Latest Income Tax Slab Rates for FY 2023-24 and AY 2024-25—Bizz Buzz
Income Tax Slab Rates for FY 2023-24 and AY 2024-25 under both new and old tax regimes.
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In this article, we will delve into:
i) Income tax slabs for FY 2024-25 (AY 2025-26) and FY 2023-24 (AY 2024-25) under the new tax regime
ii) Income tax slab rates for FY 2020-21 (AY 2021-22), FY 2021-22 (AY 2022-23) FY 2022-23 (AY 2023-24) under the new tax regime
iii) Income tax slab rates for FY 2024-25 (AY 2025-26), FY 2023-24 (AY2024-25), FY 2022-23 (AY 2023-24), FY 2021-22 (AY 2022-23) under the old tax regime
iv) Comparison of new and old income tax slabs
v) How to know which income tax slab you fall in
vi) How to calculate income tax payable under the new tax regime
vii) How to calculate income tax payable under the old tax regime
viii) Surcharge on income tax
Nirmala Sitharaman, the finance minister of India, made no changes to the income tax slab rates in the interim Budget 2024. The income tax slabs and rates will remain unchanged in the financial year 2024-25, which begins April 1, 2024. To reduce their income tax liability, individuals must weigh the benefits of the old and new tax regimes.
Income tax slabs for FY 2024-25 (AY 2025-26) and FY 2023-24 (AY 2024-25) under the new tax regime
The new tax regime's income tax slabs will remain unchanged for FY 2024-25 (AY 2025-26). The interim budget includes no changes. The previous year's budget (Budget 2023) announced changes to the income tax slabs in the new tax regime. The changes were implemented to make the new tax regime more appealing to individual taxpayers. The current basic exemption limit under the new tax regime is Rs 3 lakh. In last year's budget, this was increased by Rs 50,000 from Rs 2.5 lakh.
Income tax slab rates for Income tax slabs for FY 2020-21 (AY 2021-22), FY 2021-22 (AY 2022-23) FY 2022-23 (AY 2023-24) under the new tax regime
Income tax slab rates for FY 2024-25 (AY 2025-26), FY 2023-24 (AY2024-25), FY 2022-23 (AY 2023-24), FY 2021-22 (AY 2022-23) under the old tax regime
The interim budget contains no changes to the old tax regime. As a result, anyone who chooses the old tax regime for FY 2024-25 (April 1, 2024-March 31, 2025) will continue to estimate their income tax liability using the same tax rates as in FY 2023-24 (April 1, 2023-March 31, 2024).
The basic exemption limit for individuals under the age of 60 is Rs 2.5 lakh. The basic income exemption limit for senior citizens (aged 60 and up but less than 80) is Rs 3 lakh. The basic income exemption limit for super senior citizens (age 80 and up) is Rs 5 lakh. Non-resident individuals, regardless of age, have a basic income exemption limit of Rs 2.5 lakh.
Comparison of new and old income tax slabs
How to know which income tax slab you fall in
To determine the income tax slabs and rates that apply to your income, you must first determine the taxable income on which tax is calculated. If an individual continues to follow the old, existing income tax regime, he or she is eligible to claim tax exemptions (such as the house rent allowance exemption, the leave travel allowance exemption, and the standard deduction) as well as deductions under sections 80C to 80U. After claiming and deducting the tax exemptions and deductions for which an individual is eligible, he or she determines the taxable income on which income tax is payable.
However, if he or she chooses a new, more lenient tax regime, the tax exemptions and deductions mentioned above will be inapplicable. The new tax regime allows for two deductions: a standard deduction of Rs 50,000 from salary and pension income and Section 80CCD (2) for employer contributions to the employee's Tier-I NPS account.
You can use a multitude of income tax calculators online, such as
a) https://economictimes.indiatimes.com/wealth/calculators/income-tax-calculator
b) https://www.incometax.gov.in/iec/foportal/income-tax-calculator
c) https://cleartax.in/paytax/TaxCalculator
d) https://www.moneycontrol.com/personal-finance/tools/income-tax-calculator
e) https://groww.in/calculators/income-tax-calculator
How to calculate income tax payable under the new tax regime
Step 1: Determine Gross Income
Calculate your gross annual income. This includes earnings from a salary, a house, a business or profession, capital gains, and any other source.
Step 2: Deductions and Exemptions
Certain exemptions and deductions available under the previous tax regime are no longer applicable under the new regime. However, you can still claim deductions under Sections 80C (such as EPF, PPF, and life insurance premiums), 80D (health insurance premiums), 80G (donations), and so on, subject to certain limits.
Step 3: Apply Income Slabs and Rates
Apply the slabs and rates as applicable for the new regime.
Step 4: Calculate Taxable Income
To determine taxable income, subtract deductions from gross income.
Step 5: Calculate the Tax Liability
Calculate your tax liability using the applicable slab rates and your taxable income.
Step 6: Health and Education Cess
Add a 4% health and education cess to the tax amount calculated in the step above.
Example:
Assume your gross income is ₹8,00,000, and Section 80C deductions total ₹1,50,000.
Taxable income is ₹6,50,000, calculated by subtracting ₹1,50,000.
Tax Calculation:
₹2,50,000 at 0% = ₹0
₹2,50,000 to ₹5,00,000 @ 5% = ₹12,500
₹5,00,000 to ₹6,50,000 @ 10% = ₹15,000
Total tax before Cess: ₹12,500 + ₹15,000 = ₹27,500.
Health and Education Cess: ₹27,500 x 4% = ₹1,100.
Total tax payable: ₹28,600 (₹27,500 + ₹1,100).
How to calculate income tax payable under the old tax regime
Step 1: Determine Gross Income
Calculate your gross annual income. This includes earnings from a salary, a house, a business or profession, capital gains, and any other source.
Step 2: Deductions and Exemptions
Under the old tax regime, you can claim various exemptions and deductions under sections
Section 80C: Investments like EPF, PPF, life insurance premium, etc., up to ₹1.5 lakh.
Section 80D: Medical insurance premium.
Section 24: Interest on home loan for self-occupied or let-out property.
Section 80E: Interest on education loan, etc.
Compute these deductions accurately to arrive at your taxable income.
Step 3: Apply Income Slabs and Rates
Apply the slabs and rates as applicable for the old regime.
Step 4: Calculate Taxable Income
To determine taxable income, subtract deductions from gross income.
Step 5: Calculate the Tax Liability
Calculate your tax liability using the applicable slab rates and your taxable income.
Step 6: Health and Education Cess
Add a 4% health and education cess to the tax amount calculated in the step above.
Example:
Assume your gross income is ₹8,00,000, and Section 80C deductions total ₹1,50,000.
Taxable income is ₹6,50,000, calculated by subtracting ₹1,50,000.
Tax Calculation:
₹2,50,000 at 0% = ₹0
₹2,50,000 to ₹5,00,000 @ 5% = ₹12,500
₹5,00,000 to ₹6,50,000 @ 20% = ₹30,000
Total tax before Cess: ₹12,500 + ₹30,000 = ₹42,500.
Health and Education Cess: ₹42,500 x 4% = ₹1,700.
Total tax payable: ₹44,200 (₹42,500 + ₹1,700).
Surcharge on income tax
From FY 2023-24 onwards, the government introduced revised surcharge rates under the new tax regime, effective from April 1, 2023. It's noteworthy that no adjustments were announced in the interim budget of 2024, maintaining the income tax slabs, tax rates, and surcharge rates unchanged for FY 2024-25. As per income tax regulations, a surcharge is applicable if an individual's taxable income exceeds Rs 50 lakh. This surcharge is calculated on the income tax payable amount before the Cess is applied.
It is imperative for taxpayers to comprehend the income tax slabs and rates for both the old and new tax regimes for FY 2023-2024 and AY 2024-2025 to efficiently plan their financial affairs. While there are fewer opportunities for tax savings under the new tax regime due to lower tax rates, there are more opportunities under the previous regime due to a wider range of deductions and exemptions. To minimise their tax obligations, taxpayers should carefully compare their taxable income to the relevant slabs and surcharge thresholds, as no changes have been announced in the interim budget for 2024. By keeping up with these rules, people can make well-informed decisions regarding their tax obligations and financial planning for the next assessment year.
