Budget 2024: Income Tax Slabs for FY 2024-25
Budget 2024: Income Tax Slabs for FY 2024-25
In the interim fiscal year 2024-25 budget, Finance Minister Nirmala Sitharaman announced no changes to the income tax slabs, meaning taxpayers will calculate their taxes for the upcoming year just as they have for the current year, 2023-24. Every year, taxpayers face the decision to choose between the old and new tax regimes, a choice that significantly impacts their financial planning. This article explores the nuances of both regimes, emphasizing the continued influence of Budget 2023’s updates on the tax framework. Through a direct comparison of the old and new regimes, including detailed income tax slabs and rates, the article aims to provide taxpayers with the necessary information to make informed financial decisions.
Budget 2024: Income Tax Slabs Unchanged for FY 2024-25
The finance minister, Nirmala Sitharaman, did not change the income tax slabs for the upcoming financial year 2024-25 (April 1, 2024-March 31, 2025) in the interim budget 2024. This means individuals will calculate the income tax payable on their incomes the same way they do for the current financial year 2023-24 (April 1, 2023-March 31, 2024).
According to income tax regulations, individuals without business income must select either the new or old tax regime annually. This allows them to opt for the new tax regime in one year and switch to the old one the following year.
Income Tax Slab
An income tax slab is a system used in India to apply income tax to individuals. This system assigns different tax rates to different income ranges, meaning that as an individual’s income increases, so does the tax rate they are subject to. This progressive approach to taxation aims to ensure a fair distribution of tax burdens across different income levels. Income tax slabs are subject to periodic revisions, often announced during the annual budget, to reflect economic conditions and policy objectives. These rates can vary for different categories of taxpayers.
Income Tax Slabs for FY 2024-25
Significant updates to the new tax regime were introduced in Budget 2023, with changes to the income tax slabs applicable for the current financial year from April 1, 2023, to March 31, 2024. These changes will continue into FY 2024-25, spanning April 1, 2024, to March 31, 2025, without further alterations.
The income tax slabs vary significantly between the old and new tax regimes, with the old regime’s slab rates further segmented into three distinct categories:
- Indian Residents under 60 years and all non-residents
- Resident Senior Citizens aged 60 to 80 years
- Resident Super Senior Citizens aged over 80 years
Income Tax Slab Rate FY 2024-25 For New Regime
For the Financial Year 2023-24 (Assessment Year 2024-25) under the New Regime, the income tax slab rates are structured as follows:
| Income Slabs | Income Tax Rates for FY 2023-24 (AY 2024-25) |
| Up to ₹3,00,000 | Nil |
| ₹3,00,000 to ₹6,00,000 | 5% on income exceeding ₹3,00,000 |
| ₹6,00,000 to ₹9,00,000 | ₹15,000 + 10% on income exceeding ₹6,00,000 |
| ₹9,00,000 to ₹12,00,000 | ₹45,000 + 15% on income exceeding ₹9,00,000 |
| ₹12,00,000 to ₹15,00,000 | ₹90,000 + 20% on income exceeding ₹12,00,000 |
| Above ₹15,00,000 | ₹150,000 + 30% on income exceeding ₹15,00,000 |
This structure clearly shows how taxes are calculated at each income slab, ensuring a progressive tax rate that increases with higher income brackets.
Income Tax Slab Rate FY 2024-25 For Old Tax Regime
The income tax slab rates for the Old Tax Regime vary based on age groups. Here are the details for individuals aged between 60 and 80 years:
Old Tax Regime for Individuals Below 60 Years & HUF
| Income Slabs | Tax Rate for Individuals Below 60 Years and NRIs |
| Up to ₹2.5 lakh | NIL |
| ₹2.5 lakh – ₹5 lakh | 5% |
| ₹5 lakh – ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Note:
- The income tax exemption limit is up to ₹2,50,000 for individuals, HUFs below 60 years of age, and NRIs.
- Surcharge and cess are applicable as per rules.
Old Tax Regime for Senior Citizens (60-80 Years)
| Income Slabs | Tax Slabs for Senior Citizens (60 to <80 Years) |
| ₹0 – ₹3 lakh | NIL |
| ₹3 lakh – ₹5 lakh | 5% |
| ₹5 lakh – ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Note:
- The income tax exemption limit is up to ₹3 lakh for senior citizens aged 60 to less than 80 years.
- Surcharge and cess are applicable as per rules.
Old Tax Regime for Super Senior Citizens (80+ Years)
| Income Slabs | Tax Slabs for Super Senior Citizens (>80 Years) |
| ₹0 – ₹5 lakh | NIL |
| ₹5 lakh – ₹10 lakh | 20% |
| Above ₹10 lakh | 30% |
Note:
- The income tax exemption limit is up to ₹5 lakh for super senior citizens aged 80 years and above.
- Surcharge and cess are applicable as per rules.
Latest Update on the Pay Later Option for Income Tax Filing
The Income Tax e-filing portal has recently rolled out a ‘Pay Later’ option, allowing you to complete your tax filing process before making any tax payments. You can pay taxes after you are done filing. For additional information, please refer to our guide – Pay later option for the Income tax return filing.
Comparison of Tax Rates under the New tax regime & Old tax regime for FY 2024-25
| Slabs | Old Tax Regime | |||
| <60 years & NRIs | >60 to <80 years | > 80 years | FY 2024-25 | |
| ₹0 – ₹2,50,000 | NIL | NIL | NIL | NIL |
| ₹2,50,000 – ₹3,00,000 | 5% | NIL | NIL | NIL |
| ₹3,00,000 – ₹5,00,000 | 5% | 5% (tax rebate u/s 87A is available) | NIL | 5% |
| ₹5,00,000 – ₹6,00,000 | 20% | 20% | 20% | 5% |
| ₹6,00,000 – ₹7,50,000 | 20% | 20% | 20% | 10% |
| ₹7,50,000 – ₹9,00,000 | 20% | 20% | 20% | 10% |
| ₹9,00,000 – ₹10,00,000 | 20% | 20% | 20% | 15% |
| ₹10,00,000 – ₹12,00,000 | 30% | 30% | 30% | 15% |
| ₹12,00,000 – ₹12,50,000 | 30% | 30% | 30% | 20% |
| ₹12,50,000 – ₹15,00,000 | 30% | 30% | 30% | 20% |
| >₹15,00,000 | 30% | 30% | 30% | 30% |
How to Calculate Income Tax?
Priya’s total taxable income is Rs 7,00,000, after accounting for various income sources like her salary, income from investments, and any rental earnings. She has also taken into account all applicable deductions under Section 80. Priya is curious about her tax obligations for FY 2022-23 (AY 2023-24).
| Income Slabs | Tax Rate | Calculated Tax |
| Up to Rs 2,50,000 | No tax | – |
| Rs 2,50,000 to Rs 5,00,000 | 5% (Rs 5,00,000 – Rs 2,50,000) | Rs 12,500 |
| Rs 5,00,000 to Rs 7,00,000 | 20% (Rs 7,00,000 – Rs 5,00,000) | Rs 40,000 |
| Above Rs 10,00,000 | 30% | – |
| Total Taxable Amount | Rs 52,500 | |
| Health and Education Cess | 4% of Rs 52,500 | Rs 2,100 |
| Total Tax for FY 2022-23 | Rs 54,600 |
Note: Priya is entitled to an income tax exemption of up to Rs 2,50,000 as an individual taxpayer. The exemption limits differ for senior citizens (Rs 3,00,000) and super senior citizens (Rs 5,00,000).
Click here to access an income tax calculator.
Key Features of the New Tax Regime
- Uniform Tax Rates: The New tax regime offers the same tax rates for all individual categories, including regular individuals, senior citizens, and super senior citizens.
- Tax Rebate for Low-Income Individuals: Individuals with a net taxable income of up to Rs 5 lakh qualify for a tax rebate under section 87A, resulting in zero tax liability under both the New and the Old tax regimes.
- Rebate in Budget 2024: For the current financial year 2024, there have been no amendments to the enhanced rebate introduced in Budget 2023. As per the updated provisions, incomes up to Rs 7 lakh remain exempt from tax under the New regime, effective from FY 2023-24.
- Surcharge on High Income: A surcharge is applied when income exceeds certain thresholds, with the rates being:
- 10% for income above Rs 50 lakh
- 15% for income above Rs 1 crore
- 25% for income above Rs 2 crore
- 37% for income above Rs 5 crore
- In the current financial year 2024, following the changes implemented in Budget 2023, the maximum surcharge rate in the New tax regime for incomes over Rs 5 crore has been reduced to 25% from the previous 37%, with this adjustment taking effect from April 1, 2023.
- Exclusions from High Surcharge Rates: Surcharge rates of 25% or 37% do not apply to income taxable under specific sections related to capital gains on shares and income of Foreign Institutional Investors, capping the surcharge at 15% for such incomes.
- Surcharge Cap for Certain Incomes: From the Assessment Year 2023-24, the maximum surcharge on tax payable for dividend income or capital gains, as mentioned in Section 112, as well as for an Association of Persons (AOP) consisting entirely of companies, is capped at 15%.
- Health and Education Cess: 4% is levied on all cases’ total income tax liability and surcharge.
Choosing the New Tax Regime: What You Need to Know
Taxpayers who opt for the concessional rates under the New Tax Regime must relinquish a range of exemptions and deductions previously available under the old regime. Overall, there are 70 such exemptions and deductions, with the most commonly utilized ones highlighted below:
Comparing Old and New Tax Regimes
| Particulars | Old Tax Regime | New Tax Regime |
| Income level for rebate eligibility | ₹5 lakhs | ₹7 lakhs |
| Standard Deduction | ₹50,000 | ₹50,000 |
| Effective Tax-Free Salary income | ₹5.5 lakhs | ₹7.5 lakhs |
| Rebate u/s 87A | ₹12,500 | ₹25,000 |
| HRA Exemption | Available | Not Available |
| Leave Travel Allowance (LTA) | Available | Not Available |
| Other allowances (including food allowance) | Available | Not Available |
| Interest on Home Loan u/s 24b (self-occupied/vacant property) | Available | Not Available |
| Interest on Home Loan u/s 24b (let-out property) | Available | Available |
| Deduction u/s 80C (Investments, tuition fee, etc.) | Available | Not Available |
| Employee’s (own) contribution to NPS | Available | Not Available |
| Employer’s contribution to NPS | Available | Available |
| Medical insurance premium – 80D | Available | Not Available |
| Disabled Individual – 80U | Available | Not Available |
| Interest on education loan – 80E | Available | Not Available |
| Deduction on Family Pension Income | Available | Available |
| Gifts up to ₹50,000 | Available | Available |
| Exemption on voluntary retirement 10(10C) | Available | Available |
| All contributions to Agniveer Corpus Fund – 80CCH | Available | Available |
Here are the key changes introduced on 1st April 2023 under the New Regime:
- Income Rebate Threshold Increase: The eligibility for income tax rebate has been raised from ₹5 lakhs to ₹7 lakhs. This means that individuals with a taxable income of up to ₹7 lakhs will be eligible for a rebate on their income tax.
- Standard Deduction Reintroduction: A standard deduction of ₹50,000, previously unavailable under the new regime, has been reintroduced. This deduction allows taxpayers to reduce their taxable income by ₹50,000 before calculating their tax liability.
- Increased Rebate under Section 87A: The rebate under Section 87A has been doubled to ₹25,000 for qualifying individuals. This rebate provides a direct reduction in the amount of income tax payable by eligible taxpayers.
Choosing Between the Old and New Tax Regimes: A Comparative Example
The decision between the old and new tax regimes depends largely on one’s income level, investment habits, and financial planning.
For Middle-Class Taxpayers
New Tax Regime: This is generally more favourable for middle-class taxpayers with a taxable income of up to Rs 15 lakh, particularly those not investing heavily in tax-saving schemes. Since the new regime offers seven lower tax slabs, it can result in lower tax liabilities for individuals who don’t claim many deductions.
Example: An individual with a pre-deduction income of Rs 12 lakh but investments below Rs 1.91 lakh would face a higher tax liability under the old regime than the new one.
For High-Income Earners
Old Tax Regime: High-income earners might find the old regime more beneficial, especially if they have significant investments in tax-saving instruments, expenses eligible for deductions (like children’s tuition fees, home loan EMIs), mediclaim, life insurance, etc. The old regime offers more deduction opportunities, potentially leading to significant tax savings.
Making a choice
Conducting a detailed analysis comparing both regimes is crucial based on your financial situation. Factors to consider include your total income, the extent of your investments in tax-saving schemes, and other deductible expenses.
Timing for Opting
- For Salary Income: You can choose the regime at the beginning of the financial year and communicate your choice to your employer. This choice cannot be changed during the year but can be revised when filing your Income Tax Return.
- For Business & Professional Income: If your income includes earnings from a business or profession, the selection between the tax regimes can only be made once in a lifetime.
Given these considerations, there’s no one-size-fits-all answer. Taxpayers should evaluate their circumstances, possibly with the help of a financial advisor, to decide which regime offers them the most benefit.
For detailed information on income tax rates, consult our experts and ensure you file your returns accurately.
