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The income tax is a direct tax which follows a progressive slab rate, where the rate of tax increases as the taxpayer's income rises. The Income-tax Act, 1961 provides for two tax regimes: the old regime, which allows various deductions and exemptions, and the new regime, which offers lower tax rates without exemptions.
In Budget 2024, the tax slabs for the new regime was revised as follows: Rs. 0 to Rs. 3,00,000 - 0%, Rs. 3,00,001 to Rs. 7,00,000 - 5%, Rs. 7,00,001 to Rs. 10,00,000 - 10%, Rs. 10,00,001 to Rs. 12,00,000 - 15%, Rs. 12,00,001 to Rs. 15,00,000 - 20% and Above Rs. 15,00,001 - 30%.
In this article, we will learn about:
The Budget 2024 has revised the tax slabs in the New Regime, providing taxpayers with an extra opportunity to save Rs. 17,500 in taxes. Additionally, the standard deduction has been raised to Rs. 75,000 under this regime and the family pension deduction has been increased to Rs. 25,000 from Rs. 15,000. This is applicable for the FY 2024-25. The following is the tax slabs:
Tax Slab for FY 2024-25 | Tax Rate |
Upto ₹ 3 lakh | Nil |
₹ 3 lakh - ₹ 7 lakh | 5% |
₹ 7 lakh - ₹ 10 lakh | 10% |
₹ 10 lakh - ₹ 12 lakh | 15% |
₹ 12 lakh - ₹ 15 lakh | 20% |
More than ₹ 15 lakh | 30% |
In India, the Income Tax applies to individuals based on a slab system, where different tax rates are assigned to different income ranges. As the person's income increases, the tax rates also increase. This type of taxation allows for a fair and progressive tax system in the country. The income tax slabs are revised periodically, typically during each budget. These slab rates vary for different groups of taxpayers.
Let us take a look at all the slab rates applicable for FY 2023-24(AY 2024-25) and FY 2024-25(AY 2025-26).
Old Tax Regime:
For Old Regime, a tax rebate up to Rs.12,500 is applicable if the total income does not exceed Rs 5,00,000 (not applicable for NRIs).
New Tax Regime:
Tax Slab for FY 2023-24 | Tax Rate | Tax Slab for FY 2024-25 | Tax Rate |
Upto ₹ 3 lakh | Nil | Upto ₹ 3 lakh | Nil |
₹ 3 lakh - ₹ 6 lakh | 5% | ₹ 3 lakh - ₹ 7 lakh | 5% |
₹ 6 lakh - ₹ 9 lakh | 10% | ₹ 7 lakh - ₹ 10 lakh | 10% |
₹ 9 lakh - ₹ 12 lakh | 15% | ₹ 10 lakh - ₹ 12 lakh | 15% |
₹ 12 lakh - ₹ 15 lakh | 20% | ₹ 12 lakh - ₹ 15 lakh | 20% |
More than 15 lakh | 30% | More than 15 lakh | 30% |
NOTE:
However, under the new tax regime rebate is up to Rs.25,000 is applicable if the total income does not exceed Rs 7,00,000. (not applicable for NRIs). Additionally, the standard deduction has been raised from Rs. 50,000 to Rs. 75,000 under the new tax regime.
NOTE:
Old Tax Regime (FY 2022-23, FY 2023-24 and FY 2024-25) | New Tax Regime | |||||
Income Slabs | Age < 60 years & NRIs | Age of 60 Years to 80 years | Age above 80 Years | FY 2022-23 | FY 2023-24 | FY 2024-25 |
Up to ₹2,50,000 | NIL | NIL | NIL | NIL | NIL | NIL |
₹2,50,001 - ₹3,00,000 | 5% | NIL | NIL | 5% | NIL | NIL |
₹3,00,001 - ₹5,00,000 | 5% | 5% | NIL | 5% | 5% | 5% |
₹5,00,001 - ₹6,00,000 | 20% | 20% | 20% | 10% | 5% | 5% |
₹6,00,001 - ₹7,00,000 | 20% | 20% | 20% | 10% | 10% | 5% |
₹7,00,001 - ₹9,00,000 | 20% | 20% | 20% | 15% | 10% | 10% |
₹9,00,001 - ₹10,00,000 | 20% | 20% | 20% | 15% | 15% | 10% |
₹10,00,001 - ₹12,00,000 | 30% | 30% | 30% | 20% | 15% | 15% |
₹12,00,001 - ₹12,50,000 | 30% | 30% | 30% | 20% | 20% | 20% |
₹12,50,001 - ₹15,00,000 | 30% | 30% | 30% | 25% | 20% | 20% |
₹15,00,000 and above | 30% | 30% | 30% | 30% | 30% | 30% |
Tax Slab for FY 2023-24 | Tax Rate |
Upto 3,00,000 | Nil |
3,00,001 - 7,00,000 | 5% |
7,00,001 - 10,00,000 | 10% |
10,00,001 - 12,00,000 | 15% |
12,00,001 - 15,00,000 | 20% |
Above 15,00,000 | 30% |
* Tax rebate up to Rs.25,000 is applicable if the total income does not exceed Rs 7,00,000 (not applicable for NRIs).
Income tax slabs for individuals aged below 60 years & HUF
Income Slabs | Individuals of Age < 60 Years and NRIs |
Up to Rs 2,50,000 | NIL |
Rs 2,50,001 - Rs 5,00,000 | 5% |
Rs 5,00,001 to Rs 10,00,000 | 20% |
Rs 10,00,001 and above | 30% |
NOTE:
Income Slabs | Individuals of Age 60 Years to 80 Years |
Up to Rs 3,00,000 | NIL |
Rs 3,00,001 - Rs 5,00,000 | 5% |
Rs 5,00,001 to Rs 10,00,000 | 20% |
Rs 10,00,001 and above | 30% |
NOTE:
Income Slabs | Individuals of Age above 80 Years |
Up to Rs 5,00,000 | NIL |
Rs 5,00,001 to Rs 10,00,000 | 20% |
Rs 10,00,001 and above | 30% |
NOTE:
Income Slabs | Income Tax Rates |
Up to Rs 3,00,000 | Nil |
Rs 3,00,000 to Rs 7,00,000 | 5% on income which exceeds Rs 3,00,000 |
Rs 7,00,000 to Rs 10,00,000 | Rs. 20,000 + 10% on income more than Rs 7,00,000 |
Rs 10,00,000 to Rs 12,00,000 | Rs. 50,000 + 15% on income more than Rs 10,00,000 |
Rs 12,00,000 to Rs 1500,000 | Rs. 80,000 + 20% on income more than Rs 12,00,000 |
Above Rs 15,00,000 | Rs. 1,40,000 + 30% on income more than Rs 15,00,000 |
Income Slabs | Income Tax Rates |
Up to Rs 3,00,000 | Nil |
Rs 3,00,000 to Rs 6,00,000 | 5% on income which exceeds Rs 3,00,000 |
Rs 6,00,000 to Rs 900,000 | Rs. 15,000 + 10% on income more than Rs 6,00,000 |
Rs 9,00,000 to Rs 12,00,000 | Rs. 45,000 + 15% on income more than Rs 9,00,000 |
Rs 12,00,000 to Rs 1500,000 | Rs. 90,000 + 20% on income more than Rs 12,00,000 |
Above Rs 15,00,000 | Rs. 150,000 + 30% on income more than Rs 15,00,000 |
From FY 2023-24 the new tax regime is the default regime. If you want to file your ITR under the old regime then you have to file Form 10-IEA.
Illustration 1: Rohit has a total taxable income of Rs 8,00,000. This income has been calculated by including income from all sources, such as salary, rental income, and interest income. Deductions under Section 80 have also been reduced. Rohit wants to know his tax dues as per the old regime for FY 2023-24 (AY 2024-2025).
Income Tax Slabs | Tax Rate | Tax Amount |
*Income up to Rs 2,50,000 | No tax | - |
Income from Rs 2,50,000 – Rs 5,00,000 | 5% (Rs 5,00,000 – Rs 2,50,000) | Rs 12,500 |
Income from Rs 5,00,000 – 10,00,000 | 20% (Rs 8,00,000 – Rs 5,00,000) | Rs 60,000 |
Income more than Rs 10,00,000 | 30% | - |
Tax | Rs 72,500 | |
Cess | 4% of Rs 72,500 | Rs 2,900 |
Total tax in FY 2023-24 (AY 2024-25) | Rs 75,400 |
Note:
Please note that Rohit is an individual taxpayer assessee having an income tax exemption of Rs 2,50,000. For other taxpayer assessees, i.e. senior citizens and super senior citizens, the Income-tax limit for availing the exemption would be Rs 3,00,000 & Rs 5,00,000, respectively.
Individuals with net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A under the old tax regime, i.e. tax liability will be NIL.
In case the income exceeds a certain threshold, the additional taxes are to be paid over and above existing tax rates. This is an additional tax on the High Income Earners.
Surcharge rates are as below:
10% of Income tax if total income > Rs.50 lakh and < Rs.1 crore,
15% of Income tax if total income > Rs.1 crore and < Rs.2 crore,
25% of Income tax if total income > Rs.2 crore and < Rs.5 crore,
37% of Income tax if total income > Rs.5 crore
*In Budget 2023, the highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (applicable from 1st April 2023)
Additional Health and Education cess at the rate of 4% will be added to the income tax liability.
With the failure to file the return within the due date for FY 2023-24, the taxpayer must opt for concessional rates in the New Tax regime but will have to forgo certain exemptions and deductions available in the existing old tax regime.
In total there are 70 deductions & exemptions that are not allowed, out of which the most commonly used are listed below:
Particulars | Old Tax Regime | New Tax regime (until 31st March 2023) | New Tax Regime (From 1st April 2023) |
Income level for rebate eligibility | ₹ 5 lakhs | ₹ 5 lakhs | ₹ 7 lakhs |
Standard Deduction | ₹ 50,000 | – | ₹ 50,000 |
Effective Tax-Free Salary income | ₹ 5.5 lakhs | ₹ 5 lakhs | ₹ 7.5 lakhs |
Rebate u/s 87A | 12,500 | 12,500 | 25,000 |
HRA Exemption | ✓ | X | X |
Leave Travel Allowance (LTA) | ✓ | X | X |
Other allowances including food allowance of Rs 50/meal subject to 2 meals a day | ✓ | X | X |
Entertainment Allowance Deduction and Professional Tax | ✓ | X | X |
Perquisites for official purposes | ✓ | ✓ | ✓ |
Interest on Home Loan u/s 24b on self-occupied or vacant property | ✓ | X | X |
Interest on Home Loan u/s 24b on let-out property | ✓ | ✓ | ✓ |
Deduction u/s 80C (EPF|LIC|ELSS|PPF|FD|Children’s tuition fee etc) | ✓ | X | X |
Employee’s (own) contribution to NPS | ✓ | X | X |
Employer’s contribution to NPS | ✓ | ✓ | ✓ |
Medical insurance premium – 80D | ✓ | X | X |
Disabled Individual – 80U | ✓ | X | X |
Interest on education loan – 80E | ✓ | X | X |
Interest on Electric vehicle loan – 80EEB | ✓ | X | X |
Donation to Political party/trust etc – 80G | ✓ | X | X |
Savings Bank Interest u/s 80TTA and 80TTB | ✓ | X | X |
Other Chapter VI-A deductions | ✓ | X | X |
All contributions to Agniveer Corpus Fund – 80CCH | ✓ | Did not exist | ✓ |
Deduction on Family Pension Income | ✓ | X | ✓ |
Gifts up to Rs 50,000 | ✓ | ✓ | ✓ |
Exemption on voluntary retirement 10(10C) | ✓ | ✓ | ✓ |
Exemption on gratuity u/s 10(10) | ✓ | ✓ | ✓ |
Exemption on Leave encashment u/s 10(10AA) | ✓ | ✓ | ✓ |
Daily Allowance | ✓ | ✓ | ✓ |
Transport Allowance for a specially-abled person | ✓ | ✓ | ✓ |
Conveyance Allowance | ✓ | ✓ | ✓ |
Only the Income tax slabs under the new regimes were revised in the Union Budget 2023.
Slab | New Tax Regime FY 2022-23 (AY 2023-24) | New Tax Regime FY 2023-24 (AY 2024-25) |
₹0 - ₹2,50,000 | – | – |
₹2,50,000 - ₹3,00,000 | 5% | – |
₹3,00,000 - ₹5,00,000 | 5% | 5% |
₹5,00,000 - ₹6,00,000 | 10% | 5% |
₹6,00,000 - ₹7,50,000 | 10% | 10% |
₹7,50,000 - ₹9,00,000 | 15% | 10% |
₹9,00,000 - ₹10,00,000 | 15% | 15% |
₹10,00,000 - ₹12,00,000 | 20% | 15% |
₹12,00,000 - ₹12,50,000 | 20% | 20% |
₹12,50,000 - ₹15,00,000 | 25% | 20% |
>₹15,00,000 | 30% | 30% |
The new tax regime can largely benefit middle-class taxpayers who have a taxable income of up to Rs 15 lakh. The old regime is a better option for high-income earners.
The new income tax regime is beneficial for people who make low investments. As the new regime offers six lower-income tax slabs, anyone paying taxes without claiming tax deductions can benefit from paying a lower rate of tax under the new tax regime. For instance, the assessee having total income before deduction up to Rs 12 lakh will have higher tax liability under the old system if they have investments less than Rs. 3,12,500. Therefore, if you invest less in tax-saving schemes, go for the new regime.
That being said, if you already have in place a financial plan for wealth creation by making investments in tax-saving instruments; medical claims and life insurance; making payments of children’s tuition fees; payment of EMIs on education loan; buying a house with a home loan; and so on, the old regime helps you with higher tax deductions and lower tax outgo.
In light of the above and considering the new income tax regime, if taxpayers want to opt for the concessional tax rates, they may evaluate both regimes. Hence, it is advisable to do a comparative evaluation and analysis under both regimes and then choose the most beneficial one, as it may vary from person to person. Read a detailed breakdown on this topic here.
Nature of Income | Time of Selection of option of old vs new regime |
Income from Salary or any other head of income attracting TDS | At the start of the financial year, an employee has the choice to select the tax regime and inform their employer, whereas the default regime shall be new tax regime. It cannot be modified during the year. However, the option can be modified when filing the Income Tax Return. |
Income from Business & Profession | In case you have Business or professional income, the choice between tax regimes can only be made once in a lifetime. |
Particulars | Old regime Tax rates | New Regime Tax rates |
Company opts for section 115BAB (not covered in sections 115BA and 115BAA) & is registered on or after October 1, 2019, and has commenced manufacturing on or before 31st March 2024 and subject to the conditions specified in the section. | – | 15% |
Company opts for Section 115BAA, wherein the total income of a company has been calculated without claiming specified deductions, incentives, or exemptions and additional depreciation as specified in the section. | – | 22% |
The company opts for section 115BA registered on or after March 1, 2016 and engaged in the manufacture of any article or thing and does not claim the deduction as specified in the section. | – | 25% |
Turnover or gross receipt of the company is less than Rs. 400 crore in the previous year 2020-21 | 25% | 25% |
Any other domestic company | 30% | 30% |
*Please refer to the new sections for checking the applicability for the above concessional income tax rates.
NOTE:
A partnership firm/ LLP is taxable at 30%.
NOTE:
Turnover Particulars | Tax Rate |
---|---|
Gross turnover up to 250 Cr. in the previous year | 25% |
Gross turnover exceeding 250 Cr. in the previous year | 30% |
NOTE:
Related Articles:
Old vs New Tax Regime
Section 115BAC of Income Tax Act
Income Tax Changes From 1 April 2024: New Tax Regime Will Be Default
Form 10-IEA Purpose, Applicability, How to Fill & Submit Form
Tax free Income in India
E-Return Intermediary (ERI) Income Tax
Form 61B of Income-tax Act
Form 26B of Income-tax Act
CRN Number in Income Tax
Income Tax Customer Care
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Income tax in India follows a progressive slab rate system under the Income-tax Act, 1961 with old and new regimes offering different tax rates and deductions. For FY 2024-25, the tax slabs have been revised providing more opportunities to save on taxes. Taxpayers can choose between the old and new regimes based on their income and investments.