Explore the latest Income Tax Slab 2023 24 and AY 2024 25, introduced in the Union Budget 2022-23. Understand the impact of the new tax regime on deductions and exemptions with our comprehensive guide.
In India, the computation of income tax relies on the income tax slabs and corresponding rates applicable for a given financial year (FY) and assessment year (AY). The income tax slab 2023 24 was unveiled during the presentation of the Union Budget 2022-23.
As we step into the financial year tax slab 2023 24, understanding the revised tax slabs is crucial for individuals and businesses alike. The Indian government periodically reviews and updates tax structures to align with economic changes. The latest tax slab adjustments aim to strike a balance between revenue generation and providing relief to taxpayers.
For individual taxpayers, the income tax slab 2023 24 have undergone modifications, with new income brackets and revised tax rates. It is imperative for taxpayers to familiarize themselves with these changes to optimize their financial planning.
Income Tax Slab
Individual taxpayers are obligated to remit income tax based on their placement within the income slab structure. An individual’s position in this structure is determined by their income level. Consequently, individuals with higher incomes are subject to higher tax liabilities.
The adoption of the slab system aims to uphold fairness within the nation’s taxation system. These slabs undergo modifications with each budget announcement, ensuring they align with evolving economic conditions and fiscal policies.
Union Budget 2023-2024: Highlights on Income Tax
The Union Budget 2023-2024 introduced significant changes to income tax slab rates under the new tax regime. Here are the key highlights:
Increased Tax Rebate Limit:
The basic income tax exemption limit for salaried and individual taxpayers has been increased to ₹ 3 lakh. This means taxpayers earning up to this amount will not have to pay any income tax.
Higher Tax Rebate Ceiling:
The tax rebate limit for individual and salaried taxpayers has been raised from ₹ 5 lakh to ₹ 7 lakh under the new tax regime. This increase allows more taxpayers to benefit from reduced tax liability, providing greater financial relief.
Income Tax Slab 2023 24 (AY 2024-25)
Below are tables displaying the Updated Income Tax Slabs for the current tax regime, which were introduced in the 2023 Budget. These tables pertain to the latest tax structure in India.
| Tax Slab | Rates |
| Up to ₹ 3,00,000 | NIL |
| ₹ 300,000 to ₹ 6,00,000 | 5% on income which exceeds ₹ 3,00,000 |
| ₹ 6,00,000 to ₹ 900,000 | ₹ 15,000 + 10% on income more than ₹ 6,00,000 |
| ₹ 9,00,000 to ₹ 12,00,000 | ₹ 45,000 + 15% on income more than ₹ 9,00,000 |
| ₹ 12,00,000 to ₹ 15,00,000 | ₹ 90,000 + 20% on income more than ₹ 12,00,000 |
| Above ₹ 15,00,000 | ₹ 150,000 + 30% on income more than ₹ 15,00,000 |
Income Tax Slab 2023 24 for People Between 60 to 80 Years
| Tax Slabs | Rates |
| ₹ 3 lakhs | NIL |
| ₹ 3 lakhs – ₹ 5 lakhs | 5.00% |
| ₹ 5 lakhs – ₹ 10 lakhs | 20.00% |
| ₹ 10 lakhs and more | 30.00% |
Income Tax Slab 2023 24 for People More than 80 Years
| Tax Slabs | Rates |
| ₹ 0 – ₹ 5 lakhs | NIL |
| ₹ 5 lakhs – ₹ 10 lakhs | 20.00% |
| Above ₹ 10 lakhs | 30.00% |
Tax Slab 2023 24 for Domestic Companies
| Specifics | Tax Rates (Existing or Old Regime) | Tax Rates (New Regime) |
| When a company chooses Section 115BAB, applicable to those registered on/after October 1, 2019, and commencing manufacturing on or before March 31, 2023 | – | 15% |
| Opting for Section 115BAA, where a company calculates total income without claiming specified deductions, exemptions, incentives, and additional depreciation | – | 22% |
| Selecting Section 115BA, applicable to companies registered on or after March 1, 2016, engaged in manufacturing and not claiming specified deductions | – | 25% |
| Companies with a turnover/gross receipt less than ₹ 400 crores in the previous year | 25% | 25% |
| Other Domestic Companies | 30% | 30% |
Surcharge for Companies
- 7% surcharge on Income Tax for total income exceeding ₹ 1 crore
- 12% surcharge on Income Tax for total income exceeding ₹ 10 crores
- 10% surcharge on Income Tax for domestic companies choosing Section 115BAA and 115BAB
- Additional Health & Education Cess Rate – 4%
Tax rates for individuals or HUF opting for an Alternate Tax Regime under Section 115BAC
The Income-tax Act provides a progressive tax system where tax rates increase with higher income levels. However, individuals or Hindu Undivided Families (HUFs) can opt for an alternate tax regime under Section 115BAC, introduced in the Finance Act of 2020.
This alternative tax regime offers reduced tax rates but requires taxpayers to forgo specified exemptions and deductions. Here are the updated tax rates for individuals or HUFs opting for this regime in the financial year 2023-2024:
- Up to ₹ 2,50,000: Not applicable
- ₹ 2,50,001 to ₹ 3,00,000: 5%
- ₹ 3,00,001 to ₹ 5,00,000: 5%
- ₹ 5,00,001 to ₹ 6,00,000: 5%
- ₹ 6,00,001 to ₹ 7,50,000: 10%
- ₹ 7,50,001 to ₹ 9,00,000: 10%
- ₹ 9,00,001 to ₹ 10,00,000: 15%
- ₹ 10,00,001 to ₹ 12,00,000: 15%
- ₹ 12,00,001 to ₹ 12,50,000: 20%
- ₹ 12,50,001 to ₹ 15,00,000: 20%
- Above ₹ 15,00,000: 30%
These revised tax brackets ensure a structured approach to income taxation, offering taxpayers clarity on their liabilities under the alternate tax regime.
Income Tax Rate for Partnership Firm or LLP as Per Old/New Regime
Discover the Latest Income Tax Rates for LLP (Limited Liability Partnerships) in India. Stay informed about the updated tax brackets and regulations for LLPs in the fiscal year. Expert insights on income tax rates for LLPs in 2023 to ensure accurate financial planning. Trust us for the latest and reliable information. Partnership firms and LLPs are subject to a 30% tax rate.
Note:
A 12% surcharge applies to incomes exceeding ₹ 1 crore.
Health and Education Cess Rate – 4%
Want to know your tax liabilities? Use our calculate income tax online tool. Our new tax regime calculator is designed to help you save more.
Income Tax Slab Rate for New Tax Regime
For the Financial Year 2023-24 (Assessment Year 2024-25) under the New Regime, the income tax slab rates are structured as follows:
| Income Slabs | Income Tax Rates for FY 2023-24 (AY 2024-25) |
| Up to ₹3,00,000 | Nil |
| ₹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 | ₹150,000 + 30% on income exceeding ₹15,00,000 |
These rates apply to individuals opting for the new tax regime, offering a structured approach based on income levels for the assessment year 2024-25.
Conditions for Opting for the New Tax Tax Slab 2023 24
One of the primary conditions for opting for the new tax regime is the willingness to forego specific deductions and exemptions that are available under the old tax regime. These deductions and exemptions play a crucial role in reducing taxable income and consequently lowering the overall tax liability. Here are some common deductions and exemptions not allowed under the new tax regime:
- Leave Travel Allowance: Under the old regime, employees could claim tax benefits on expenses related to leave travel. However, this deduction is not available in the new tax regime.
- Conveyance Allowance: Taxpayers who received conveyance allowance as part of their salary package could previously claim exemptions. This allowance is not eligible for exemption under the new regime.
- House Rent Allowance: House Rent Allowance (HRA) is a common component of salary that provides tax benefits for individuals living in rented accommodations. This benefit is not applicable under the new regime.
- Relocation Allowance: Any relocation allowance received by an individual for shifting their residence or workplace is not eligible for exemption under the new tax regime.
- Children Education Allowance: Previously, parents could claim deductions for expenses related to their children’s education. This benefit is no longer available in the new regime.
- Professional Tax: Professional tax is levied by some state governments and was previously allowed as a deduction. However, it is not eligible for deduction under the new regime.
- Daily Expenses in the Course of Employment: Employees who received allowances for daily expenses incurred during work were eligible for deductions. Such allowances are not deductible in the new regime.
- Helper Allowance: Any allowance given to employees for hiring domestic help or helpers is not exempted under the new tax regime.
- Deductions Under Chapter VI-A: Several deductions under Chapter VI-A, such as Section 80C (investments like PPF, EPF, ELSS), Section 80D (health insurance premiums), and Section 80E (education loan interest), are not allowed in the new regime. However, Section 80CCD(2) is an exception, and contributions to the National Pension Scheme (NPS) can still be claimed.
- Standard Deduction on Salary: The standard deduction on salary, which provided a flat deduction, is not applicable in the new tax regime.
Common Deductions That are Allowed Under New Tax Rate Regime
In the new tax rate regime, certain deductions are still available to taxpayers, allowing for potential tax savings. Here are the key deductions you can claim:
- Notified Pension Scheme (Section 80CCD(2)): Deduct contributions to recognised pension plans.
- Conveyance Allowance: Claim expenses for traveling to work.
- Depreciation (Section 32): Businesses can depreciate assets, reducing taxable income.
- Employment of New Employees (Section 80JJAA): Get deductions for hiring new employees.
- Employment-Related Travel Allowances: Deduct expenses for work-related travel.
- Transport Allowance for Specially-Abled: Special allowances for specially-abled individuals.
These deductions can help you optimise your tax planning under the new regime, ensuring you benefit from available tax relief. Consider consulting a tax expert for personalised guidance.
Old Tax Regime for Individuals Below 60 Years & HUF
For individuals below 60 years and Hindu Undivided Families (HUF), the old tax regime follows these income tax slabs:
- Up to ₹2.5 lakh: No tax.
- ₹2.5 lakh – ₹5 lakh: 5% tax.
- ₹5 lakh – ₹10 lakh: 20% tax.
- Above ₹10 lakh: 30% tax.
Note: The tax exemption limit is ₹2,50,000 for individuals below 60 years, HUFs, and NRIs. Surcharge and cess apply as per the rules.
How to Calculate Income Tax?
Calculating your income tax can be straightforward. Let’s use Hari’s case as an example. His total taxable income is Rs 7,00,000 for the financial year 2022-23 (assessment year 2023-24). This includes his salary, investment income, and rental earnings, minus all deductions under Section 80.
Here’s how to calculate his tax:
- Income up to Rs 2,50,000: No tax.
- Income from Rs 2,50,000 to Rs 5,00,000: 5% of Rs 2,50,000 (Rs 5,00,000 – Rs 2,50,000) = Rs 12,500.
- Income from Rs 5,00,000 to Rs 7,00,000: 20% of Rs 2,00,000 (Rs 7,00,000 – Rs 5,00,000) = Rs 40,000.
- Adding these, Hari’s total tax before cess is Rs 52,500.
Next, calculate the Health and Education Cess:
4% of Rs 52,500 = Rs 2,100.
Therefore, Hari’s total tax for FY 2022-23 is Rs 54,600.
Key Features of the New Tax Regime
Uniform Tax Rates: The new tax regime offers the same tax rates for all individual categories, including regular individuals, senior citizens, and super senior citizens.
Tax Rebate for Low-Income Individuals: Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability under both the new and old tax regimes.
Rebate in Budget 2024: For the current financial year 2024, there have been no changes to the enhanced rebate introduced in Budget 2023. Incomes up to Rs 7 lakh remain exempt from tax under the new regime, effective from FY 2023-24.
Surcharge on High Income: A surcharge is applied when income exceeds certain thresholds:
- 10% for income above Rs 50 lakh
- 15% for income above Rs 1 crore
- 25% for income above Rs 2 crore
- 37% for income above Rs 5 crore
For FY 2024, the maximum surcharge rate for incomes over Rs 5 crore has been reduced to 25% from the previous 37%, effective from April 1, 2023.
Exclusions from High Surcharge Rates: The 25% or 37% surcharge rates do not apply to income from specific sections related to capital gains on shares and income of Foreign Institutional Investors. For these, the surcharge is capped at 15%.
Surcharge Cap for Certain Incomes: From Assessment Year 2023-24, the maximum surcharge on tax payable for dividend income or capital gains under Section 112, and for an Association of Persons (AOP) consisting entirely of companies, is capped at 15%.
Health and Education Cess: A 4% cess is levied on the total income tax liability and surcharge.
Comparing Old and New Tax Regimes
| Particulars | Old Tax Regime | New Tax Regime |
| Income Level for Rebate Eligibility | ₹5 lakhs | ₹7 lakhs |
| Standard Deduction | ₹50,000 | ₹50,000 |
| Effective Tax-Free Salary Income | ₹5.5 lakhs | ₹7.5 lakhs |
| Rebate u/s 87A | ₹12,500 | ₹25,000 |
| HRA Exemption | Available | Not available |
| Leave Travel Allowance (LTA) | Available | Not available |
| Other Allowances (including food allowance) | Available | Not available |
| Interest on Home Loan u/s 24b (self-occupied/vacant property) | Available | Not available |
| Interest on Home Loan u/s 24b (let-out property) | Available | Available |
| Deduction u/s 80C (Investments, tuition fee, etc.) | Available | Not available |
| Employee’s (own) contribution to NPS | Available | Not available |
| Employer’s contribution to NPS | Available | Available |
| Medical Insurance Premium – 80D | Available | Not available |
| Disabled Individual – 80U | Available | Not available |
| Interest on Education Loan – 80E | Available | Not available |
| Deduction on Family Pension Income | Available | Available |
| Gifts up to ₹50,000 | Available | Available |
| Exemption on Voluntary Retirement 10(10C) | Available | Available |
| All Contributions to Agniveer Corpus Fund – 80CCH | Available | Available |
Choosing Between the Old and New Tax Regimes: A Comparative Example
The decision between the old and new tax regimes hinges on factors such as income level, investment patterns, and financial planning strategies.
For Middle-Class Taxpayers:
New Tax Regime: Middle-class taxpayers earning up to Rs 15 lakh, and not heavily invested in tax-saving schemes, may find the new regime advantageous. With its lower tax slabs and fewer deductions, it often results in reduced tax liabilities.
Example: Consider an individual earning Rs 12 lakh annually with investments below Rs 1.91 lakh. They would likely face lower taxes under the new regime compared to the old one.
For High-Income Earners:
Old Tax Regime: High-income earners, especially those with substantial investments in tax-saving instruments and eligible deductions (like tuition fees, home loan EMIs, and insurance premiums), may prefer the old regime. It offers more opportunities for deductions, potentially leading to significant tax savings.
Making a Choice:
Making an informed decision requires a thorough analysis of your income, investment portfolio, and deductible expenses. Consulting with a financial advisor can provide clarity on which regime aligns best with your financial goals.
Timing for Opting:
Salary Income: Choose your preferred regime at the start of the financial year and inform your employer. This choice remains fixed for the year but can be revised at the time of filing your Income Tax Return.
Business & Professional Income: If your income includes earnings from business or profession, you can select a tax regime only once in your lifetime.
There’s no universal solution; each taxpayer’s situation is unique. Evaluate your circumstances carefully to determine which regime offers maximum benefits for you.
FAQs on Tax Slab 2023 24
What is the new regime tax slab 2023 24?
The new regime tax slab for 2023 24 varies based on income levels, with different tax rates for each bracket. It was introduced as part of the 2023 Budget.
What are the new tax updates for 2023?
The new tax updates for 2023 include revised income tax slabs, which were introduced in the 2023 Budget, affecting the taxation of individuals based on their income levels. Additionally, there have been changes in deductions and exemptions available to taxpayers.
What is 80C for fy tax slab 2023 24?
Taxpayers can claim exemptions of up to ₹ 1.5 lakh under section 80C of the Income Tax Act, 1961, which offers tax savings on various investments and expenditures made during the financial year.
How is a taxpayer's Income classified?
A taxpayer's income is typically classified into various categories, such as earned income, passive income, and investment income, based on its source and nature. These classifications help determine the applicable tax treatment and rates.
