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

Updated on: 21 May, 2024 01:08 PM

India's income tax system is progressive, meaning tax rates increase with higher income levels. The income tax slabs 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 2024-25 for salaried persons will be as per the announcements in budget 2023. It's always advisable to refer to the official tax guidelines and consult a tax expert to know any recent tax updates.

What is Income Tax Slab?

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 slab system was introduced to enable a fair tax system in the country. Based on these slabs, the taxpayer has to finish ITR filing by the income tax return last 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:-

  • Individuals who are less than 60 years
  • Senior citizens with age of 60 to 80 years
  • Super senior citizens with an age of above 80 years.

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

As per the Union Budget 2023, a few key changes have been introduced under the new tax regime. The number of tax slabs under the new tax regime has been reduced from 6 to 5, and the basic exemption limit has been raised to Rs. 3 lakh from Rs. 2.5 lakh. These changes will be applicable from 1 April 2023. The slab structure has been revised as follows:-

New Tax Regime Slab

Range of Income (Rs.) Tax Rate
Upto 3,00,000 Nil
3,00,000-6,00,000 5%
6,00,000-9,00,000 10%
9,00,000-12,00,000 15%
12,00,000-15,00,000 20%
Above 15,00,000 30%

Old Tax Regime Slab

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.

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 Vs. New Tax Regime

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.

New Tax Regime

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, the government offered a few key changes in the new tax regime to make it more attractive:-

  • The new income tax regime will be set as the default option. The basic exemption limit has been raised to Rs 3 lakh from Rs 2.5 lakh to make the new tax regime slab more attractive. Also, the highest tax rate of 30% will be levied above Rs 15 lakh income.
  • In the 2023-24 budget 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.
  • The proposal to introduce the standard deduction in the new tax regime has been shared. As per this salaried class, the pensioners, including family pensioners, will benefit from a standard deduction of Rs. 50,000/-
  • Also, the exemption of a family pension of Rs. 15,000 has been introduced under the new tax regime.
  • Reduction in the surcharge on annual income above Rs 5 crore from 37% to 25% under the new regime. Currently, the highest tax rate is 42.74%, which would slash the maximum tax rate to 39% after this reduction.
  • The limit of Rs. 3 lakh for tax exemption on leave encashment on non-government salaried employees has been raised to Rs. 25 lakh.

Old Tax Regime

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.

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

Income Tax Slab (Rs.) Old Tax Regime FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25) New tax Regime (Before budget 2023) New Tax Regime
(Applicable for FY 2023-24 (AY 2024-25)
0 - 2,50,000 - - -
2,50,001 - 3,00,000 5% 5% -
3,00,001 - 5,00,000 5% 5% 5%
5,00,001 - 6,00,000 20% 10% 5%
6,00,001 - 7,50,000 20% 10% 10%
7,50,001 - 9,00,000 20% 15% 10%
9,00,001 - 10,00,000 20% 15% 15%
10,00,001 - 12,00,000 30% 20% 15%
12,00,001 - 12,50,000 30% 20% 20%
12,50,001 - 15,00,000 30% 25% 20%
More than 15,00,000 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.


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

Income Tax Rate for Resident Individual

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
Slabs (Rs.) Income Tax Rates
Up to 3,00,000 Nil
3,00,001 to 6,00,000 5% (Tax rebate u/s 87A)
6,00,001 to 900,000 10% (Tax rebate u/s 87A up to Rs 7 lakh)
9,00,001 to 12,00,000 15%
12,00,001 to 1500,000 20%
Above 15,00,000 30%

Note:1. In Addition to basic Income Tax, as discussed above, the following are also to be taken care of:-

- Surcharge: A surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits:-

Rs. 50 Lakhs to Rs. 1 Crore Rs. 1 Crore to Rs. 2 Crores Rs. 2 Crores to Rs. 5 Crores More Than 5 Crores
10% 15% 25% 37%

- Health & Education Cess @4%

- Rebate u/s 87A (no tax will be payable on total income upto Rs. 5 lakh in both the new and old tax regimes). The rebate is allowed to the extent of Rs. 25,000. Thus, if the total tax (excluding health & education cess) is less than or equal to Rs. 25,000 then the whole amount can be claimed as a rebate by a resident individual.

Certain income tax exemptions and deductions , like sections 80C, 80D, 80TTB, HRA, etc, are available in the OLD tax regime but will not be available under the new tax regime.

Income Tax Rate for Non-Resident Individual

Income of the assessee (Rs.) Rate of Tax under Old Regime for FY 2023-24 (AY 2024-25) New Regime Slab Rates for FY 2023-24 (AY 2024-25)
0 to Rs 2,50,000 NIL NIL
2,50,001 to 5,00,000 5% 5%
5,00,001 to 7,50,000 20% 10%
7,50,001 to 10,00,000 20% 15%
10,00,001 to 12,50,000 30% 20%
12,50,001 to 15,00,000 30% 25%
>15,00,000 30% 30%
Note:
Surcharge & cess are also applicable here, as in the case of the resident.

Income Tax Rate for AOP/BOI/Artificial Judicial Person

Income of the assessee (Rs.) Rate of Tax under Old Regime for FY 2023-24 (AY 2024-25)
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%

Income Tax Rate for a Domestic Company

Domestic Company NORMAL TAX RATE
Assessment Year 2022-23 Assessment Year 2023-24
Where its total turnover or gross receipt during the previous year, 2019-20, does not exceed Rs. 400 crore 25% NA
Where its total turnover or gross receipt during the previous year 2020-21 does not exceed Rs. 400 crore NA 25%
Any other domestic company 30% 30%

Also, the Government introduced special tax rates for domestic companies under various sections; these can be summarized as:-

Special Tax Rates

Domestic Company SPECIAL TAX RATES
Assessment Year 2022-23 Assessment Year 2023-24
Where it opted for section 115BA 25% 25%
Where it opted for Section 115BAA 22% 22%
Where it opted for Section 115BAB 15% 15%

Note:
1. In Addition to basic Income Tax, as discussed above, the following are also to be taken care of:-
- Surcharge: Surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits:-

Rs. 1 Crore to 10 Crores Above Rs. 10 Crore
7% 12%

The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10% irrespective of the amount of total income.

- Health & Education Cess @4%
2. MAT Provisions as per section 115JB would also be applicable while calculating tax payable.

Income Tax Rate for a Foreign Company

Nature of Income Tax Rate
Royalty received from the 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%
Note:
1. In Addition to basic Income Tax, as discussed above, the following are also to be taken care of:-
- Surcharge: A surcharge is levied on the amount of income tax at the following rates if the total income of an assessee exceeds specified limits:-
Rs. 1 Crore to 10 Crores Above Rs. 10 Crore
2% 5%
- Health & Education Cess @4%
2. MAT Provisions as per section 115JB would also be applicable while calculating tax payable.

Surcharge on Income Tax for FY 23-24

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:

  • 10% of Income tax if total income is greater than Rs.50 lakh but less than Rs.1 crore.
  • 15% of Income tax if total income is greater than Rs.1 crore but less than Rs.2 crore.
  • 25% of Income tax if total income is greater than Rs.2 crore but less than Rs.5 crore.
  • 37% of Income tax if total income exceeds Rs.5 crore.

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.


What are the Exemptions/Deductions Unavailable Under the New Tax Regime?

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 slab is chosen for tax calculation –

  1. House Rent Allowance under Section 10 (13A)
  2. Leave Travel Allowance under Section 10(5)
  3. Allowances under Section 10(14)
  4. Food coupons and other tax-free allowances and perquisites
  5. Deductions under Chapter VI A of the Income Tax Act like Section 80C, 80D, 80TTA, etc.
  6. Deduction for home loan interest paid for self-owned house property under Sections 24 (b) and Section 80EEA

What Exemptions/Deductions are Available Under the New Tax Regime?

The following deductions and exemptions would be available under the new tax regime –

  1. Employer’s contribution to the NPS for up to 10% of your salary under Section 80CCD (2) [ 14% in case of Central Govt employee]
  2. Standard deduction of 30% of net rental income if house property is let out.
  3. Home loan interest paid can be deducted from the rental income from the house property. However, loss from the House Property head can not be set off from any other head of income.
  4. Transport allowance exemption will be available to Divyang employees to meet the day-to-day travel expenses from the workplace to home.
  5. Conveyance allowance will be allowed to meet the expenditure on the conveyance to perform an official duty.
  6. Allowances granted will be allowed to meet the cost of traveling on tour or on transfer to the employees.
  7. Daily allowance granted for day-to-day ordinary expenses in case of absence from his / her normal place of duty.

What are the Benefits and Disadvantages of Opting for the Old Tax Regime/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

Important Points to Note if you are Opting for the New Tax Regime

Opting for the new tax regime in India can come with significant advantages and disadvantages, depending on your income, savings, and investment patterns. Here are some crucial points to consider before making the switch:

Benefits:

  • Simpler Tax Filing: The new regime eliminates most deductions and exemptions, making tax filing a much simpler process. This can be ideal for individuals who find the old regime complicated and time-consuming.
  • Lower Tax Rates: In many cases, the new regime offers lower tax rates as compared to the old regime, especially for individuals with incomes up to Rs. 7 lakhs. This can lead to increased disposable income.
  • Tax Rebate: Individuals with income up to Rs. 7 lakhs are eligible for a complete tax rebate under the new regime, effectively paying zero tax.
  • Increased Liquidity: By eliminating the need for tax-saving investments, the new regime can free up your disposable income for other financial goals.

Drawbacks:

  • Limited Deductions and Exemptions: You forego several valuable deductions and exemptions like HRA, LTA, educational expenses, medical insurance, etc., potentially increasing your taxable income.
  • No Planning Flexibility: Without deductions, you lose the ability to lower your tax liability through investments and expenses strategically.
  • Higher Tax Rates for High Earners: For individuals with incomes exceeding Rs. 10 lakhs, the new regime's tax rates can be higher than the old regime, especially with surcharges added for income above Rs. 5 crores.
  • Limited Choice for Long-Term Investors: If you rely on tax-saving instruments for long-term wealth creation, the new regime may not be optimal as you miss out on their benefits.

Additional Points:

  • You can switch between the new and old regimes every year at the time of filing your tax return.
  • Carefully compare your tax liability under both regimes before making a decision. Tools like tax calculators can help with this.
  • Consider your future income growth and investment plans when choosing a regime.
  • Consult a tax advisor for personalized guidance based on your specific financial situation.

Example on How to Calculate Income Tax from Income Tax Slabs?

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 tax slabs. There are three slabs:

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!


FAQs on Income Tax Slab Rate

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

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


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

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 2023-23.


Q- Can I change the applicable income tax regime every year?

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.


Q- Is a surcharge applicable under the new tax regime for Individuals or HUF under income tax?

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)


Q- Is health and education cess applicable under the new tax regime slabs AY2024-25?

Yes, the Health and education cess @4% will also apply under the new income tax regime.


Q- How much tax is free?

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.


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

Indian income tax structure has witnessed for the first time 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.


Q- 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 old tax regime slab and the new income tax slabs introduced in Budget 2020 can be understood by comparing taxable income under both scenarios.


CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.