Correct Calculation of Income Tax for AY 2022-23

The only form of tax that makes you feel proud after you have paid it? Any idea what tax is this and why it is tax named so? The answer to the question is Income tax. It is also known as Progressive Tax, it implies that as the income increases, tax liability increases. In other words, the more you receive , the more tax you pay.

Penalty for not showing the income in IT Return

Here are some common Income Tax doubts. Let’s try to understand them. 

Who has to pay tax?

In case of Individual and HUF, there is no tax if there income is less than Rs 2,50,000. But even if income is Rs 2,50,001 then person will be liable to pay tax. Although there won’t be any liability in this case since some deductions are provided by the Act for the same which we will see later.


In case of Domestic Company, Companies having Gross turnover upto 250 Crore in the previous year , tax rate is 25%. Likewise even if turnover increases by Re 1 then you will be liable to pay the tax at rate of 30%.

Difference between Section 44AD, 44ADA and 44AE of IT Act

In case of Individual and HUF the tax rate is applicable as per the age of the assesse and in HUF the age of Karta is seen. Tax slab rate of Individual and HUF for AY 2022-23 are-:

Income Age below 60 year  Age above 60 year    Age above 80 year
Upto Rs 2.5 lakh Nil Nil Nil
Rs 2.5-3 lakhs 5% Nil Nil
Rs 3-5 lakhs 5% 5% Nil
Rs 5-10 lakhs 20% 20% 20%
Above Rs. 10 lakhs 30% 30% 30%

Don’t Go Blind When Planning Tax To Be Paid On Your Income

Tax slab rate of other assesse for AY 2022-2023 are

Person Tax Rate
Firm / Local Authority Flat 30%
Domestic company 30% & 25%*
Foreign company 50% & 40% #

*Tax rate is 25% if turnover or gross receipts of the domestic company in the previous year 2018-19 doesn’t exceed Rs. 250 crore. Tax rate is 30% if the turnover exceeds Rs 250 crore.

#Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government then 50%. In case of any other Income 40%. 


The tax assessed in accordance with the above-mentioned rates after being decreased by the amount of the tax rebate shall be increased by a surcharge.

Surcharge for Individuals and HUF

  • Total income exceeds Rs.50 lakh up to Rs.1 crore- 10% of income tax
  • Total income exceeds Rs.1 crore- 15% of income tax

(However, the amount of Income Tax and Surcharge shall not increase the amount of tax payable on a taxable income by more than the amount of increase in taxable income.)

Summary of Section 194M- TDS on payment to resident contractors and professionals

Surcharge for Domestic Companies

  • Taxable Income exceeds Rs 1 Crore –  7% of computed income tax.
  • Taxable Income exceeds Rs 10 Crores – 12% of computed income tax.

(However, the amount of Income Tax and Surcharge shall not increase the amount of income tax payable on a taxable income by more than the amount of increase in taxable income.)

Everything about Section 194N- TDS on Cash Withdrawal

Surcharge for LLPs and Firms

Surcharge on LLP and Firms is levied on the tax payable at the rate of 12% when the total income exceeds Rs.1 crore.

Health & Education Cess

Health and Education Cess is computed at 4% of the sum total of Income Tax and Surcharge.


In Indian tax laws, it is a  beneficial provision to reduce your Tax liability, covered by Section 87A of the Income Tax Act. However, It only provides to reduce the tax burden of the lower income bracket.

Tax on selling of Shares and Securities

Basically, it provides for a marginally lower payment of taxes to individuals earning an income below the specified limit.

Deductions under Chapter- VIA

There are some of the benefits provided by the government under law for reducing tax liabilities.

Some of the common deductions are Interest earned on FD and PPF, Loan taken for the construction of house property and many others.

16 Most Useful Deductions for 2019-20

Above, are the things that are used in Income tax calculation. Here we will see an example of tax calculation for the ASSESSMENT YEAR 19-20.

A person having salary income of Rs 6 lakh with HRA , Special Allowance ,Transport Allowance  and other allowances of rs 3 lakh , 1.46 lakhs and 20 thousand respectively. Person pays a rent of Rs 20,000 and lives in Delhi. Income from other sources were Rs 18,400.

Calculation of Income under the head of Salary

Particulars   Amount (in rs)
Basic salary   6,00,000
HRA 3,00,000  
Less: deduction 1,80,000 1,20,000
Transport Allowance 20,000  
Less: deduction 12,000 8,000
Special allowance 1,46,000 1,46,000
Standard Deduction   40,000
Income under the head salary   8,34,000

Know how to Apply for PAN

Calculation of gross taxable income in India-

Particular Amount Amount
Income from House property
Income from Salary 8,34,000  
Income from Business/ Profession
Income from Capital Gain
Income from Other Source 18,400  
Gross Total Income 8,52,400 8,52,400
80C 1,50,000  
80D 12,000  
80TTA 8,400 1,70,400
Net Total Income   6,82,000

Calculation of Income Tax in India for a 30 years old assesse:

Up to Rs 2,50,000 0 0
Rs 2,50,000- 5,00,000 5%of(500000-250000) 12,500
Rs 5,00,000 to Rs 10,00,000 20% (Rs 6,82,000 – Rs 5,00,000) 36,400
More than Rs 10,00,000 30% of NIL  
Cess 4% of (Rs 12,500 + Rs 36,400) 1956
Total Income Tax Rs 12,500 + Rs 36,400 + 1,956 Rs 50,856

This is how income tax for AY 22-23 is calculated.

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The author of above article is Sneha Bhalotia

Disclaimer:The article or blog or post (by whatever name) in this website is based on the writer’s personal views and interpretation of Act. The writer does not accept any liabilities for any loss or damage of any kind arising out of information and for any actions taken in reliance thereon. 
Also, and its members do not accept any liability, obligation or responsibility for author’s article and understanding of user.

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