Income earned beyond a certain limit in a financial year is subject to tax. The tax amount one has to pay depends on the income tax slabs applicable to the income. The slabs and tax treatment vary in the new tax regime and the old tax regime. A taxpayer without business income can choose one out of these two regimes every year. The laws used to calculate income tax for FY2024-25 are currently the same as those of the previous year, as the government had presented an interim budget in February 2024 because of the Lok Sabha elections in 2024. The budget had not changed income tax laws. The full budget for FY 2024-25 is expected to be presented in July or August, 2024, after a new government is formed. Till then, the laws remain the same.

Also Read: Last date to file ITR for different taxpayers

Though the full budget is yet to be presented, one needs to know the income tax slabs currently applicable in the on-going financial year to estimate tax liability and choose the appropriate tax regime to lower the tax deducted at source (TDS).

Income tax slabs under the new tax regime

Income tax slabs Income tax rate
Rs 0 to Rs 3,00,000 0
Rs 3,00,001 to Rs 6,00,000 5%
Rs 6,00,001 to Rs 9,00,000 10%
Rs 9,00,001 to Rs 12,00,000 15%
Rs 12,00,001 to Rs 15,00,000 20%
Rs 15,00,001 and above 30%

Cess at 4% will be levied on the amount of income tax payable. Surcharge will be applicable on incomes above Rs 50 lakh.

Income tax slabs under the old tax regime

Income tax slabs Income tax rate
Rs 0 to Rs 2,50,000 0
Rs 2,50,001 to Rs 5,00,000 5%
Rs 5,00,001 to Rs 10,00,000 20%
Rs 10,00,001 and above 30%

The above income tax slabs table is applicable for individuals below 60 years of age. Cess at 4% will be levied on the income tax amount payable.

Surcharge will be applicable on incomes above Rs 50 lakh.Comparison of new vs old income tax slabs

Taxable Income

Old Tax Regime

New Tax Regime

0 to Rs 2,50,000

Exempted

Exempted

Rs 2,50,001 to Rs 3,00,000

5%

Exempted

Rs 3,00,001 to Rs 5,00,000

5%

5%

Rs 5,00,001 to Rs 6,00,000

20%

5%

Rs 6,00,001 to Rs 9,00,000

20%

10%

Rs 9,00,001 to Rs 10,00,000

20%

15%

Rs 10,00,001 to Rs 12,00,000

30%

15%

Rs 12,00,001 to Rs 15,00,000

30%

20%

Rs 15,00,001 and above

30%

30%

Difference between old and new tax regimes

A taxpayer must understand the pros and cons of both the tax regimes before choosing one.

The tax benefits available under the new tax regime are:
a) Basic exemption limit of Rs 3 lakh is applicable to all taxpayers irrespective of age.
b) Standard deduction of Rs 50,000 is allowed on incomes from salary and pension.
c) Deduction on employer’s contribution to NPS account is available up to 10% of basic salary (14% for government employees).
d) Family pensioners can claim standard deduction of Rs 15,000 from their family pension.
e) Zero tax is payable if taxable income does not exceed Rs 7 lakh. This is because a tax rebate of Rs 25,000 is available under Section 87A.
f) Surcharge rate (applicable on incomes exceeding Rs 5 crore) reduced to 25% from 37% earlier.

Also Read: Which is beneficial tax regime for you – New or old?

Remember, the new tax regime is the default tax regime. If an individual does not choose a regime, the tax liability will be calculated based on the income tax slabs under the new tax regime. Apart from the two deductions (standard deduction and NPS deduction) mentioned above, no other deductions are allowed under the new tax regime.

The tax benefits available under the old tax regime are:
a) Basic exemption limit applicable to individuals depends on the age. Income up to Rs 2.5 lakh is exempted for individuals below 60 years. For senior citizens (aged between 60 and 80 years), income up to Rs 3 lakh is exempted. For super senior citizens (aged 80 years and above), income up to Rs 5 lakh is exempted.
b) An individual can claim various tax deductions and exemptions. Some of them are: under Section 80C for up to Rs 1.5 lakh, under Section 80D for up to Rs 25,000/Rs 50,000, tax exemption on house rent allowance (HRA), leave travel allowance (subject to certain conditions), Section 80TTA deduction for up to Rs 10,000. Deductions available under the new tax regime are also available under the old tax regime.
c) Zero tax is payable if taxable income does not exceed Rs 5 lakh. This is because a tax rebate of Rs 12,500 is available under Section 87A.
d) The old tax regime can be chosen only if the income tax return is filed before the due date for filing ITR i.e., July 31 expires.

Surcharge rate

Surcharge is levied on the income tax amount if the taxable income of a taxpayer exceeds specified limits. To make the new tax regime attractive, the surcharge rate on incomes was reduced.

Here are the surcharge rates applicable under the old and new tax regimes:

Surcharge rate in new tax regime

Income range Surcharge rate
Less than Rs 50 lakh NIL
Rs 50 lakh to Rs 1 crore 10%
Rs 1 crore to Rs 2 crore 15%
Exceeding Rs 2 crore 25%

Surcharge rate in old tax regime

Income range Surcharge rate
Less than Rs 50 lakh NIL
Rs 50 lakh to Rs 1 crore 10%
Rs 1 crore to Rs 2 crore 15%
Rs 2 crore to Rs 5 crore 25%
Exceeding Rs 5 crore 37%

Cess is levied on the total of income tax liability and surcharge. There is a concept of marginal relief in income tax in cases when as a result of income exceeding a threshold level the income tax payable increases by more than the amount by which the income exceeds the threshold.

Also Read: How marginal relief help taxpayers to pay lower taxes

How is income taxed in India?
Under the income tax laws, the income is divided into five categories. These categories are as follows: a) Income from salaries, b) Income from house property, c) Income from capital gains, c) Income from business and profession and c) Income from other sources.

How much income is exempted from tax under new and old tax regime?
Income up to Rs 3 lakh is exempted from tax under new tax regime for all taxpayers, irrespective of their age. Under the old tax regime, income exempted from tax depends on the age of an individual. For individual below 60 years of age, income up to Rs 2.5 lakh is exempted from tax. For senior citizens, aged between 60 and 80 years of age, income up to Rs 3 lakh is exempted from tax. For super senior citizens, aged 80 years and above, income up to Rs 5 lakh is exempted from tax.



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