Income Tax Slabs FY 2023-24 & AY 2024-25 (New & Old Regime Tax Rates)
For the fiscal year 2023-24 and assessment year 2024-25, India offers different income tax slabs under the old and new tax regimes, giving taxpayers flexibility in managing their finances. Under the old regime, taxpayers benefit from various deductions and exemptions but face higher tax rates.
Conversely, the new regime generally offers lower Income tax rates but eliminates most deductions and exemptions, simplifying compliance. Individuals can choose between these regimes based on their financial situation.
The tax slabs range across different income levels, and specific rates vary, especially considering surcharges and cesses that apply above certain income thresholds. Each taxpayer must evaluate which regime optimally reduces their tax liability.
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Budget 2024 Update: Tax Slabs Under New Regime
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. These changes are applicable for the FY 2024-25. Here is a comparison of the tax slabs post-budget and pre-budget:
Tax Slab for FY 2023-24:
- Upto ₹ 3 lakh: Nil
- ₹ 3 lakh - ₹ 6 lakh: 5%
- ₹ 6 lakh - ₹ 9 lakh: 10%
- ₹ 9 lakh - ₹ 12 lakh: 15%
- ₹ 12 lakh - ₹ 15 lakh: 20%
- More than 15 lakh: 30%
Tax Slab for FY 2024-25:
- 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%
These adjustments are aimed at providing relief to taxpayers and encouraging higher compliance. The raised standard deduction and family pension deduction will particularly benefit salaried individuals and pensioners.
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What Is an Income Tax Slab?
The income tax slab rates for the Financial Year (FY) 2023-24 and Assessment Year (AY) 2024-25 under both the old and new tax regimes in India. Here’s a detailed analysis:
Old Regime
- For Individuals (Age < 60 years)
- Up to ₹2,50,000: Nil (No tax)
- ₹2,50,001 to ₹3,00,000: 5%
- ₹3,00,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
For Resident Senior Citizens (Age 60 to < 80 years)
- Up to ₹3,00,000: Nil (No tax)
- ₹3,00,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
For Resident Super Senior Citizens (Age ≥ 80 years)
- Up to ₹5,00,000: Nil (No tax)
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
New Regime
For All Individuals (No age differentiation)
- Up to ₹3,00,000: Nil (No tax)
- ₹3,00,001 to ₹6,00,000: 5% (Tax rebate under Section 87A up to ₹7,00,000)
- ₹6,00,001 to ₹9,00,000: 10% (Tax rebate under Section 87A up to ₹7,00,000)
- ₹9,00,001 to ₹12,00,000: 15%
- ₹12,00,001 to ₹15,00,000: 20%
- Above ₹15,00,000: 30%
Key Points:
Old Regime:
- Includes various deductions and exemptions (like HRA, 80C, etc.).
- Different basic exemption limits for different age groups.
New Regime:
- Lower tax rates but no deductions/exemptions.
- Uniform slab rates for all age groups.
Income tax exemption limit:
- Up to ₹2,50,000 for Individuals and HUFs below 60 years of age and NRIs.
- Up to ₹3,00,000 for senior citizens aged 60 years and above but below 80 years.
- Up to ₹5,00,000 for super senior citizens aged 80 years and above.
- Surcharge and cess will be applicable over and above the tax rates.
New Regime
Under the New Regime, a tax rebate of up to ₹25,000 is applicable if the total income does not exceed ₹7,00,000. This rebate is not available for NRIs.
Note:
- Income tax exemption limit: Up to ₹3,00,000 for Individuals and HUFs opting for the new regime.
- Surcharge and cess will be applicable over and above the tax rates.
- The tax rebate is equivalent to the amount of tax payable when the total income exceeds ₹7,00,000. This rebate is not applicable for NRIs.
Income Tax Slab Rates for FY 2022-23 (AY 2023-24)
New Tax Regime (Until 31st March 2023)
Income Slabs for Individuals (all age categories):
- Up to ₹2,50,000: Nil (No tax)
- ₹2,50,001 - ₹5,00,000: 5%
- ₹5,00,001 - ₹7,50,000: 10%
- ₹7,50,001 - ₹10,00,000: 15%
- ₹10,00,001 - ₹12,50,000: 20%
- ₹12,50,001 - ₹15,00,000: 25%
- Above ₹15,00,000: 30%
A tax rebate of up to ₹12,500 is applicable if the total income does not exceed ₹5,00,000. This rebate is not available for NRIs.
Refer to the above image for the rates applicable to FY 2023-24 (AY 2024-25) for the upcoming tax filing season.
Revised Income Tax Slab Rates for AY 2024-25 (FY 2023-24) - New Regime
Income Slabs and Tax Rates for FY 2023-24 (AY 2024-25)
- Up to ₹3,00,000: Nil (No tax)
- ₹3,00,000 to ₹6,00,000: 5% on income exceeding ₹3,00,000
- ₹6,00,000 to ₹9,00,000: ₹15,000 + 10% on income exceeding ₹6,00,000
- ₹9,00,000 to ₹12,00,000: ₹45,000 + 15% on income exceeding ₹9,00,000
- ₹12,00,000 to ₹15,00,000: ₹90,000 + 20% on income exceeding ₹12,00,000
- Above ₹15,00,000: ₹1,50,000 + 30% on income exceeding ₹15,00,000
These rates are applicable for the Financial Year 2023-24, corresponding to the Assessment Year 2024-25, under the new tax regime.
How to Calculate Income Tax from Income Tax Slabs?
To calculate income tax based on income tax slabs, follow these steps:
Determine Total Taxable Income: Calculate the total income from all sources such as salary, rental income, and interest income. Deduct eligible deductions under relevant sections like Section 80 to arrive at the taxable income.
Apply Tax Rates as per Slabs: Use the applicable tax rates based on the income tax slabs to compute the tax for each portion of the income.
Illustration 1: Tax Calculation for Rohit
Rohit has a total taxable income of Rs 8,00,000 for the Financial Year 2023-24 (Assessment Year 2024-25). Here’s how his tax dues are calculated under the old tax regime:
Income Tax Slabs and Tax Rates:
Income up to Rs 2,50,000: No tax
- Tax Amount: Nil
Income from Rs 2,50,000 to Rs 5,00,000: 5%
- Calculation: 5% of (5,00,000 - 2,50,000) = 5% of Rs 2,50,000
- Tax Amount: Rs 12,500
Income from Rs 5,00,000 to Rs 10,00,000: 20%
- Calculation: 20% of (8,00,000 - 5,00,000) = 20% of Rs 3,00,000
- Tax Amount: Rs 60,000
Income more than Rs 10,00,000: 30%
- Calculation: Not applicable as Rohit's income does not exceed Rs 10,00,000
- Tax Amount: Nil
Total Tax Calculation:
- Total Tax Amount: Rs 12,500 (for Rs 2,50,000 to Rs 5,00,000) + Rs 60,000 (for Rs 5,00,000 to Rs 8,00,000) = Rs 72,500
- Cess: 4% of Rs 72,500 = Rs 2,900
- Total Tax Payable: Rs 72,500 + Rs 2,900 = Rs 75,400
Notes:
- Rohit is an individual taxpayer with a tax exemption limit of Rs 2,50,000. For senior citizens (aged 60-79 years), the exemption limit is Rs 3,00,000, and for super senior citizens (aged 80 years and above), it is Rs 5,00,000.
- Individuals with a net taxable income of up to Rs 5,00,000 are eligible for a tax rebate under Section 87A, resulting in a nil tax liability under the old tax regime.
This method ensures that Rohit accurately calculates his tax liability using the appropriate income tax slabs and rates.
Key Points about the New Tax Regime
You've outlined some key points about the new tax regime in India and the concept of a surcharge. Here’s a clearer breakdown and further explanation:
Key Points of the New Tax Regime:
Uniform Tax Rates: Under the new tax regime, the tax rates are the same for all categories of individuals, regardless of age. This means that whether an individual is below 60, a senior citizen (60-79 years), or a super senior citizen (80 years and above), the tax slab applicable remains the same.
Tax Rebate under Section 87A: Individuals with a net taxable income of ₹7 lakh or less are eligible for a tax rebate under section 87A, making their tax liability nil under the new regime.
Understanding Surcharge:
A surcharge is an additional charge or tax levied on an existing tax rate. In India, surcharges are applied to individuals whose income exceeds certain thresholds, primarily affecting high-income earners.
Applicable Surcharge Rates:
- 10% if total income is more than ₹50 lakh but less than ₹1 crore.
- 15% if total income is more than ₹1 crore but less than ₹2 crore.
- 25% if total income is more than ₹2 crore but less than ₹5 crore.
Reduced Rate: In Budget 2023, the highest surcharge rate for incomes exceeding ₹5 crore under the new tax regime was reduced from 37% to 25%, effective from April 1, 2023.
Exceptions to Surcharge Rates:
Dividends and Capital Gains: The surcharge on income from dividends and capital gains taxable under sections 111A, 112A, and 115AD (involving short-term and long-term capital gains on shares and income of Foreign Institutional Investors) is capped at 15%, regardless of the income threshold.
Association of Persons (AOP): If an AOP consists entirely of companies, the surcharge will also be limited to 15%.
Additional Cess:
An additional Health and Education Cess at the rate of 4% is added to the computed income tax and surcharge, further increasing the tax liability.
This structure aims to simplify tax administration and improve compliance, while the surcharge ensures that higher earners contribute more towards national development.
Old Tax regime Vs New Tax regime - Which is better?
Deciding between the old tax regime and the new tax regime depends on various factors such as your income level, eligible deductions, financial goals, and personal preferences. Here’s a comparison to help you understand which regime might be better for you:
Old Tax Regime:
Pros:
- Allows for various deductions and exemptions, including popular ones like HRA, LTA, 80C deductions, home loan interest, and medical insurance premiums.
- Taxpayers can optimize their tax liability by strategically utilizing available deductions and exemptions.
- Beneficial for individuals who heavily rely on deductions to reduce their taxable income.
Cons:
- Higher tax rates compared to the new regime.
- Complex tax planning required to maximize deductions and exemptions.
- May not be suitable for individuals with lower taxable income or those who prefer simplicity in tax filing.
New Tax Regime:
Pros:
- Lower tax rates compared to the old regime, providing immediate tax relief.
- Simpler tax structure with fewer deductions and exemptions, making tax filing easier and less time-consuming.
- Suitable for individuals with moderate to high incomes who do not heavily rely on deductions or prefer a straightforward tax system.
Cons:
- Limited deductions and exemptions available, which may result in a higher tax liability for certain individuals, especially those with significant investments and expenses eligible for deductions.
- Not beneficial for individuals who actively use deductions to reduce their taxable income.
Which is Better?
For High Earners with Few Deductions:
The new tax regime may be more beneficial due to lower tax rates and simplicity in tax filing.
For Moderate Earners with Many Deductions:
The old tax regime might be better as it allows for various deductions and exemptions, potentially reducing the tax liability.
For Individuals Seeking Simplicity:
The new tax regime offers a straightforward tax structure and may be preferred by individuals who prioritize ease of tax filing over maximizing deductions.
For Long-Term Financial Planning:
Consider your long-term financial goals and tax-saving investments. If certain deductions play a crucial role in your financial planning, sticking to the old regime might be more beneficial.
For Flexibility:
Salaried individuals can switch between regimes annually, allowing them to reassess their tax situation each year and choose the regime that offers the most advantages based on their current financial circumstances.
Ultimately, the decision depends on your individual financial situation, goals, and preferences. It’s advisable to consult with a financial advisor or tax professional to evaluate the best option for your specific needs.
Income Tax Rate for domestic companies – FY 2023-24
Certainly! Here's a simplified summary of the income tax rates for domestic companies in India for FY 2023-24:
New Tax Regime Rates
Section 115BAB (New Manufacturing Companies)
- Tax Rate: 15%
- Applicability: For companies registered on or after October 1, 2019, and commenced manufacturing on or before March 31, 2024. This rate applies if the company meets specific conditions outlined in Section 115BAB.
- Effective: From AY 2020-21 onwards.
Section 115BAA (General Concessional Rate)
- Tax Rate: 22%
- Applicability: For companies that opt to calculate their total income without claiming certain specified deductions, incentives, or exemptions, and additional depreciation.
- Effective: From AY 2020-21 onwards.
Section 115BA (Certain New Manufacturing Companies)
- Tax Rate: 25%
- Applicability: For companies registered on or after March 1, 2016, engaged in manufacturing and not claiming specified deductions.
- Effective: From AY 2017-18 onwards.
Companies with Turnover under Rs. 400 Crore
- Tax Rate: 25%
- Applicability: For companies whose turnover or gross receipts in FY 2020-21 were less than Rs. 400 crore.
Any Other Domestic Company
- Tax Rate: 30%
Additional Charges
- Health and Education Cess: 4% on the income tax and applicable surcharge.
Surcharge:
- 7% of income tax if total income > Rs. 1 crore and up to Rs. 10 crore.
- 12% of income target="blank" tax if total income > Rs. 10 crore.
- 10% of income tax for companies opting for Sections 115BAA and 115BAB.
Key Notes
The rates mentioned apply based on the company's choice of taxation regime and specific conditions.
Companies need to review the conditions and provisions related to each section to determine eligibility for these concessional tax rates.
This table outlines the rates applicable depending on the tax regime and conditions a company meets. It is essential to confirm current regulations and consult a tax professional for accurate tax planning based on the most recent updates.
Income tax rate for Partnership firm or LLP as per old/ new regime
The income tax rate for a Partnership firm or LLP remains consistent at 30% regardless of the old or new tax regime.
Additional Charges:
- Surcharge: A surcharge of 12% is applied if the income exceeds Rs 1 crore.
- Health and Education Cess: An additional 4% cess is levied on the income tax and applicable surcharge.
Important Note:
No concessional tax rates have been introduced for Partnership firms or LLPs in the forthcoming tax regime.
What is a Surcharge and Cess?
A surcharge is an additional tax levied on taxpayers whose income exceeds certain thresholds. It is charged over and above the existing income tax rates and is primarily targeted at high-income earners.
Surcharge Rates:
- 10% of Income Tax if total income is more than Rs 50 lakh and up to Rs 1 crore.
- 15% of Income Tax if total income is more than Rs 1 crore and up to Rs 2 crore.
- 25% of Income Tax if total income is more than Rs 2 crore and up to Rs 5 crore.
- 37% of Income Tax if total income exceeds Rs 5 crore.
Note: In Budget 2023, the highest surcharge rate of 37% has been reduced to 25% under the new tax regime, applicable from April 1, 2023.
Special Considerations:
Dividends and Capital Gains: The surcharge rates of 25% or 37% do not apply to income from dividends and capital gains taxable under sections 111A (Short Term Capital Gain on Shares), 112A (Long Term Capital Gain on Shares), and 115AD (Tax on the income of Foreign Institutional Investors). The highest surcharge rate for these incomes is capped at 15%.
Association of Persons (AOP): For an AOP consisting entirely of companies, the surcharge rate is also limited to 15%.
Additional Health and Education Cess:
An additional Health and Education cess at the rate of 4% will be added to the income tax liability, inclusive of the surcharge.
Consequences of Not Filing the Return Within the Due Date for AY 2024-25
If you fail to file your tax return by the due date for FY 2023-24, you must opt for the concessional rates under the new tax regime, but you will have to forgo certain exemptions and deductions available in the old tax regime.
Here's a simplified overview of the key differences and the implications:
Income Level for Rebate Eligibility:
- Old Regime: ₹ 5 lakhs
- New Regime (until 31st March 2023): ₹ 5 lakhs
- New Regime (from 1st April 2023): ₹ 7 lakhs
Standard Deduction:
- Old Regime: ₹ 50,000
- New Regime (until 31st March 2023): None
- New Regime (from 1st April 2023): ₹ 50,000
Effective Tax-Free Salary Income:
- Old Regime: ₹ 5.5 lakhs
- New Regime (until 31st March 2023): ₹ 5 lakhs
- New Regime (from 1st April 2023): ₹ 7.5 lakhs
Rebate under Section 87A:
- Old Regime: ₹ 12,500
- New Regime (until 31st March 2023): ₹ 12,500
- New Regime (from 1st April 2023): ₹ 25,000
Exemptions Not Allowed in New Regime:
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Deductions under Section 80C (e.g., EPF, LIC, ELSS, PPF, Fixed Deposits, Children’s tuition fees)
- Medical insurance premiums (Section 80D)
- Interest on education loans (Section 80E)
- Interest on home loans for self-occupied properties (Section 24b)
- Donations to political parties or trusts (Section 80G)
- Savings bank interest (Sections 80TTA and 80TTB)
- Various other Chapter VI-A deductions
Exemptions Allowed in New Regime:
- Perquisites for official purposes
- Interest on home loans for let-out properties (Section 24b)
- Employer's contribution to NPS
- Contributions to the Agniveer Corpus Fund (Section 80CCH)
- Deduction on family pension income
- Gifts up to ₹ 50,000
- Exemptions on voluntary retirement (Section 10(10C))
- Exemptions on gratuity (Section 10(10))
- Exemptions on leave encashment (Section 10(10AA))
- Daily allowance, transport allowance for specially-abled persons, and conveyance allowance
Health and Education Cess:
- An additional 4% cess on the income tax liability, including the surcharge.
By failing to file on time, you will have to forgo significant deductions and exemptions that could have otherwise reduced your tax liability. It is crucial to file your tax return within the due date to maximize your tax benefits under the old regime.
Comparison of Income Tax Slabs under New Regime Before and After Budget 2023
The Union Budget 2023 introduced revisions to the income tax slabs under the new regime. Here is a comparison of the income tax slabs for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25):
New Tax Regime FY 2022-23 (AY 2023-24)
- ₹0 - ₹2,50,000: No tax
- ₹2,50,000 - ₹3,00,000: 5%
- ₹3,00,000 - ₹5,00,000: 5%
- ₹5,00,000 - ₹6,00,000: 10%
- ₹6,00,000 - ₹7,50,000: 10%
- ₹7,50,000 - ₹9,00,000: 15%
- ₹9,00,000 - ₹10,00,000: 15%
- ₹10,00,000 - ₹12,00,000: 20%
- ₹12,00,000 - ₹12,50,000: 20%
- ₹12,50,000 - ₹15,00,000: 25%
- Above ₹15,00,000: 30%
New Tax Regime FY 2023-24 (AY 2024-25)
- ₹0 - ₹2,50,000: No tax
- ₹2,50,000 - ₹3,00,000: No tax
- ₹3,00,000 - ₹5,00,000: 5%
- ₹5,00,000 - ₹6,00,000: 5%
- ₹6,00,000 - ₹7,50,000: 10%
- ₹7,50,000 - ₹9,00,000: 10%
- ₹9,00,000 - ₹10,00,000: 15%
- ₹10,00,000 - ₹12,00,000: 15%
- ₹12,00,000 - ₹12,50,000: 20%
- ₹12,50,000 - ₹15,00,000: 20%
- Above ₹15,00,000: 30%
Key Changes
- The tax rate for the income slab ₹2,50,000 - ₹3,00,000 has been reduced from 5% to 0%.
- The tax rate for the income slab ₹5,00,000 - ₹6,00,000 has been reduced from 10% to 5%.
- The tax rate for the income slab ₹7,50,000 - ₹9,00,000 has been reduced from 15% to 10%.
- The tax rate for the income slab ₹10,00,000 - ₹12,00,000 has been reduced from 20% to 15%.
- The tax rate for the income slab ₹12,50,000 - ₹15,00,000 has been reduced from 25% to 20%.
These changes aim to simplify the tax structure and provide relief to taxpayers by lowering the tax rates for several income slabs.
Income Tax Slab for Individuals Aged 60 to 80 Years
For senior citizens aged above 60 years but less than 80 years, the income tax slabs for FY 2023-24 (AY 2024-25) are as follows:
Income Tax Slabs and Rates
- Up to ₹3,00,000: No tax
- ₹3,00,000 - ₹5,00,000: 5%
- ₹5,00,000 - ₹10,00,000: 20%
- More than ₹10,00,000: 30%
Note
- The income tax exemption limit is up to ₹3 lakh for senior citizens aged above 60 years but less than 80 years.
- Surcharge and cess will be applicable as discussed in the previous sections.
The surcharge and cess include:
- Surcharge: Depending on income levels, ranging from 10% to 37%, as specified earlier.
- Health and Education Cess: 4% on the income tax amount including the surcharge.
These tax rates and slabs help to provide relief to senior citizens, acknowledging their reduced earning capacity and higher medical expenses.
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