Understanding the income tax slabs applicable to your salary is crucial for effective financial planning and tax management. The 2024 tax regime in India offers both a simplified tax structure and traditional deductions, giving taxpayers the flexibility to choose what works best for their financial situation. This article explains the salary income tax slabs for 2024, explores the benefits of various financial products, and highlights opportunities for tax savings through strategic investments.
Income tax slabs for 2024
The income tax slabs in India for the assessment year 2024-25 are categorised under two regimes: the new tax regime and the old tax regime. Each regime has its own structure and benefits, and taxpayers can choose the one that best suits their needs.
New tax regime
The new tax regime offers lower tax rates but limits the availability of deductions and exemptions. This regime is designed to simplify the tax process, making it more straightforward for taxpayers who do not have significant deductions.
| Income Range (Rs) | Tax Rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,001 to Rs. 6,00,000 | 5% |
| Rs. 6,00,001 to Rs. 9,00,000 | 10% |
| Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
Old tax regime
The old tax regime, while offering higher tax rates, allows for a variety of deductions and exemptions. This regime is beneficial for those who have significant investments in tax-saving instruments.
| Income Range (Rs) | Tax Rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Please note:
- Surcharge: Applied at varying rates depending on income levels.
- Health and Education Cess: 4% on the total tax.
- Rebate Under Section 87A: Available for total income up to Rs. 5 lakh under the old regime and up to Rs. 7 lakh under the new regime.
- Deductions and Exemptions: Available under the old regime but not under the new regime.
Key deductions and benefits
- Section 80C deductions: Under the old regime, taxpayers can claim deductions up to Rs. 1.5 lakh annually under Section 80C. This section covers investments in:
- Public Provident Fund (PPF)
- Employee Provident Fund (EPF)
- National Savings Certificates (NSC)
- Equity-Linked Savings Schemes (ELSS)
- Life insurance premiums
- Section 80D deductions: Health insurance premiums paid for self, spouse, and children are deductible under Section 80D. Taxpayers can claim:
- Up to Rs. 25,000 for health insurance premiums for self and family
- An additional Rs. 25,000 for insurance of parents under the age of 60
- If parents are senior citizens, the deduction increases to Rs. 50,000
- Home loan interest deductions (Section 24): Interest paid on a home loan is deductible up to Rs. 2 lakh under Section 24. This benefit is significant for those investing in real estate, as it reduces taxable income and encourages property acquisition.
- Section 80E deductions: Interest paid on education loans for higher studies is fully deductible under Section 80E, applicable for up to eight years or until the interest is fully paid, whichever is earlier.
- Section 80TTA and 80TTB:
- Section 80TTA: Allows a deduction of up to Rs. 10,000 on interest earned from savings accounts.
- Section 80TTB: For senior citizens, allows a deduction of up to Rs. 50,000 on interest income from savings, fixed, and recurring deposits.
Strategic investments for tax savings
While the new tax regime limits deductions, strategic investments remain crucial for long-term financial health and wealth creation.
- Health insurance: Even without the deductions under Section 80D in the new regime, health insurance is essential for protecting against medical emergencies. Comprehensive health plans provide financial security and peace of mind.
- National Pension System (NPS): NPS remains a valuable investment for retirement planning. While its tax benefits are limited to the old regime, it continues to be a reliable option for building a retirement corpus.
- Mutual funds: Mutual funds, especially Systematic Investment Plans (SIPs), are excellent for long-term wealth accumulation. ELSS funds offer tax benefits under Section 80C in the old regime but remain a viable investment option for growth.
- Fixed Deposits (FDs): Tax-saving fixed deposits with a 5-year lock-in period are eligible for deductions under Section 80C in the old regime. They provide a safe investment avenue with guaranteed returns.
- Life insurance: Life insurance policies, including term plans and unit-linked insurance plans (ULIPs), are eligible for deductions under Section 80C. They provide financial protection for families and contribute to long-term savings.
Understanding the 2024 salary income tax slabs and their implications helps taxpayers make informed financial decisions. The choice between the new and old tax regimes depends on individual income levels, potential deductions, and financial goals. While the new tax regime simplifies the process with lower rates and limited deductions, the old regime's extensive deductions and exemptions may benefit those with significant investments. Leveraging financial products like health insurance, mutual funds, and home loans, including those from Bajaj Housing Finance, can optimise tax savings and contribute to long-term financial security.
