Income Tax Slabs FY 2024-25: In India, individuals pay income tax based on a slab system, where varying tax rates apply to different income ranges. As income increases, tax rates also increase, ensuring a fair and progressive tax system. These slab rates are revised periodically, typically during each budget, and differ for various groups of taxpayers.
Let’s explore the applicable slab rates for Financial Year year 2024-25 (Assessment Year 2025-26). Note: Tax slabs are same for FY 2023-24 (AY 2024-25)
Old Tax Regime Slabs FY 2024-25
| Income Range | Individual (Age < 60 years) | Resident Senior Citizen (Age > 60 but < 80 years) | Resident Super Senior Citizen (Age 80 years and above) |
|---|---|---|---|
| Up to Rs 2,50,000 | NIL | NIL | NIL |
| Rs 2,50,001 to Rs 3,00,000 | 5% | NIL | NIL |
| Rs 3,00,001 to Rs 5,00,000 | 5% | 5% | NIL |
| Rs 5,00,001 to Rs 10,00,000 | 20% | 20% | 20% |
| Above Rs 10,00,000 | 30% | 30% | 30% |
New Tax Regime Slabs FY 2024-25
| Income Range | Income Tax Rates |
|---|---|
| Up to Rs 3,00,000 | Nil |
| Rs 3,00,001 to Rs 6,00,000 | 5% (Tax rebate u/s 87A) |
| Rs 6,00,001 to Rs 9,00,001 | 10% (Tax rebate u/s 87A up to Rs 7 lakh) |
| Rs 9,00,001 to Rs 12,00,000 | 15% |
| Rs 12,00,001 to Rs 15,00,000 | 20% |
| Above Rs 15,00,000 | 30% |
Income Tax Calculation under New Regime
The income tax slabs and rates remain consistent for both financial years. For FY 2023-24 and FY 2024-25, a salaried individual can claim two deductions – i) Standard deduction of Rs 50,000 from salary and pension income and ii) Section 80CCD (2) for employer’s contribution to the employee’s NPS account.
Suppose Mr. Sharma, a salaried individual, earned a gross total income of Rs 15,00,000 in financial year 2023-24. His employer contributed Rs 1,20,000 to his Tier-I NPS account.
| Particulars | Amount (In Rs) |
|---|---|
| Gross total income | 15,00,000 |
| Standard deduction from salary/pension | 50,000 |
| Deduction under section 80CCD (2) | 1,20,000 |
| Net taxable income | 13,30,000 |
In this case, Mr. Sharma’s gross total income is Rs 15,00,000. After deducting the standard deduction of Rs 50,000, his total taxable income becomes Rs 14,50,000. Additionally, since his employer has contributed Rs 1,20,000 to his Tier-I NPS account, Mr. Sharma can claim this amount as a deduction under section 80CCD(2). As a result, his net taxable income reduces to Rs 13,30,000 (Rs 14,50,000 – Rs 1,20,000).
This deduction under section 80CCD(2) incentivizes individuals to save for retirement by allowing them to reduce their taxable income by the amount contributed by their employer to their NPS account.
Also Read: Tax-free perks under New Tax Regime
Income Tax Calculation under Old Regime
For those opting for the old tax regime, knowing your income tax slab is essential. Deductions and exemptions help lower your gross total income to determine taxable income, on which you calculate payable tax. It’s important to note that the income tax slabs remain unchanged as per the interim budget of 2024.
In FY 2023-24, Aditya made a gross total income of Rs 20 lakh opts for the old tax regime. They can claim tax deductions: Rs 1.5 lakh under section 80C, Rs 50,000 under section 80CCD(1b) for NPS, Rs 25,000 under section 80D for medical insurance, and Rs 10,000 under section 80TTA for savings account interest.
| Particulars | Amount (in Rs) |
| Gross total income | 20,00,000 |
| Section 80C | (1,50,000) |
| Section 80 CCD(1b) NPS investment | (50,000) |
| Section 80D – medical insurance premium | (25,000) |
| Section 80TTA | (10,000) |
| Net taxable income | 17,65,000 |
How to identify your income tax slab?
To calculate the income tax payable in a particular financial year, one needs to know the tax slabs their income falls in. Also, it will also depend on the income tax regime chosen by him/her in a particular financial year. An individual will compare the income tax payable in both the tax regimes before choosing the one.
To determine income tax liability, individuals need to calculate their taxable income after claiming applicable exemptions and deductions under sections 80C to 80U. These include exemptions like House Rent Allowance, Leave Travel Allowance, and standard deduction. After deducting exemptions, income tax is levied on the taxable income based on prevailing rates and slabs.
For example, your total income from all sources is Rs 12 lakh and you are eligible to claim deduction of Rs 2.10 lakh under sections 80C, 80TTA, 80CCD(1b). The taxable income on which you have to calculate tax will be Rs 9.9 lakh (Rs 12 lakh – Rs 2.10 lakh). Your income tax slab in the old tax regime will be between Rs 5 lakh and Rs 10 lakh. The tax rate is the 20%.
Also Read: No change in New Tax Regime for FY 2024-25 from April 1. Beware of Misleading News! Check Facts
Under the new tax regime, individuals forgo traditional exemptions and deductions, instead benefiting from a standard deduction of Rs 50,000 and Section 80CCD (2) deduction for employer’s NPS contributions. For instance, if the gross taxable income is Rs 12 lakh, after deductions, the taxable income might be Rs 10 lakh. The net taxable income of Rs 10 lakh falls under the income tax slab of Rs 9,00,001 and Rs 12,00,000. This will be taxed at 15%.
Surcharge on Income Tax
High-income earners must pay additional taxes above the existing tax rates if their income exceeds a certain threshold. This additional tax imposition affects them as an extra burden.
Surcharge rates are as below:
Surcharge rate from April 1, 2023 under new tax regime
| Income range | Surcharge rate |
| Up to Rs 50 lakh | Nil |
| More than Rs 50 lakh but up to Rs 1 crore | 10% |
| More than Rs 1 crore but up to Rs 2 crore | 15% |
| More than Rs 2 crore | 25% |
Surcharge rate under old tax regime
| Income range | Surcharge rate |
| Upto Rs 50 lakh | Nil |
| More than Rs 50 lakh but up to Rs 1 crore | 10% |
| More than Rs 1 crore but up to Rs 2 crore | 15% |
| More than Rs 2 crore but up to Rs 5 crore | 25% |
| More than Rs 5 crore | 37% |
If an individual earns income from certain sources like capital gains or dividends, ensuring the surcharge won’t exceed 15%.
Understanding surcharge includes knowing about marginal relief, which reduces the surcharge if it surpasses the increase in income over a specified limit.
For example, if an individual’s net taxable income is Rs 51 lakh, with the income exceeding Rs 50 lakh, a 10% surcharge applies. Marginal relief adjusts this if the surcharge exceeds the additional income above Rs 50 lakh.
To find the actual tax payable with surcharge, compare the normal tax liability with the tax liability after marginal tax relief. The difference is the applicable surcharge.
The final tax payable equals the tax amount plus the surcharge and cess.
Which is better? Old Tax regime or New Tax regime
The new tax regime can significantly benefit middle-class taxpayers with taxable incomes up to Rs 15 lakh, while the old regime remains preferable for high-income earners.
The new regime proves advantageous for individuals with lower investments due to its lower tax slabs. For those not claiming deductions, the new regime offers reduced tax rates, especially with its six lower-income tax slabs. For example, taxpayers with total income before deductions up to Rs 12 lakh could face higher tax liabilities under the old system if their investments are less than Rs. 3,12,500. Therefore, if your investments in tax-saving schemes are minimal, opting for the new regime might be advantageous.
However, if you’ve already devised a financial plan aimed at wealth creation through investments in tax-saving instruments, medical claims, life insurance, tuition fees payments, education loan EMIs, or home loan EMIs, the old regime provides higher tax deductions and lower tax burdens.
Given these considerations and the introduction of the new income tax regime, taxpayers should evaluate both options. It’s advisable to conduct a comparative analysis under both regimes to determine the most beneficial approach, as this can vary based on individual circumstances.
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