlook in both the regimes

ParticularsOld Tax Regime (in Rs.)New Tax Regime (in Rs.)
Gross Income10,00,00010,00,000
U/S 80C1,50,000
U/S 8025,000
Taxable Income7,50,00010,00,000
Tax Slab (OLD)
0-2.5 lakh
2.5 lakh – 5 lakh @5%12,500
5 lakh – 10 lakh @20%50,000
>10 lakh @ 30%
Tax Slab (New)
0- 2.5 lakh
2.5 lakh – 5 lakh @5%12,500
5 lakh- 7.5 lakh @10%25,000
7.5 lakh- 10 lakh @15%37,500
10 lakh – 12.5 lakh @ 20%
12.5 lakh- 15 lakh @ 25%
>15 Lakh @ 30%
Income Tax62,50075,000
Cess @4%2,5003,000
Total Tax Outgo65,00078,000

According to this table, if the gross income is above Rs. 10 lakh or deductions U/S 80C, 80D and 24(b) of the Income Tax Act has been availed, then the older regime is more beneficial for tax planning. While for taxpayers with middle income, earning a gross income of Rs. 5 lakh, the new tax slab regime may prove to be more beneficial.

Is it mandatory to file income tax returns if the annual income is below Rs. 2.5 lakh?
It is not mandatory to file ITR if the annual income of an individual is below Rs. 2.5 lakh. However, it is advised to file ‘Nil Return’ just for the record as there are many cases where you can show it as proof of your income.
Who can claim a rebate under Section 87A?
Any residential Indian whose annual income is below Rs. 5 lakh can claim a maximum deduction up to Rs. 12,500 under Section 87A of the IT Act.
What is the basic exemption limit for NRIs in the new tax regime?
Irrespective of age, the basic exemption limit for NRIs is Rs. 2.5 lakh.

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