¶ Income Tax Slab
Indian Income tax levies tax on individual taxpayers on the basis of a slab system. Slab system means different tax rates are prescribed for different ranges of income. It means the tax rates keep increasing with an increase in the income of the taxpayer. This type of taxation enables progressive and fair tax systems in the country. Such income tax slabs tend to undergo a change during every budget.These slab rates are different for different categories of taxpayers. Income tax has classified three categories of individual taxpayers such as:
- Individuals (aged less than of 60 years) including residents and non-residents
- Resident Senior citizens (60 to 80 years of age)
- Resident Super senior citizens (aged more than 80 years)
In accu360 to create Income Tax Slab, go to Human Resources > Payroll > Income Tax Slab.
To use Income Tax, you need to add Income Tax component in the Salary Structure.
This is the Income Tax Slab for the financial year 2022-2023 under Age Group 60 from the official site of Income Tax Department of India.
In accu360, the New Tax Regime can be declared similarly as shown below.
¶ Formula in Accu360
-
if not To_Amt and Annual_Taxable_Salary >= From_Amt:
tax_amount += (Annual_Taxable_Salary - From_Amt + 1) * Percentage *.01 -
if Annual_Taxable_Salary >= From_Amt and Annual_Taxable_Salary < To_Amt:
tax_amount += ( Annual_Taxable_Salary - From_Amt + 1) * Percentage *.01 -
elif Annual_Taxable_Salary >= From_Amt and Annual_Taxable_Salary >= To_Amt:
tax_amount += ( To_Amt - From_Amt + 1) * Percentage * .01
where,
Annual_Taxable_Salary = Annual Salary after deduction on which tax will be applied.
From_Amt = ‘From Amount’ from Income Tax Slab
To_Amt = ‘To Amount’ from Income Tax Slab
Percentage = ‘Percent Deduction’ from Income Tax Slab
tax_amount = The amount as tax.
¶ Example
An employee earns Rs 80000 as monthly salary. So his Annual Salary would be 80000*12=9,60,000. As per rules the Annual Taxable Salary for the employee is 9,60,000-2,50,000=7,10,000.
So 7,10,000 falls under the second slab of the income tax as defined in the accu360.
The calculation will be done serially starting from first slab till the matching slab in accu360.
First Slab Tax Amount = According to formula 3,
(500000-250001+1) * 5 * 0.01 = 12500
Second Slab Tax Amount = According to formula 2,
(710000-500001+1) * 10 * 0.01 = 21000 + 12500 = 33500
where, 21000 is the amount of second slab over the taxable amount and 12500 is the tax amount from the first slab.
So the total tax the employee needs to pay is Rs 33500, which will be partitioned in terms of month. To know more, refer to Employee Tax Exemption Declaration.
Tax calculator as per Income Tax Department of India which resembles the same taxable amount if calculated as shown below.
Note : Default Income Tax component needs to be added in the salary structure with Variable Based On Taxable Salary as checked in the component level.
