Income tax Calculation above 5 Lakh for FY 2022-23 as Per New and Old Tax Regime

A look into the income tax calculation for the FY 2022-23 for income earned above 5 lakhs as per the New Tax Regime, and how it is better over the Old Tax Regime.

When you earn income above a specified limit, you are obligated by the government to pay certain taxes to the latter. This tax money is essentially used to provide for several welfare projects and services designed for your convenience. Here we understand a little more about what is income tax, what is the Income tax above 5 Lakh and the standard deduction on salary in this case.

Also Read: How to save tax for salary above 10 Lakh

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What is Income Tax?

As the name inevitably suggests, income tax refers to the specific tax that is computed on your total taxable income according to the specific tax slab that it falls under. When you add your income earned from various sources, such as rent, annual salary, capital gains, and the like, you derive your gross total income. From this, you can then remove the standard deduction on salary as well as certain other tax deductions that you may be eligible for as per law. You can then derive your taxable income.

If the above method sounds confusing or complicated, you can go for an easier and more convenient alternative – using the income tax calculator. Let’s take a look at what that is.

What is an Income Tax Calculator?

It is a simple, fast and convenient-to-use online tool that helps you calculate the total amount of tax that you need to pay in seconds! The tax payable is calculated on the basis of your taxable income, age, expenses incurred, investments made, and the interest payable on home loan, according to the relevant law of taxation.

Below is a small example of how to use the income tax calculator for computing your tax liability for the FY 2022-23:

• Step 1: Choose your age from the age range given
• Step 2: Enter your income earned per annum
• Step 3: Enter all your investments made as well as the various deductions you are eligible for under different sections of the Income Tax Act, such as –
  • Section 24B (Interest payable on repayment of home loan)
  • Section 80G (donations made as charity)
  • Section 80C (investments made in PPF, ELSS funds, and the like)
  • Section 80E (Interest payable on repayment of educational loan)
  • Section 80CCD(1B) [earnings under the National Pension System)
• Step 4: Enter the various tax exemptions that you are eligible for under HRA, LTA, and the like
  • In case of some fields that are not particularly applicable to your case, you may enter ‘0’. At the end of completing all the steps above, you will derive your total payable tax under the Old and New Tax Regimes for the  FY 2022-23 (AY 2023-24).

Also Read: Income Tax Slabs Old Regime: Income Tax Slabs and Rates for FY 2022-23

Income Tax Slab for 5 LPA Salary for FY 2022-23 Under New Tax Regime

Now let us look at the tax slab under which the income tax above 5 Lakh of a salaried person falls under:

Income Tax Exemptions for Salaried Employees 2021-22

Under the New Tax Regime, the tax rates calculated for all the categories of individuals, such as salaried individuals below 60 years old, senior citizens over 60, as well as super senior citizens above 80, is the same. This means that the basic benefit of the exemption limit for senior and super-senior citizens in the country hasn’t increased much.

That said, there is some standard deduction on salary considered for professional tax exemption for the FY 2021-22:

• Conveyance allowance incurred on travel to work
• Transport allowance for specially-abled people is deducted
• Deductions for new employees under Section 80JJAA
• Investment made in the Notified Pension Scheme (NPS) deducted under Section 80CCD (2)
• Under Section 32, depreciation of assets, such as machinery, not including the extra depreciation expenses incurred by the employee traveling for work reasons or being transferred, is considered for deduction

Also Read: Income Tax Saving: How Section 80C Of The Income Tax Act Works

Summing Up

As seen in the blog, the income tax rates vary for different individuals based on their income earned and the tax slabs too differ based on these conditions. It is therefore important to always check the income tax slab that you fall under before computing your income tax, such as the one shown in this blog for income tax above 5 lakh. It is also equally important to consider the standard deduction on salary and the various tax exemptions before calculating the taxable income. Always use an online tax calculator for faster and accurate calculations.

For more information on the various income tax slab rates for the FY 2022-23, visit PayBima.

 

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