Income Tax Slabs for FY 2024-25 (New & Old Regime Tax Rates)

The income tax is a direct tax which follows a progressive slab rate, where the rate of tax increases as the taxpayer’s income rises. The Income-tax Act, 1961 provides for two tax regimes: the old regime, which allows various deductions and exemptions, and the new regime, which offers lower tax rates without exemptions.

In Budget 2024, the tax slabs for the new regime was revised as follows:

Budget 2024 Update: Tax Slabs Under New Regime Updated

The Budget 2024 has revised the tax slabs in the New Regime, providing taxpayers with an extra opportunity to save Rs. 17,500 in taxes.

Additionally, the standard deduction has been raised to Rs. 75,000 under this regime and the family pension deduction has been increased to Rs. 25,000 from Rs. 15,000. This is applicable for the FY 2024-25. The following is the tax slabs:

What is an Income Tax Slab?

In India, the Income Tax applies to individuals based on a slab system, where different tax rates are assigned to different income ranges. As the person’s income increases, the tax rates also increase.

Read Also : What is capital gain Tax and Changes in Budget 2024 ?

This type of taxation allows for a fair and progressive tax system in the country. The income tax slabs are revised periodically, typically during each budget. These slab rates vary for different groups of taxpayers.

For Old Regime, a tax rebate up to Rs.12,500 is applicable if the total income does not exceed Rs 5,00,000 (not applicable for NRIs).

NOTE:

• In the case of old tax regime Income tax exemption limit is
• up to Rs 2,50,000 for Individuals, HUF below 60 years aged and NRIs.
• up to Rs 3,00,000 for senior citizens aged above 60 years but less than 80 years.
• up to Rs 5,00,000 for super senior citizens aged above 80 years.
• Surcharge and cess will be applicable over and above the tax rates

However, under the new tax regime rebate is up to Rs.25,000 is applicable if the total income does not exceed Rs 7,00,000. (not applicable for NRIs). Additionally, the standard deduction has been raised from Rs. 50,000 to Rs. 75,000 under the new tax regime.

Important Points to note if you select the new tax regime:

Please note that the tax rates in the New tax regime are the same for all categories of Individuals, i.e. Individuals, Senior citizens, and Super senior citizens.

Individuals with net taxable income less than or equal to Rs 7 lakh will be eligible for tax rebate u/s 87A, i.e. tax liability will be NIL under the new regime.

What is Surcharge?

In case the income exceeds a certain threshold, the additional taxes are to be paid over and above existing tax rates. This is an additional tax on the High Income Earners.

Surcharge rates are as below:

• 10% of Income tax if total income > Rs.50 lakh and < Rs.1 crore,
• 15% of Income tax if total income > Rs.1 crore and< Rs.2 crore,
• 25% of Income tax if total income > Rs.2 crore and < Rs.5 crore,
• 37% of Income tax if total income > Rs.5 crore

Read Also : Section 54EC – Exemptions Under Capital Gain Bonds

Note:

In Budget 2023, the highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (applicable from 1st April 2023)

Surcharge rates of 25% or 37% will not apply to the 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). Therefore, the highest surcharge rate on the tax payable for such incomes will be 15%.

The surcharge rate for an Association of Persons (AOP) consisting entirely of companies will also be limited to 15%.

Additional Health and Education cess at the rate of 4% will be added to the income tax liability.