Income Tax Slab Rate Changes (2021–2025)

Author

Ashutosh

Introduction

This report visualizes changes in income tax slab rates in India from 2021 to 2025. We examine how tax rates for different income slabs evolved during this period, highlighting any reforms or reductions in taxation, especially for higher income brackets.

Load Required Libraries

 library(ggplot2) 
 library(dplyr)

Attaching package: 'dplyr'
The following objects are masked from 'package:stats':

    filter, lag
The following objects are masked from 'package:base':

    intersect, setdiff, setequal, union

Create Tax Slab Dataset

We construct a dataset representing the tax rates for four income slabs across five years (2021–2025).

# Data for 2021–2025
tax_data <- data.frame(
  Year = rep(2021:2025, 4),
  Slab = rep(c("Up to 2.5L", "2.5L–5L", "5L–10L", "10L+"), each = 5),
  Rate = c(
    rep(0, 5),        # Up to 2.5L: 0% rate (all years)
    rep(5, 5),        # 2.5L–5L: 5% rate (all years)
    rep(15, 5),       # 5L–10L: 15% rate (all years)
    c(30, 30, 25, 25, 25) # 10L+: reduced from 30% to 25% in 2023
  )
)

Visualize the Tax Rate Changes

The following step plot shows how tax rates have changed over time for each income slab.

ggplot(tax_data, aes(x = Year, y = Rate, color = Slab, group = Slab)) +
  geom_step(size = 1.2, direction = "hv") +
  labs(
    title = "Income Tax Slab Rate Changes (2021–2025)",
    x = "Year",
    y = "Tax Rate (%)",
    color = "Income Slab"
  ) +
  theme_minimal(base_size = 14) +
  theme(
    panel.grid.minor = element_blank(),
    legend.position = "top"
  )
Warning: Using `size` aesthetic for lines was deprecated in ggplot2 3.4.0.
ℹ Please use `linewidth` instead.

Interpretation

  • The “Up to 2.5L” slab consistently had a 0% tax rate, indicating no tax burden for the lowest income group.

  • The “2.5L–5L” slab was taxed at a flat 5% rate throughout the five years.

  • Similarly, the “5L–10L” slab maintained a 15% tax rate.

  • The most significant change occurred in the “10L+” slab, where the rate was reduced from 30% to 25% starting in 2023, suggesting a reform aimed at reducing the tax burden for high-income earners.

Conclusion

The visualization reflects policy stability in the lower and middle-income tax brackets, while signaling a tax cut for the highest slab beginning in 2023. Such a change might have implications for revenue collection, investment incentives, and income inequality trends.