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India's income tax system is progressive, meaning tax rates increase with higher income levels. The income tax slab in India specify the applicable rates for different income brackets and vary based on residential status, age, and type of taxpayer. There are two tax regimes: the new tax regime and the old tax regime. The applicable income tax slabs and rates may change each financial year based on government announcements.
The income tax slab for AY 2025-26 for salaried persons will be as per the announcements in Budget 2024.. The income tax you are required to pay is determined by the specific slab or range your total income falls into.It's always advisable to refer to the official tax guidelines and consult a tax expert to know any recent tax updates.
As per the Budget, the New Tax Regime will be considered as the default tax regime if the taxpayer has not opted for any. First, the standard deduction for salaried employees is proposed to be increased from Rs 50,000/- to Rs 75,000/-. Similarly, deduction on family pension for pensioners is proposed to be enhanced from Rs 15,000/- to Rs 25,000/-.
Second, in the new tax regime, the tax rate structure is revised, as follows:
The taxpayers in India need to pay income tax based on the income tax slab they fall in. The Income tax slab consists of different ranges of income with different income tax rates. As income increases, the tax rates also increase. The tax slab in India was introduced to enable a fair tax system in the country. Based on these income tax slabs, the taxpayer has to finish ITR filing by the due date. The changes in the income tax slab are done as per the budget announcement. There are three categories under which income tax is divided:-
As per the Union Budget 2024, the tax slab under new tax regime has been revised. These revised slab rates will be applicable from 1April 2025. The income tax slab for AY 2025-26 for salaried person has been revised as follows:-
(Note: There is no change under the tax slabs for old tax regime)
| Range of Income (Rs.) | Tax Rate |
|---|---|
| Up to 3,00,000 | NIL |
| 3,00,000-7,00,000 | 5% |
| 7,00,000-10,00,000 | 10% |
| 10,00,000-12,00,000 | 15% |
| 12,00,000-15,00,000 | 20% |
| Above 15,00,000 | 30% |
| Range of Income (Rs.) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,000-5,00,000 | 5% |
| 5,00,000-10,00,000 | 20% |
| Above 10,00,000 | 30% |
A lot of confusion has arisen after Budget 2023 as it has brought many amendments under the new tax regime. This time, the government focused on a new tax regime, making it more attractive for the taxpayers. But with several deductions, the old tax regime has always been the first choice for taxpayers. Let us talk in detail about both these regimes and check which will suit you best.
The new tax regime slab was introduced in Budget 2020, effective April 1, 2020. The new regime offers lower tax rates for higher incomes than the old tax regime. It allows you to lower your tax liability subject to certain conditions and is optional.
So, If you choose to calculate your taxes using the new tax regime, most of the deductions and exemptions available under the Income Tax Act 1961 would not be available to you.
However, with the Budget 2023 and Budget 2024, the government offered a few key changes in the new tax regime to make it more attractive:-
| Tax Slab for FY 2023-24 | Tax Rate | Tax Slab for FY 2024-25 | Tax Rate |
|---|---|---|---|
| Upto ₹ 3,00,000 | Nil | Upto ₹ 3,00,000 | Nil |
| ₹ 3,00,000 - ₹ 6,00,000 | 5% | ₹ 3,00,000 - ₹ 7,00,000 | 5% |
| ₹ 6,00,000 - ₹ 9,00,000 | 10% | ₹ 7,00,000 - ₹ 10,00,000 | 10% |
| ₹ 9,00,000 - ₹ 12,00,000 | 15% | ₹ 10,00,000 - ₹ 12,00,000 | 15% |
| ₹ 12,00,000 - ₹ 15,00,000 | 20% | ₹ 12,00,000 - ₹ 15,00,000 | 20% |
| Above 15,00,000 | 30% | Above 15,00,000 | 30% |
The old tax regime in India refers to the system of income tax calculation and slabs that existed before the introduction of the new tax regime. In the old tax regime, individuals have the option to claim various tax deductions and exemptions to reduce their taxable income. The Old Tax Regime offers more than 70 deductions and exemptions to claims like Section 80C, HRA, LTA, and more. This regime is also called the existing tax regime. There is no change in old tax regime slab rate.
| Range of Income (Rs.) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,000-5,00,000 | 5% |
| 5,00,000-10,00,000 | 20% |
| Above 10,00,000 | 30% |
Note: The basic exemption limit for individuals above the age of 60 years and below 80 years under the old tax regime is Rs.3,00,000.
The basic exemption limit for individuals above the age of 80 years under the new tax regime is Rs.5,00,000.
Higher Tax Rates:
Deductions and Exemptions:
Lower Tax Rates:
No Deductions or Exemptions:
Simplified Compliance:
Higher Take-Home Salary:
Suitable for Certain Taxpayers:
If you find ITR filing complicated, you can get assistance from our tax experts and complete your income tax return filing with the help of an online CA.
| Old Tax Regime (FY 2022-23, FY 2023-24 and FY 2024-25) | New Tax Regime | |||||
|---|---|---|---|---|---|---|
| Income Slabs | Age < 60 years & NRIs | Age of 60 Years to 80 years | Age above 80 Years | FY 2022-23 | FY 2023-24 | FY 2024-25 |
| Up to ₹2,50,000 | NIL | NIL | NIL | NIL | NIL | NIL |
| ₹2,50,001 - ₹3,00,000 | 5% | NIL | NIL | 5% | NIL | NIL |
| ₹3,00,001 - ₹5,00,000 | 5% | 5% | NIL | 5% | 5% | 5% |
| ₹5,00,001 - ₹6,00,000 | 20% | 20% | 20% | 10% | 5% | 5% |
| ₹6,00,001 - ₹7,00,000 | 20% | 20% | 20% | 10% | 10% | 5% |
| ₹7,00,001 - ₹7,50,000 | 20% | 20% | 20% | 10% | 10% | 10% |
| ₹7,50,001 - ₹9,00,000 | 20% | 20% | 20% | 15% | 10% | 10% |
| ₹9,00,001 - ₹10,00,000 | 20% | 20% | 20% | 15% | 15% | 10% |
| ₹10,00,001 - ₹12,00,000 | 30% | 30% | 30% | 20% | 15% | 15% |
| ₹12,00,001 - ₹12,50,000 | 30% | 30% | 30% | 20% | 20% | 20% |
| ₹12,50,001 - ₹15,00,000 | 30% | 30% | 30% | 25% | 20% | 20% |
| ₹15,00,000 and above | 30% | 30% | 30% | 30% | 30% | 30% |
Confused about which tax regime suits you best as per your financial situation? Don’t worry! Book Consultation with our tax experts and let them select the best regime for your needs.
| Old Regime | Slabs (Rs.) | Individuals (Age < 60 years) |
Resident Senior Citizens (≥60 but <80 years) |
Resident Super Senior Citizens (80 years and above) |
|---|---|---|---|
| Up to 2,50,000 | Nil | Nil | Nil |
| 2,50,001 to 3,00,000 | 5% | Nil | Nil |
| 3,00,001 to 5,00,000 | 5% | 5% | Nil |
| 5,00,001 to 10,00,000 | 20% | 20% | 20% |
| Above 10,00,000 | 30% | 30% | 30% |
| New Regime (FY 2024-25) | |||
|---|---|---|---|
| Total Income | Rate of Tax (AY 25-26) | ||
| up to ₹3,00,000 | Nil | ||
| ₹3,00,001- ₹7,00,000 | 5% | ||
| ₹7,00,001- ₹10,00,000 | 10% | ||
| ₹10,00,001- ₹12,00,000 | 15% | ||
| ₹12,00,001- ₹15,00,000 | 20% | ||
| ₹15,00,001 and above | 30% | ||
Under the revised new tax regime, the surcharge rate has been reduced from 37% to 25% for taxpayers earning income more than Rs 5 crores.
A surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits
| Net Taxable Income limit | Surcharge Rate on the amount of income tax | |
|---|---|---|
| Before Budget 2023 | After Budget 2023 | |
| Less than ₹50 lakhs | Nil | Nil |
| More than ₹50 lakhs ≤ ₹ 1 Crore | 10% | 10% |
| More than ₹ 1 Crore ≤ ₹ 2 Crore | 15% | 15% |
| More than ₹ 2 Crore ≤ ₹ 5 Crore | 25% | 25% |
| More than ₹ 5 Crore | 37% | 25% |
| Existing tax regime | New tax regime | ||
|---|---|---|---|
| Level of income (₹) | Rate of tax | Level of income (₹) | Rate of tax |
| 0 – 2,50,000 | Nil | 0 – 3,00,000 | Nil |
| 2,50,001 – 5,00,000 | 5% | 3,00,001 – 7,00,000 | 5% |
| 5,00,001 – 10,00,000 | ₹12,500 + 20% of the amount exceeding ₹5,00,000 | 7,00,001 – 10,00,000 | ₹20,000 + 10% of the amount exceeding ₹7,00,000 |
| 10,00,001 and above | ₹1,12,500 + 30% of the amount exceeding ₹10,00,000 | 10,00,001 – 12,00,000 | ₹50,000 + 15% of the amount exceeding ₹10,00,000 |
| 12,00,001 – 15,00,000 | ₹80,000 + 20% of the amount exceeding ₹12,00,000 | ||
| 15,00,001 and above | ₹1,40,000 + 30% of the amount exceeding ₹15,00,000 | ||
| Note: Surcharge & cess are also applicable here, as in the case of the resident. | |||
| Income of the assessee (Rs.) | Old Regime |
|---|---|
| 0.0 to 2,50,000 | NIL |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
| Condition | Income Tax Rate (excluding surcharge and cess) |
|---|---|
| Total Turnover or Gross Receipts during the previous year 2020-21 does not exceed ₹ 400 crores | 25% |
| If opted for Section 115BA | 25% |
| If opted for Section 115BAA | 22% |
| If opted for Section 115BAB | 15% |
| Any other Domestic Company | 30% |
Note:
Assessment Year 2024-25
| Nature of Income | Tax Rate |
|---|---|
| Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government | 50% |
| Any other income | 40% |
Assessment Year 2025-26
| Nature of Income | Tax Rate |
|---|---|
| Royalty received from Government or an Indian concern in pursuance of an agreement made with the Indian concern after March 31, 1961, but before April 1, 1976, or fees for rendering technical services in pursuance of an agreement made after February 29, 1964 but before April 1, 1976 and where such agreement has, in either case, been approved by the Central Government | 50% |
| Any other income | 35% |
Add:
(a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:
(b) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.
Minimum Alternate Tax (MAT)
A foreign company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of 'book profit'. In such a case the 'book profit' is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such 'book profit'.
However, the provisions of MAT do not apply in case of foreign companies if it does not have permanent establishment (PE) in India or opts for presumptive taxation scheme of Section 44B, Section 44BB, Section 44BBA or Section 44BBB.
| Income Tax Slabs | Tax Rate |
|---|---|
| Up to Rs.3,00,000 | None |
| Rs.3,00,001 to Rs.7,00,000 | 5% |
| Rs.7,00,001 to Rs.10,00,000 | 10% |
| Rs.10,00,001 to Rs.12,00,000 | 15% |
| Rs.12,00,001 to Rs.15,00,000 | 20% |
| Above Rs.15,00,000 | 30% |
| Income Slab | Income Tax Rate |
|---|---|
| Up to Rs. 3,00,000 | Nil |
| 3,00,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
| Income Slab | Income Tax Rate |
|---|---|
| Up to Rs. 5,00,000 | Nil |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
In the event that an individual's income exceeds a certain threshold, additional taxes are levied on top of the existing tax rates. This constitutes an extra tax burden primarily targeted at high-income earners.
The surcharge rates are structured as follows:
It's worth noting that in Budget 2023, the highest surcharge rate of 37% was reduced to 25% under the new tax regime, effective from 1st April 2023.
However, certain income sources are exempted from the highest surcharge rates of 25% or 37%. These include 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). For such incomes, the highest surcharge rate on the tax payable is capped at 15%.
Additionally, the surcharge rate for an Association of Persons (AOP) consisting entirely of companies is also limited to 15%.
Furthermore, an additional Health and Education cess at the rate of 4% is applied to the income tax liability, contributing to government funds designated for healthcare and educational initiatives.
The 2020 budget has removed approximately 70 of the 100 exemptions available under the new regime. The following exemptions and deductions are some of the most important ones that would not be available if the new tax regime slab is chosen for tax calculation –
The following deductions and exemptions would be available under the new tax regime –
The various benefits and disadvantages of old and new tax regimes include
| Benefits | Disadvantages |
|---|---|
| OLD TAX REGIME | |
| Option to avail approx 70 exemptions and deductions under the Income Tax Act | Investment only in specified options was required to claim the tax benefit. |
| Practice in submitting false disclosures for investment proofs is prevalent | |
| NEW TAX REGIME | |
| Tax Rates Reduced | No major tax saving options given, increasing cash flow in the hands of taxpayers |
| Not attractive to those who are already investing and have binding premiums | |
Let's walk through how Pooja, a salaried individual with an annual income of Rs. 8,50,000, calculates her income tax. Pooja has deductions under section 80C amounting to Rs. 1,50,000.
Pooja starts by figuring out her gross taxable income. So, it's Rs. 8,50,000 (her total income) minus Rs. 1,50,000 (deductions), which equals Rs. 7,00,000.
Now, let's dive into the income tax slab. There are three tax slabs in India:
Up to Rs. 5,00,000: 0% tax
Rs. 5,00,001 to Rs. 10,00,000: 20% tax
Above Rs. 10,00,000: 30% tax
Since Pooja's income falls in the Rs. 5,00,001 to Rs. 10,00,000 range, her tax rate is 20%.
Calculating the tax amount involves taking the income in this slab (Rs. 7,00,000 - Rs. 5,00,000) and applying the tax rate (20%). So, Pooja's tax amount within this slab is Rs. 40,000.
Now, surcharge. No worries for Pooja here because the surcharge applies to incomes exceeding Rs. 50 lakhs, and she's below that threshold.
Adding it all up, Pooja's total income tax for the financial year 2023-24 is Rs. 40,000. That's how she figures out her tax liability in a nutshell!
Tax2win’s Old vs New Tax Regime Calculator provides you with all the computations and a detailed comparison of how much your taxability will be as per both regimes (old/new) so that you can decide which one is suitable for you. However, filing ITR yourself can be complicated and time-consuming. Moreover, it is common to miss out on some important deductions available to you due to a lack of knowledge. Therefore, the best way to file an ITR is to hire an online CA who can not only help you file your ITR smoothly but also reduce your tax liability. Hire an Online CA Now!
The Budget 2020 announced a new income tax structure that is optional for individuals or HUF. The new tax regime reduced income tax rates that can be opted for if the taxpayer is ready to forego some major deductions and exemptions available under the income tax act
Yes, in lieu of any specific exclusion, we can say that rebate u/s 87A amounting to Rs 12,500 is also available under the new income tax regime introduced in Budget 2020. In the budget 2023 announcement, the rebate under section 87A has been hiked to Rs. 25000 for taxable income up to Rs. 7 lakhs under the new tax regime. This is applicable for FY 2023-24.
The salaried taxpayer can change the regime's selection every year. If such an individual or HUF also has income from a business, then this selection is not allowed to be changed every year.
Yes, the Surcharge will still be applicable under the new tax regime for Individuals or HUF. The surcharge rates are the same for FY 2022-23 as those for the last financial year(FY 2021-22). As per Budget 2023, the highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (Applicable for FY 2023-24)
Yes, the Health and education cess @4% will also apply under the new income tax regime.
As per the budget 2023 update, individuals opting for the new tax regime with taxable income of up to Rs 7 lakh need not pay any taxes. Earlier, this tax rebate was available till taxable income of Rs 5 lakh under the old tax regime.
Indian income tax structure has witnessed the applicability of two slab rates simultaneously. As a result, a lot of confusion has been created among the taxpayers. One of the most important criteria while choosing an applicable tax slab will be whether you wish to claim exemptions and deductions available under the old income tax structure. But that should not form the only criteria. Know more here.
A comparative analysis of income tax calculation for FY 2023-24(AY 2024-25) under the old tax regime slab and the new income tax slabs introduced in Budget 2020 can be understood by comparing taxable income under both scenarios.
