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Frequently Asked Questions

Tax Liability - What is Tax Liability?

You may either be involved in a profession or run a business, or you could also receive a regular salary. No matter what your field is, you are required to pay taxes on the income you earn.

The income tax system in India is very progressive. That is, the more you earn the more tax you have to pay. This tax that you pay is used by the government for the development of the country. This money is used for building infrastructure, advancing facilities, funding employees, etc.

What is Tax Liability?

The tax that you owe to the government as per the income you earn is known as your tax liability. This is the amount that you are liable to pay to the tax authorities.

Whether you are an individual or a company, you have to pay taxes. If you evade tax, then you can land in serious trouble and can even go to jail.

How is Tax Liability Calculated?

In India, the amount of income tax that you are liable to pay is calculated based upon the income tax slab you fall into. Each slab is associated with an income range and a specific tax rate. Here are the rates.

Old Income Tax Regime

Income Range (In Rs) Tax Slab Rate Max Tax Liability*
0-2.5 lakh 0% Nil
2.5-5 lakh 5% 12,500
5-10 lakh 20% 112,500
(100,000 + 12,500)
Above 10 lakhs 30% 112,500 + 30% of excess income
* All amount before cess and surcharge

New Income Tax Regime

Income Range (In Rs) Tax Slab Rate Max Tax Liability*
Up to Rs 2.5 lakh 0% Nil
2,50,001-5,00,000 5% 12,500
5,00,001-7,50,000 10% 37,500
(25,000 + 12,500)
7,50,000-10,00,000 15% 75,000
(37,500 + 25,000 + 12,500)
10,00,001-12,50,000 20% 125,000
(50,000 + 37,500 + 25,000 + 12,500)
12,50,001-15,00,000 25% 187,500
(62,500 + 50,000 + 37,500 + 25,000 + 12,500)
Above 15,00,000 30% 187,500 + 30% of excess income
* All amount before cess and surcharge

Understand the Income Tax Slab for FY 2022-2023.

Higher education cess of 4% applies on the tax liability estimated as per slabs. Surcharge may apply where your income exceeds the following threshold:

  • 10% for income exceeding Rs 50 Lakhs
  • 15% for income exceeding Rs 1 crore

If surcharge applies to your tax liability cess will apply after surcharge.