Income Tax Slabs for FY 2024-25

Explore the income tax slabs for FY 2024-25 to grasp the applicable tax rates and thresholds, aiding you in effective tax planning and compliance with current tax regulations.
Income Tax Slabs for FY 2024-25
3 mins read
26 March 2024

In India, the tax system is structured progressively, meaning that higher income levels are taxed at higher rates. Tax rates for individuals are determined based on income tax slabs that vary depending on factors like the taxpayer's residential status, total income, the type of taxpayer, and age.

With each financial year, these income tax slabs and related provisions are subject to change as per the announcements made by the government. For the most accurate and up-to-date tax information, consulting the official tax guidelines or seeking advice from a tax professional is recommended. Beyond the basic income tax rates, individuals may also be subject to surcharges if their income exceeds certain thresholds. Additionally, a cess for health and education is applied to the overall tax amount due.

What is an Income tax slab?

In India, individuals are required to pay income tax according to the tax slab their income falls within. These slabs delineate various income ranges, each associated with a specific tax rate, which escalates as income rises. This slab-based approach was devised to establish an equitable tax framework across the country. Adjustments to the income tax slabs are typically made during the budget announcements. Income tax is categorised into three distinct age-based groups

  • Individuals younger than 60 years,
  • Senior citizens aged between 60 and 80 years,
  • Super senior citizens aged over 80 years.

New Income Tax Slabs For FY 2024-25

In response to the Union Budget 2023, significant amendments have been made to the income tax structure under the new tax regime for the financial year 2023-24, applicable from Assessment Year 2024-25. A notable modification in the income tax slabs 24-25 includes the reduction of tax slabs from six to five, alongside an increase in the basic exemption limit from Rs. 2.5 lakh to Rs. 3 lakh. These changes, effective from April 1, 2023, aim to simplify the tax-paying process and provide relief to taxpayers.

Income Tax Slab Rates for New Tax Regime (FY 2023-24, AY 2024-25)

Range of Income

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. 15,00,00

30%


Income Tax Slab Rates for Old Tax Regime

Range of Income

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%


Old Tax Regime Vs. New Tax Regime for FY 2024-25

The introduction of the new tax regime in the 2020 Budget, with further amendments in 2023, has stirred significant discussions among taxpayers. Comparing the old and new tax regimes helps in understanding which option may be more beneficial based on individual financial situations and preferences.

New Tax Regime

Introduction and Tax Rates: The new tax regime, effective from April 1, 2020, offers lower tax rates for higher incomes compared to the old regime, aiming to reduce tax liability under certain conditions. This regime is optional.

Deductions and Exemptions: Opting for the new regime means forgoing most deductions and exemptions previously available under the Income Tax Act of 1961

Budget 2023 Amendments:

  • Set as the default tax calculation option.
  • Basic exemption limit increased to Rs 3 lakh.
  • Highest tax rate of 30% applicable for incomes above Rs 15 lakh.
  • Rebate under Section 87A increased to Rs. 25,000 for taxable incomes up to Rs. 7 lakhs.
  • Introduction of a standard deduction of Rs. 50,000 for salaried and pensioned individuals, including family pensioners.
  • Exemption for family pensions up to Rs. 15,000.
  • Reduction of the surcharge on annual incomes over Rs. 5 crore from 37% to 25%, lowering the maximum tax rate to 39%.
  • Tax exemption limit on leave encashment for non-government salaried employees raised to Rs. 25 lakh.

Old Tax Regime

Tax Deductions and Exemptions: Under the old regime, taxpayers have the option to claim over 70 different tax deductions and exemptions, such as those under Section 80C, HRA, LTA, etc., to minimise taxable income.

Flexibility: Known also as the existing tax regime, it allows for a personalised approach to tax planning, benefiting those who can leverage the various deductions and exemptions available.

The choice between the old and new tax regimes depends on individual financial scenarios. Those who want to benefit from numerous deductions under 80C might prefer the old regime and by through strategic planning, an individual can diversify their 80C investments across options such as ELSS Mutual Funds, NSC, ULIP, PPF, etc., enabling them to claim deductions of up to Rs. 1,50,000. While others seeking simplicity and potentially lower tax rates might find the new regime more appealing.

Here is how to invest in ELSS mutual funds on the Bajaj Finserv platform.

Comparing the Tax Rates of Old Tax Regime and New Tax Regime

Here is a tabular comparison of the tax rates across the old tax regime for FY 2023-24 (AY 2024-25), the new tax regime before Budget 2023 (until 31st March 2023), and the new tax regime after Budget 2023 (applicable from 1st April 2023):

Income Range

 

Old Tax Regime
New Tax Regime (Before Budget 2023)
New Tax Regime (After Budget 2023)
Rs. 0 - Rs. 2,50,000 Nil Nil Nil
Rs. 2,50,001 - Rs. 3,00,000 5% 5% Nil

Rs. 3,00,001 - Rs. 5,00,000

5%
5%
5%
Rs. 5,00,001 - Rs. 6,00,000 20% 10% 5%
Rs. 6,00,001 - Rs. 7,50,000 20% 10% 10%
Rs. 7,50,001 - Rs. 9,00,000 20% 15% 10%
Rs. 9,00,001 - Rs. 10,00,000 20% 15% 15%
Rs. 10,00,001 - Rs. 12,00,000 30%
20%
15%
Rs. 12,00,001 - Rs. 12,50,000 30% 20% 20%
Rs. 12,50,001 - Rs. 15,00,000 30% 25% 20%
More than Rs. 15,00,000 30% 30% 30%


Note
: The changes in the tax regime were last made in the Budget 2023. Hence, it is used as reference when comparing the old vs new tax regimes.

Income Tax Slab Rates for FY 2024-25

Income Tax Rate for Resident Individual or HUF

Income Range Old Regime Tax Rates New Regime Tax Rates (Before Budget 2023) New Regime Tax Rates (After Budget 2023)
Individuals and HUF < 60 years     Applicable for All Ages
Rs 0.0 to Rs 2,50,000 NIL NIL NIL
Rs 2,50,001 to Rs 3,00,000 5% (tax rebate u/s 87A available) NIL 5% (tax rebate u/s 87A available)
Rs 3,00,001 to Rs 5,00,000 5% (tax rebate u/s 87A available) 5% 5%
Rs 5,00,001 to Rs 7,50,000 20% 10% 10%
Rs 7,50,001 to Rs 10,00,000 20% 15% 15%
Rs 10,00,001 to Rs 12,50,000 30% 20% 20%
Rs 12,50,001 to Rs 15,00,000 30% 25% 25%
Exceeding Rs 15,00,000 30% 30% 30%


Note:

  • Surcharge: Applicable at different rates based on income levels.
  • Health & Education Cess @ 4%
  • Rebate u/s 87A is available for total income up to Rs. 5 lakh as per old regime and up to Rs. 7 lakh as per new tax regime.
  • Deductions and Exemptions: Available under the OLD regime, not applicable under the new regime.

Income Tax Rate for Non-Resident Individual

Income Range Old Regime Tax Rates New Regime Tax Rates
Rs 0.0 to Rs 2,50,000 NIL NIL
Rs 2,50,001 to Rs 5,00,000 5% 5%
Rs 5,00,001 to Rs 7,50,000 20% 10%
Rs 7,50,001 to Rs 10,00,000 20% 15%
Rs 10,00,001 to Rs 12,50,000 30% 20%
Rs 12,50,001 to Rs 15,00,000 30% 25%
Exceeding Rs 15,00,000 30% 30%


Note: Surcharge & cess applicable as in the case of residents.

Income Tax Rate for AOP/BOI/Artificial Judicial Person

Income Range Rate of Tax under Old Regime
Rs 0.0 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%

 

Income Tax Rate for a Domestic Company

Conditions Tax Rates  - Old Regime Tax Rates  - New Regime
Company under Section 115BAB, registered after October 1, 2019, and commencing manufacturing by March 31, 2024. AY 2020-21 onwards. -        15%


Income Tax Rate for a Foreign Company

Nature of Income Tax Rate
Royalty received from the Government or an Indian concern according to an agreement post-March 31, 1961, but before April 1, 1976; or fees for technical services from an agreement post-February 29, 1964, but before April 1, 1976, approved by the Central Government 50%
Any other income 40%

 

Additional Notes:

  • Surcharge: Imposed based on total income levels:
  • Rs. 1 Crore to 10 Crores: 2%
  • Above Rs. 10 Crore: 5%
  • Health & Education Cess: 4% on the total tax.
  • MAT (Minimum Alternate Tax): Applicable as per section 115JB.

Income Tax Slab for Senior Citizens (60 to 80 years)

Income Level Tax Applicable
Up to Rs. 3,00,000 Nil
Rs. 3,00,001 to Rs. 5,00,000 5% of the income exceeding Rs. 3,00,000
Rs. 5,00,001 to Rs. 10,00,000 5% on income above Rs. 3,00,000 + 20% on income above Rs. 5,00,000
Above Rs. 10,00,000 5% on income above Rs. 3,00,000 + 20% on income above Rs. 5,00,000 + 30% on income above Rs. 10,00,000

 

Income Tax Slabs for Super Senior Citizen (Individuals above 80 years)

Income Level Tax Applicable
Up to Rs. 5,00,000 Nil
Rs. 5,00,001 to Rs. 10,00,000 20% of the income exceeding Rs. 5,00,000
Above Rs. 10,00,000 20% on income above Rs. 5,00,000 + 30% on income above Rs. 10,00,000


What are the Exemptions/Deductions unavailable under the new tax regime in FY 24-25?

The 2020 budget significantly revised the tax structure by removing approximately 70 of the 100 exemptions previously available under the new tax regime. Opting for the new income tax brackets 24-25 for tax calculation means foregoing several critical exemptions and deductions, including:

  • House Rent Allowance (HRA): Previously deductible under Section 10 (13A), this allowance helped employees reduce taxable income by the amount paid for rented accommodation.
  • Leave Travel Allowance (LTA): Section 10(5) provided a deduction for expenses on travel while on leave, which is no longer available under the new regime.
  • Specific Allowances: Allowances exempt under Section 10(14), including conveyance and children's education allowance, are not deductible in the new tax regime.
  • Tax-Free Perquisites: Benefits such as food coupons and other tax-free allowances that were exempt from tax will now be included in taxable income.
  • Chapter VI A Deductions: Significant deductions like those under Section 80C (investments), 80D (medical insurance), 80TTA (savings interest), etc., are not available.
  • Home Loan Interest Deduction: The deduction for interest paid on home loans for self-occupied property under Sections 24(b) and Section 80EEA will no longer reduce taxable income in the new regime.

What Exemptions/Deductions are Available under the New Tax Regime in FY 24-25?

Under the new income tax brackets 24-25, taxpayers can still avail of certain deductions and exemptions, despite the removal of many previously available ones. These include:

  • NPS Contributions by Employer: Contributions to the National Pension System (NPS) by an employer, up to 10% of the salary of the employee (and 14% for Central Government employees), are deductible under Section 80CCD(2).
  • Standard Deduction on Rental Income: For rented-out property, a standard deduction of 30% of the net rental income is allowed, simplifying the calculation of taxable income from house property.
  • Home Loan Interest: Interest paid on a home loan for a let-out property can be deducted from the rental income earned, although a loss from house property cannot be offset against other income heads.
  • Transport Allowance for Divyang Employees: Divyang (disabled) employees are eligible for a transport allowance exemption to cover daily travel expenses between their workplace and home.
  • Conveyance Allowance: Expenses incurred on conveyance for official duties are permissible as a conveyance allowance.
  • Allowances for Travel and Transfer: Allowances provided to employees for the costs associated with travel on tour or transfer are exempt.
  • Daily Allowance: A daily allowance received to cover ordinary day-to-day expenses while away from the normal place of duty is also allowed.

What are the benefits or disadvantages of opting for the old tax regimes/the new tax regime in FY 24-25?

The benefits and disadvantages of both the old and new tax regimes:

Tax Regime

Benefits

Disadvantages

Old Tax Regime

Offers the option to avail approximately 70 exemptions and deductions under the Income Tax Act.

Required investment in specified options to claim tax benefits. Practice of submitting false disclosures for investment proofs is prevalent.

New Tax Regime

Reduced tax rates, increasing cash flow in the hands of taxpayers.

Lacks major tax-saving options, making it less attractive to those already investing or with binding premiums.


Important Points to Note if you are Opting for the New Tax Regime in FY 24-25

Choosing between India's new and old tax regimes involves weighing their respective advantages and disadvantages against your financial habits, income level, and investment strategy. Here's a breakdown to help guide your decision:

Benefits of the New Tax Regime:

  • Simplified Tax Process: With fewer deductions and exemptions, the new regime streamlines tax filing, benefiting those overwhelmed by the complexity of the old regime.
  • Reduced Tax Rates: For individuals earning up to Rs. 7 lakhs, the new regime often provides lower tax rates, potentially increasing your net income.
  • Tax Rebate Advantage: Earnings up to Rs. 7 lakhs qualify for a full tax rebate, resulting in zero tax liability under the new regime.
  • Enhanced Liquidity: The absence of compulsory tax-saving investments increases available cash for other financial purposes.

Drawbacks of the New Tax Regime:

  • Loss of Deductions and Exemptions: Opting for the new regime means missing out on several key deductions and exemptions (e.g., HRA, LTA), which could raise your taxable income.
  • Reduced Financial Planning Flexibility: The elimination of deductions limits opportunities to strategically lower your tax obligations through targeted investments and expenditures.
  • Potentially Higher Taxes for Higher Earners: Individuals with incomes over Rs. 10 lakhs might find themselves subject to higher taxes under the new regime, especially when including surcharges on incomes above Rs. 5 crores.
  • Disadvantages for Long-Term Savers: The new regime may not suit those who depend on tax-saving investments for wealth accumulation, as it excludes these benefits.

Additional Considerations:

  • Regime Switching Flexibility: Taxpayers have the annual option to choose between regimes at tax filing, offering a chance to adjust as financial circumstances change.
  • Careful Comparison is Key: Evaluating your tax obligations under both regimes can clarify which option minimises your tax liability, with tools like online tax calculators providing assistance.
  • Plan According to Future Financial Goals: Consider potential income growth and investment objectives in your regime choice.
  • Seek Professional Advice: A tax advisor can offer tailored recommendations, ensuring your tax strategy aligns with your overall financial landscape.

Example on How to Calculate Income Tax for Income Tax Slabs for FY 24-25

To illustrate the process of income tax calculation, let's consider the scenario of Anjali, a salaried individual with an annual income of Rs. 9,00,000. Anjali is entitled to deductions under Section 80C amounting to Rs. 2,00,000.

Firstly, Anjali determines her gross taxable income by subtracting the deductions from her total income. This calculation is as follows: Rs. 9,00,000 (total income) minus Rs. 2,00,000 (deductions), resulting in a gross taxable income of Rs. 7,00,000.

Next, we assess the applicable tax slabs, which are structured thus:

  • Up to Rs. 2,50,000: 0% tax
  • Rs. 2,50,001 to Rs. 5,00,000: 5% tax
  • Rs. 5,00,001 to Rs. 10,00,000: 20% tax
  • Above Rs. 10,00,000: 30% tax

Given that Anjali's income falls within the Rs. 5,00,001 to Rs. 10,00,000 range, the applicable tax rate for her is 20%.

To compute the tax payable, we calculate the income that falls within this slab (Rs. 7,00,000 - Rs. 5,00,000) and apply the 20% tax rate. Accordingly, the tax amount for Anjali within this slab is Rs. 40,000. Regarding the surcharge, Anjali does not need to concern herself, as surcharges are levied on incomes exceeding Rs. 50 lakhs, and her income does not reach this threshold.

Thus, for the financial year 2023-24, Anjali's total income tax liability amounts to Rs. 40,000.

Conclusion

In conclusion, understanding the income tax slabs for the financial year 2023-24 (assessment year 2024-25) in both the new and old tax regimes provides individuals with valuable insights into their tax obligations. The choice between the new and old regimes hinges on various factors such as income levels, available deductions, and personal financial goals. While the new regime offers lower tax rates with fewer deductions, the old regime provides a more traditional approach with higher tax rates but allows for a broader range of deductions. Ultimately, taxpayers must evaluate their unique circumstances and preferences to make informed decisions regarding which tax regime aligns best with their financial objectives. Regardless of the chosen regime, staying informed about the prevailing tax regulations remains essential for effective tax planning and compliance.

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Frequently asked questions

What deductions and exemptions are available under the new income tax regime?

The Budget 2020 introduced an optional new income tax structure for individuals or HUFs. This regime offers reduced income tax rates but requires forgoing certain major deductions and exemptions available under the income tax act.

Is rebate u/s 87A available under the new income tax structure?

Yes, under the new income tax regime introduced in Budget 2020, a rebate u/s 87A amounting to Rs. 12,500 is available. In the Budget 2023, this rebate has been increased to Rs. 25,000 for taxable income up to Rs. 7 lakhs, applicable for FY 2023-24.

Can I change the income tax regime applicable every year?

Salaried taxpayers can change the regime annually. However, individuals or HUFs with income from a business cannot alter their selection every year.

Is a surcharge applicable under the new tax regime for Individuals or HUFs?

Yes, the surcharge remains applicable. However, as per Budget 2023, the highest surcharge rate has been reduced to 25% for FY 2023-24.

Is health and education cess applicable under the new tax regime?

Yes, a health and education cess at 4% applies under the new income tax regime.

How much tax is free?

Following the Budget 2023 update, individuals opting for the new tax regime with taxable income up to Rs. 7 lakh are exempt from paying taxes. Previously, this rebate was available up to taxable income of Rs. 5 lakh.

Which tax slab should I choose for FY 2023-24 (AY 2024-25)?

With the simultaneous applicability of two slab rates, choosing the applicable tax slab depends on various factors. While eligibility for exemptions and deductions under the old regime is crucial, it shouldn't be the sole criteria.

What will be the impact of the new income tax regime on my Income Tax Calculation?

A comparative analysis of income tax calculation for FY 2023-24 (AY 2024-25) under the existing and new tax slabs introduced in Budget 2020 can be understood by comparing taxable income under both scenarios.

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