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New Tax Regime 2024: All Your Questions Answered

By Ektha Surana

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Updated on: Jan 2nd, 2024

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16 min read

New Tax Regime 2023: Check out here about all the frequently asked questions about new income tax regime 2023 slabs, calculator, deductions for salaried employees. Budget 2023 brought in many surprising changes to the new tax regime. In this article, we've addressed some key questions about these changes. 

What are the new income tax slabs and tax rates under the revised new tax regime?

The tax slabs have been revised under the new tax regime. The new Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25) is:

Total IncomeRate of Tax
up to ₹3,00,000Nil
₹3,00,001- ₹6,00,0005%
₹6,00,001- ₹9,00,00010%
₹9,00,001- ₹12,00,00015%
₹12,00,001- ₹15,00,00020%
₹15,00,001 and above30%

What is the surcharge amount under the revised new tax regime? Is that change applicable only for those with an income more than 5 crores?

The surcharge rate has been reduced to 25% from 37% for taxpayers earning income more than Rs 5 crores under the new tax regime. Therefore, this surcharge change is applicable only for those who opt for new tax regime and have an income more than Rs. 5 crores.

The surcharge rates for various income levels are as under:

Net Taxable Income limitSurcharge Rate on the amount of income tax 
Before Budget 2023After Budget 2023
Less than ₹50 lakhsNilNil
More than ₹50 lakhs ≤ ₹ 1 Crore10%10%
More than ₹ 1 Crore ≤  ₹ 2 Crore15%15%
More than ₹ 2 Crore ≤  ₹ 5 Crore25%25%
More than ₹ 5 Crore37%25%

The new income tax slabs slabs are Rs 3 lakh - 6 lakh with 5% tax rate, Rs 6 lakh- 9 lakh with 10%, etc. But why is it being said that there is no income tax upto Rs. 7 lakh?

tax rebate reduces your tax amount. However, the tax rebate is allowed only to resident individuals. However, the tax slabs are applicable to all whether individuals, HUFs, AOPs, etc. or whether resident or non-resident. 

So while computing taxes, they will first be calculated as per the slab rates. Then the rebate shall be reduced from your final tax amount bringing it down to zero. You will, however, get a rebate only if you are a resident individual. 

What deductions are available under the revised new tax regime?

Deductions in new regime: 

  • Standard deduction for salaried individuals up to Rs 50,000
  • Standard deduction on such pension: ₹15,000 or 1/3rd of pension, whichever is lower.
  • Interest on Home Loan u/s 24b on: Let-out property
  • Employer's contribution to NPS
  • All contributions to Agniveer Corpus Fund (section 80CCH)

Will I receive an exemption on leave encashment under the new tax regime?

Yes, exemption on leave encashment is available under the new tax regime. 

In Budget 2023, the exemption threshold for leave encashment was increased 8-fold from from ₹3 lakhs to ₹25 lakhs for non-government employees. 

Thus, at the time of retirement, leave encashment of up to ₹25 lakhs is tax-free under Section 10(10AA).

Which tax regime is better: old or new?

Using our income tax calculator, you can calculate how much tax you can save under both regimes and decide the most beneficial regime for you. For a detailed understanding of which tax regime you must opt for according to your pay scale, click here

Are investments in PF and VPF taxable under the new regime?

No, investments like PF and VPF are tax deductible under 80C. However, section 80C deduction is not available under the new regime. Click here to know what exemptions and deductions are allowed under the new regime.

Withdrawals from the Agniveer Corpus Fund is not taxable as per Section 10(12C). Will this exemption be available under the new regime too?

Yes. Any amount received from the Agniveer Corpus Fund will be tax-free under both the old and the new tax regimes.

An individual enrolled under the Agnipath scheme can make a contribution to the Agniveer Corpus Fund. An equal contribution shall be made by the government. Both these contributions will be allowed as tax deduction from your income under the newly inserted section 80CCH.

Not only this, but even the amount received at the end of your tenure will also be exempt from tax under the newly inserted section 10(12C). 

Is the standard deduction 52500 or 50000?

Finance Minister’s statement in the Budget Speech caused a lot of confusion among taxpayers regarding the amount of the standard deduction, whether it is ₹50,000 or ₹52,500

The FM's previous statement was simply an illustration of the possible impact if the standard deduction is to be introduced in the new tax regime. However, as per the Finance Bill and the CBDT (Central Board of Direct Taxes), the standard deduction is ₹ 50,000 and not ₹ 52,500. 

Given that standard deduction of Rs. 50,000 is there, will the tax on an income of 7,50,000 be 0 as per the new tax regime?

In Budget 2023, a tax rebate on an income up to ₹7 lakhs was introduced under the new tax regime. This means that taxpayers with an income of up to ₹7 lakhs will not have to pay any tax at all if they opt for the new tax regime. Also, Rs 50,000 standard deduction was introduced under the new tax regime. Therefore, a taxpayer with income up to Rs 7.5 lakhs will pay zero tax if he opts for the new tax regime. 

Last year I filed as per new regime. Can I switch back to old regime, and how frequently can I keep switching?

Starting from FY 2023-24, the new income tax regime will be considered as the default tax regime. If you wish to switch to the old regime, you must submit a form (yet to be specified) at the time of filing return.  

How frequently you can switch between old and new regime shall depend on your income type. If you have:

  • Business or professional income: you can switch between old and new regime only once in a lifetime
  • Other than business/professional income like salary etc: You can switch between the old and new tax regimes every year.

How will presumptive taxation work in case of a new regime?

Presumptive scheme works the same under the new and the old tax regime

                        CategoryTurnover/receipts are within these limits
Before Budget 2023After Budget 2023
Small Business Owners (Section 44AD)Rs. 2 croreRs.3 crore*
Specified Professionals like doctors, lawyers, engineers, interior decorators, freelancers, etc. (Section 44ADA)Rs. 50 lakhsRs.75 lakh*

                                        *95% of your earnings should be received through online payment modes, not cash.

What are the advantages of the new tax regime?

Under the new tax regime, you don’t need to keep track of rent receipts, travel tickets, and complicated tax planning. The new tax regime offers lower tax rates and fewer deductions. This eliminates the need to invest in tax-saving schemes and insurance plans which may not align with your financial goals.

Will insurance proceeds be taxable - will the originally paid premium amount be exempt from that?

Amount received from a life insurance policy is exempt from taxes as long as the premiums paid on the policy does not exceed 10% of the sum assured. However, there have been instances of taxpayers exploiting this exemption by investing in policies with high premium contributions and claiming higher tax exemptions. To prevent such misuse, the government restricted the tax exemption on high value life insurance policies. Therefore, the amount received from life insurance policies will now be taxable if the annual premium paid in a year exceeds Rs. 5 lakhs.

Can I claim section 80C deduction under revised new tax regime?

No, if you opt for the new tax regime you will not be allowed any tax benefit under section 80C.

About the Author

Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more

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Quick Summary

The article discusses the new income tax regime 2023, focusing on revised tax rates, surcharge amounts, deductions, and advantages. It also touches on topics like leave encashment exemptions, investments, and presumptive taxation. It clarifies confusion on standard deductions and tax rebates under the new regime. It explains how one can switch between the old and new tax regimes and highlights the restrictions on certain exemptions like those on insurance proceeds.

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