The salaried people with monthly income just touching six figures or lower have certainly taken a sigh of relief after the government either exempted or imposed a little tax on them in the budget for the fiscal year 2022-23.
This means that they will have more to spend or save amid rising inflation. However, the individuals pulling down handsome salaries will face higher deductions from their incomes as the government relieved those with nominal salaries.
As per updated tax slabs in the Finance Bill 2022, the individuals banking a monthly salary of Rs50,000 will pay no tax on income. Even those who earn Rs100,000 monthly will only pay Rs100 as income tax this year.
An individual earning Rs150,000 a month will pay Rs3,500 in income tax while the tax rate will double to Rs7,000 with an increase of 50,000 in monthly salary to Rs200,000.
Comparison between tax rates of 2022 and 2021:
(Rotate mobile screen if chart is not fitting to screen)
|Taxable income||Rate of tax (2022)||Rate of tax (2021)|
|Income doesnot exceed Rs600,000||Rs0||Rs0|
|Income b/w Rs600,000 and Rs1,200,000||Rs100||5% of amount exceeding Rs600,000
Rs10,000 + 12.5 of amount exceeding Rs800,000
|Income b/w Rs1,200,001 and Rs2,400,000||7% of amount exceeding Rs1,200,000||Rs60,000 + 17.5% of amount exceeding Rs1,200,000|
|Income b/w Rs2,400,001 and Rs3,600,000
||Rs84,000 + 12.5% of amount exceeding Rs2,400,000||Rs270,000 + 22.5% of amount exceeding Rs2,400,000
Rs405,000 + 27.5% of amount exceeding Rs3,000,000
|Income b/w Rs3,600,001 and Rs6,000,000||Rs234,000 + 17.5% of amount exceeding Rs3,600,000||Rs405,000 + 27.5% of amount exceeding Rs3,000,000
Rs680,000 + 32.5% of amount exceeding Rs4,000,000
|Income b/w Rs6,000,001 and Rs12,000,000||Rs654,000 + 22.5% of amount exceeding Rs6,000,000||Rs1,330,000 + 35% of amount exceeding Rs6,000,000|
|Income above Rs12,000,000||Rs2,004,000 + 32.5% of amount exceeding Rs12,000,000
A salaried individual banking Rs250,000 monthly will pay Rs13,250 as income tax, an uptick of Rs6,250 from the preceding slab. The difference in the next stab will remain stagnant as the income tax on the individual drawing Rs300,000 monthly salary will be Rs19,500.
However, the difference would widen for the people pocketing a monthly salary of Rs350,000 as they will face a deduction of nearly 10% of their salary which is Rs28,250.
The salary-tax ratio would stay almost the same for a salaried individual earning Rs400,000 a month as the income tax rate for him will be Rs37,000.
As the income goes up, the income tax rate would also break the threshold of 10% and an individual drawing salary of Rs500,000 would be taxed Rs54,500 every month.
Those individuals who draw a salary of Rs1 million every month will pay a whooping Rs167,000 which is more than 15% of their monthly salary.
A salaried person getting Rs2 million monthly salary will be most heavily taxed as his net income will almost lose 25%. The monthly income tax for such an individual will be Rs492,000.