Income Tax Slab for Old, and New Regime FY 2024-25

The new budget of 2021 brought the new income tax rates. It has new exemptions and new rates. Let’s know about the income tax slabs and rates provided in the new financial year 2021-22.

What is an Income Tax Slab?

The Income Tax Slab 2024 refers to the system in which individual taxpayers are required to pay income tax based on the specific slab they fall into. The Income Tax Slabs an individual belongs to depends on their income, and as a result, those with higher incomes are subject to higher tax payments. The introduction of the slab system aims to establish a fair tax structure within the country. It’s worth noting that the Income Tax slabs are subject to change with each budget announcement.

Income Tax Slab 2024 in India

According to their income and what tax they should pay, as per the taxation laws, the grouping of taxpayers is called the Income Tax Slab 2024. These income tax slab 2024 help decide the income tax rates levied on a person and who is entitled to tax exemption. 

These exemptions are made by considering a person’s age and state of income. According to the Income Tax Slab, there are three kinds of people, i.e. residents and non-residents aged less than 60, senior citizens aged between 60 to 80, and super senior citizens aged more than 80.

New Income Tax Slabs for FY 2023-24 (AY 2024-25)

Note:

1. The option to choose the new regime can be exercised on or before the specified date for each previous year, provided you, as an individual or a member of a Hindu Undivided Family (HUF), do not have any business income.
2. Once you select the new Income Tax Slabs regime as your option, you are not allowed to change it within the same year. However, if you withdraw your option for the new tax regime and revert to the old regime, you can opt for the new regime again during the financial year if desired.

Stay updated with the latest tax laws using our tax calculator 2024. Our online tax calculator is accurate and easy to use.

Comparison Between FY 2022-23 (AY 2023-24) for New Tax Regime

Note: It is important to note that in the new tax regime, the rebate for income tax has been raised from the previous limit of up to Rs. 5 lakh to Rs. 7 lakh.

Income Tax Slabs & Rates as Per Old Regime AY 2023-24

Income Tax Slab 2024 Between 60-80 years (Senior Citizen)

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

 Surcharge Rates Applicable to Income Tax

New Income Tax Slabs Rates for Domestic Companies 

Income Tax Slabs 2021-22 and 2022-23 

A person’s income in the financial year of 2021-2022 decides what tax he will pay to file income tax returns in the assessment year. The financial year and assessment year starts on 1 April and ends on 31 March.

Every earning individual needs to pay income tax as per the Income Tax Slabs, and rates. Paying taxes is not only limited to single individuals; every person involved in a Hindu Undivided Family, partnership firms, corporates, small businesses, and LLPs is entitled to pay tax. The income tax Act provides different tax rates for different categories or slabs supplied to the public every year. 

The current budget for 2023 brought no changes to the previous income tax bracket. This is the new Income Tax Slab Rate for FY 2021-2022.

• The new regime Income Tax Slabs remains unchanged regarding the exception limit for all tax-paying citizens and binds everyone irrespective of age.

• A person whose total annual income doesn’t exceed 5 lakhs can benefit from tax exemption. This exemption is described under section 87A of The income tax act. No money needs to be deposited for income under 5 lakhs annually. It is important to know about these sections like Section 80DD to file ITR properly

• Whereas the tax exemption limit for NRIs is within 2.5 lakhs net annual income, irrespective of any age.

• An additional health and education cess of 4% gets added to the income tax liability with the provided tax rate. Cess is the additional taxes that must be paid; it is the tax levied on another tax.
• Also, an additional surcharge gets added as per the tax rate mentioned in the slabs.

• If your total annual income doesn’t exceed more than 5 lakhs, you have to pay 5% of income tax.

• If the annual income exceeds 5 lakhs and remains less than 7.5 lakhs, the total payable income tax will be 10%.

• A 15% of income tax must be paid in the case where the total income exceeds 7.5 lakhs per annum and lies under 10 lakhs.

• If the total annual income of a person remains between 10 lakhs and 12.5 lakhs, the payable income tax will be 20%.

• If the total income of an Assessee in Income Tax remains between 12.5 lakhs and 15 lakhs, the imposed income tax will be 25%.

• In the case where the income of a person exceeds 15 lakhs, the imposed tax rate shall be 30%.

• In order to explain the Surcharge levied on some income rates, other slabs are provided too. 

• If the income range stays between 50 lakhs to 1 crore, a 10% surcharge shall be imposed.

• If the range of income stays between 1 crore to 2 crores, a 15% surcharge shall be imposed.

• If the income range stays between 2 crores to 5 crores, a 25% surcharge shall be imposed.

• As proposed in Budget 2022, the Surcharge on income under section 112 shall be a maximum of 15% on the transfer of any capital asset. Other long-term capital gains can arise a graded Surcharge of 37%.

• An individual whose annual income does not exceed 5 lakhs can avail rebate under section 87A of the Income-tax Act. Before calculating the education cess, this rebate is deducted from it. The amount of the rebate can be 100% of income tax or Rs. 12,500, whichever is less.
• The cess and Surcharge remain variable according to the position of the taxpayer. HUF, domestic companies, partnerships, local authorities, and foreign companies pay different cess and surcharge values in addition to the income tax levied upon them.

How to Calculate Income Tax?

Before Filing income tax returns, one needs to understand what slab he is in and what taxable income he does. Taxable income is an income that attracts income tax on it. If you are not under the no tax to be paid slab, you need to calculate what amount of tax you need to pay. A person’s income consists of a basic salary, transport allowance, special allowance, and house rent allowance.

• The medical and telephone reimbursement gets exempted from income tax. If a person earns 6 lakhs rupees per annum as his basic salary, it becomes taxable. If the house rent allowance is 3 lakhs per annum, 1.8 lakhs will be exempted, and the taxable amount will be 1.2 lakhs.
• If the transport allowance is 96,000 per annum, 19,200 will be deducted, and the payable amount will be 76,800.
• There is no exemption on special allowance, so the same will remain; in this case, let’s take 60,000.
• If the leave travel allowance is 20,000 per annum, 12,000 will be exempted to make it 8,000.
• The total taxable income to be paid tax on will be 8,64,800 now.
• More than 8 lakhs taxable income attracts a 20% income tax rate. So the final tax will be the exact 20% of the total taxable income.
  

Income Tax Slabs FY 2023-24 & AY 2024-25 (New & Old Regime Tax Rates)

In the new regime of income tax slab rates, many tax exemptions are not allowed, like house rent allowance, leave travel allowance, relocation allowance, daily expenses in the course of employment, special allowance, children’s education allowance, and interest on the house loan. The new income tax rates are equally imposed on everyone irrespective of their seniority.

• 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.
• The standard deduction has been raised to Rs. 75,000 under this regime.
• The family pension deduction has been increased to Rs. 25,000 from Rs. 15,000.
• This is applicable for the FY 2024-25.

Tax Slabs Comparison: Pre-Budget vs Post-Budget

Income Tax Slabs for FY 2023-24

Old Regime:

• Tax rebate up to Rs.12,500 is applicable if the total income does not exceed Rs 5,00,000 (not applicable for NRIs).

Income Tax Exemption Limits:

• Up to Rs 2,50,000 for Individuals, HUF below 60 years aged and NRIs.
• Up to Rs 3,00,000 for senior citizens aged above 60 years but less than 80 years.
• Up to Rs 5,00,000 for super senior citizens aged above 80 years.

New Tax Regime:

• Rebate up to Rs.25,000 is applicable if the total income does not exceed Rs 7,00,000 (not applicable for NRIs).

Comparison of Tax Rates Under New Tax Regime & Old Tax Regime

Revised Income Tax Slab Rate AY 2024-25 (FY 2023-24) – For New Regime

Major Procedural Changes in Filing of Income Tax Return

• For FY 2022-23, the default regime was the Old tax regime. To opt for the New tax regime, Form 10-IE was required.
• For FY 2023-24, the default regime changed to the new tax regime. To file under the old tax regime, Form 10-IEA must be filed within the due date.

Illustration: Calculating Income Tax

Example:

• Rohit has a total taxable income of Rs 8,00,000.

Old Regime Calculation:

• Income up to Rs 2,50,000: No tax
• Income from Rs 2,50,000 – Rs 5,00,000: 5% of (Rs 5,00,000 – Rs 2,50,000) = Rs 12,500
• Income from Rs 5,00,000 – Rs 8,00,000: 20% of (Rs 8,00,000 – Rs 5,00,000) = Rs 60,000

Total Tax:

• Rs 12,500 + Rs 60,000 = Rs 72,500
• Cess: 4% of Rs 72,500 = Rs 2,900
• Total Tax: Rs 75,400

Surcharge Rates

*Note: The highest surcharge rate of 37% has been reduced to 25% under the new tax regime (applicable from 1st April 2023).

Health and Education Cess

• An additional 4% will be added to the income tax liability.

Consequences of Not Filing the Return Within the Due Date for AY 2024-25

• Taxpayers must opt for concessional rates in the New Tax regime if they miss the due date and forgo certain exemptions and deductions available in the old tax regime.

Key Deductions and Exemptions Not Allowed Under New Tax Regime

Comparison of Income Tax Slabs under New Regime Before and After Budget

Income Tax Rate for Domestic Companies – FY 2023-24

Note:

• Additional Health and Education cess at the rate of 4% will be added to the income tax liability.
• Surcharge applicable for companies:
  • 7% of Income tax where total income > Rs 1 crore.
  • 12% of Income tax where total income > Rs.10 crore.
  • 10% of income tax where domestic company opted for section 115BAA and 115BAB.

Income Tax Rate for Partnership Firm or LLP as per Old/New Regime

• Taxable at 30%.

Note:

• 12% Surcharge is levied on income more than Rs 1 crore.
• Health and Education Cess at the rate of 4% will be applicable.

Important Points for Filing:

• For FY 2023-24, the default regime is the new tax regime. If filing under the old regime, Form 10-IEA must be filed within the due date.
• The new tax regime is beneficial for individuals with low investments and offers six lower-income tax slabs.
• Taxpayers should compare both regimes to determine the most beneficial one based on their individual financial situations.

Deductions and Exemptions under New Tax Regime

Certain deductions and exemptions that existed under the previous tax regime will no longer be available under the new tax regime. Around 70 deductions and exemptions available under the old tax regime will no longer be available under the new tax regime. The following are some of the common deductions that are and are not permitted under the new tax regime:

Example of How Income Tax is Calculated under Old Regime for 3 Individuals (A, B, and C)

Given below is an Example of How Income Tax is Calculated for 3 individuals (A, B, C):

For A (Income: Rs. 5,00,000)

• • Annual Salary: Rs. 5,00,000
  • Standard Deduction: Rs. 50,000
  • Tax deductions under Section 80C: Rs. 70,000
  • House Rent Allowance deductions: Rs. 82,000
  • Gross total income after deductions: Rs. 3,98,000

Based on the Income Slab:

• • • Up to Rs. 2.5 lakh: Nil
    • From Rs. 2,50,001 to Rs. 5 lakh: Rs. 1,900
    • From Rs. 5,00,001 to Rs. 10 lakh: Nil
    • Above Rs. 10 lakh: Nil
    • Total Tax: Rs. 1,900
    • Deductions under Section 87A: Rs. 1,900
    • Additions of cess: Nil
    • Total tax payable: Rs. Nil

For B (Income: Rs. 10,00,000)

• • – Annual Salary: Rs. 10,00,000
  • – Standard Deduction: Rs. 50,000
  • – Tax deductions under Section 80C: Rs. 1,50,000
  • – House Rent Allowance deductions: Rs. 90,000
  • – Gross total income after deductions: Rs. 9,10,000

Based on the income slab:

• • • • Up to Rs. 2.5 lakh: Nil
      • From Rs. 2,50,001 to Rs. 5 lakh: Rs. 12,500
      • From Rs. 5,00,001 to Rs. 10 lakh: Rs. 40,000
      • Above Rs. 10 lakh: Nil
      • Total Tax: Rs. 52,500
      • Deductions under Section 87A: Nil
      • Additions of cess: Rs. 2,100
      • Total tax payable: Rs. 54,600

For C (Income: Rs. 15,00,000)

• • Annual Salary: Rs. 15,00,000
  • Standard Deduction: Rs. 50,000
  • Tax deductions under Section 80C: Rs. 1,50,000
  • House Rent Allowance deductions: Rs. 1,40,000
  • Gross total income after deductions: Rs. 14,60,000

Based on the Income Slab:

• • Up to Rs. 2.5 lakh: Nil
  • From Rs. 2,50,001 to Rs. 5 lakh: Rs. 12,500
  • From Rs. 5,00,001 to Rs. 10 lakh: Rs. 1,00,000
  • Above Rs. 10 lakh: Rs. 45,000
  • Total Tax: Rs. 1,57,500
  • Deductions under Section 87A: Nil
  • Additions of cess: Rs. 6,300
  • Total tax payable: Rs. 1,63,800

Example of How Income Tax is Calculated under New Regime for 3 individuals (A, B, and C)

For Annual Salary:

A: Rs. 5,00,000

B: Rs. 10,00,000

C: Rs. 15,00,000

Standard Deduction:

A: Rs. 50,000

B: Rs. 50,000

C: Rs. 50,000

Tax Deductions under Section 80C:

A: Rs. 70,000

B: Rs. 1,50,000

C: Rs. 1,50,000

House Rent Allowance Deductions:

A: Rs. 82,000

B: Rs. 90,000

C: Rs. 1,40,000

Gross Total Income after Deductions:

A: Rs. 2,88,000

B: Rs. 7,00,000

C: Rs. 11,50,000

Computation of Tax on Gross Total Income:

Up to Rs. 5 lakh:

– A: Nil

– B: Nil

– C: Nil

From Rs. 5,00,001 to Rs. 10 lakh:

– A: Rs. 40,000

– B: Rs. 1,00,000

– C: Nil

Above Rs. 10 lakh:

– A: Rs. 45,000

– B: Nil

– C: Nil

Total Tax:

A: Nil

B: Rs. 40,000

C: Rs. 1,45,000

Deductions under Section 87A:

A: Nil

B: Nil

C: Nil

Additions of Cess:

A: Nil

B: Rs. 1,600

C: Rs. 5,800

Total Tax Payable:

A: Nil

B: Rs. 41,600

C: Rs. 1,50,800

For Domestic Companies, The Tax-Slabs Depends on Turnover as Mentioned Below

Time to choose New Regime or Old Regime

The new tax regime is particularly advantageous for middle-class taxpayers with a taxable income of up to Rs. 15 lakh. On the other hand, the old regime is more favorable for high-income earners.

The new tax regime proves beneficial for individuals who make minimal investments. With its lower-income tax slabs, taxpayers who do not claim tax deductions can enjoy the advantage of paying a reduced tax rate. For instance, if an individual’s total income before deductions is up to Rs. 12 lakh and they have investments below Rs. 1.91 lakh, they may face higher tax liability under the old system. Therefore, for individuals who invest less in tax-saving schemes, opting for the new regime is more beneficial.

However, for those who already have a financial plan in place that involves investments in tax-saving instruments, medical and life insurance premiums, tuition fees payments, education loan EMIs, home loans, etc., the old regime provides higher tax deductions and lower overall tax payments.

Given these considerations and the introduction of the new income tax regime, taxpayers should evaluate both regimes and conduct a comparative analysis. The choice between the two depends on individual circumstances and financial goals. It is advisable to assess the personal benefits under each regime before making a decision.

New Tax Slab Rates for Domestic Companies

The tax rates under the old and new regimes for companies are as follows:

Old Regime Tax Rates

– Company chooses section 115BAB and is registered on or after 1 October 2019 and has commenced manufacturing on or before 31 March 2023: Nil

– Company chooses Section 115BAA, wherein the total income of a company has been calculated without claiming specified deductions, incentives, exemptions, and additional depreciation: Nil 

– Company chooses section 115BA and is registered on or after 1 March 2016 and engaged in the manufacture of any item without claiming specified deductions: 25%

– If a company’s turnover is less than Rs. 400 crore in the previous year 2018-19: 25%

– Any other domestic company: 30%

New Regime Tax Rates

– Company chooses section 115BAB and is registered on or after 1 October 2019 and has commenced manufacturing on or before 31 March 2023: 15%

– Company chooses Section 115BAA, wherein the total income of a company has been calculated without claiming specified deductions, incentives, exemptions, and additional depreciation: 22%

– Company chooses section 115BA and is registered on or after 1 March 2016 and engaged in the manufacture of any item without claiming specified deductions: 25%

– If a company’s turnover is less than Rs. 400 crore in the previous year 2018-19: 25%

– Any other domestic company: 30%

Current Surcharge Rates for Different Taxpayers

What Deductions and Exemptions are Allowed Under the New Tax Regime?

The following deductions and exemptions are allowed under the new regime 

• Travelling allowance in the case of transfer or for employment
• Apart from additional depreciation, other deductions under Section 32
• Deduction under Section 80JJAA for new employees (employment)
• Any investments that are made in the Notified Pension Scheme (Section 80CCD(2))
• Any conveyance allowance due to work travel
• Specially abled individuals will be provided transport allowance

Conclusion 

To be a responsible citizen, a person must do his legal duty by filing an income tax return each year. Income taxes are levied on both personal wages and income generated by businesses. Non-payment of Income Tax Slabs can put you in grave liabilities.

FAQs on Income Tax Slabs