Taxable Income

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Glossary

Taxable income is the portion of an individual’s or company’s income on which tax owed by the government in a given tax year is calculated. Taxable income includes wages, salaries, bonuses, invested sums, and other types of declared unearned income.


Taxable Income Meaning

‘What is taxable income?’ is a frequently asked question. Taxable income meaning can be further elaborated as a proportion of an individual’s or company’s gross income that is subject to tax as per the Income Tax Act of the Government of India. It consists of both earned and unearned income like canceled debts, government benefits, lottery payments. Income generated from selling appreciated taxes in a given financial year is also included in taxable income.

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In this glossary, we will further you about following topics related to taxable income:

  • Taxable Income Formula
  • Taxable Income Calculator
  • Taxable Income Slab 2022-23
  • Taxable Income for Employees
  • Taxable Income for Senior Citizens


Taxable Income Formula

As per the Income Tax Act, 1961, income tax is levied on:

  • Income from salary
  • Income from business or property
  • Income from capital gain tax
  • Income from house property
  • Income from other sources

With the help of Form 16 and salary slips, you can calculate your taxable income on salary. For calculating taxable income on salary, you can apply the following formula:

Taxable income = Gross salary- (tax-exempted (House Rent Allowance (HRA)+ Transport Allowance (TA)+Medical Reimbursements)+ Reimbursements provided on actual bills)


Taxable Income Calculator

Total taxable income depends on tax deductions, filing ITR status, and standard deductions. To calculate your taxable income, follow the steps below:

  • Calculate adjusted gross income which is equal to gross annual income with subtracted adjustments
  • From adjusted gross income, subtract any standardized or itemized deductions and entitled tax exemptions
  • The final sum after subtracting form adjustments, deductions and exemptions from gross income is equal to taxable income


Taxable Income Slab 2022-23

An individual who was in India for 182 days or a minimum of 60 days during the preceding tax year or for at least 365 days during the previous 4 years will be taxed.

The new taxable income slab for 2022-23:

Income Tax Slab Tax Rate
Up to Rs.2.5 lakh Nil
From Rs.2,50,001 to Rs.5,00,000 5% of the total income that is more than Rs.2.5 lakh
From Rs.5,00,001 to Rs.7,50,000 10% of the total income that is more than Rs.5 lakh
From Rs.7,50,001 to Rs.10,00,000 15% of the total income that is more than Rs.7.5 lakh
From Rs.10,00,001 to Rs.12,50,000 20% of the total income that is more than Rs.10 lakh
From Rs.12,50,001 to Rs.15,00,000 25% of the total income that is more than Rs.12.5 lakh
Income above Rs.15,00,001 30% of the total income that is more than Rs.15 lakh

The above mentioned tax slab is optional for individuals. It’s upto individuals if they chose to use the new tax regime or the old one.  If filing ITR (Income tax returns) as per slab 2022-23, i.e the new regime, the aforementioned tax slab should be used.
Apart from this, taxpayers can file updated returns in two years in the one-time window.


Taxable Income for Employees

For employees under the age of 60 years:

Net IncomeIncome Tax RateEducation CessSecondary and Higher Education Cess
Up to Rs.2.5 lakhsNilNilNil
Rs.2.5 lakhs to Rs.5 lakhs5% of (Total income – Rs.2.5 lakhs)2% of income tax1% of income tax
Rs.5 lakhs to Rs.10 lakhsRs.12,500 + 20% of (Total income – Rs.5 lakhs)2% of income tax1% of income tax
Above Rs.10 lakhsRs.1,12,500 + 30% of (Total income – Rs.10 lakhs)2% of income tax1% of income tax


Taxable Income for Senior Citizens

For individuals between the age of 60 and 80 years:

Net IncomeIncome Tax RateEducation CessSecondary and Higher Education Cess
Up to Rs.3 lakhsNILNilNil
Rs.3 lakhs to Rs.5 lakhs5% of (Total Income – Rs.3 lakhs)2% of income tax1% of income tax
Rs.5 lakhs to Rs.10 lakhsRs. 10,000 + 20% of (Total income – Rs.5 lakhs)2% of income tax1% of income tax
Above Rs.10 lakhsRs.1,10,000 + 30% of (Total income – Rs.10 lakhs)2% of income tax1% of income tax


For individuals above 80 years of age

Net IncomeIncome Tax RateEducation CessSecondary and Higher Education Cess
Up to Rs.5 lakhsNilNilNil
Rs.5 lakhs to Rs.10 lakhs20% of (Total Income – Rs.5 lakhs)2% of income tax1% of income tax
Above Rs.10 lakhsRs.1 lakh + 30% of (Total income – Rs.10 lakhs)2% of income tax1% of income tax

Read more: Filing ITR (Income Tax Return) For The Very First Time?

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Sukriti Saini

Sukriti Saini works as a content marketing strategist at HROne. She has done Bachelors in Journalism from Delhi University and carries several years of experience in content development. HR trends, Productivity, Performance and topics related to Employee Engagement garner most of her writing interest here. During leisure, she loves to write and talk about fashion, food & life.

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