Income Tax Slabs for FY 2024-25/ AY 2025-26 in India

The Budget 2024 has introduced a mix of optimism and changes for Indian taxpayers. On one side, it has raised the taxation limit for many, while on the other, it has preserved the old tax regime to encourage wider tax compliance. Finance Minister Ms. Nirmala Sitharaman has unveiled new adaptations for the upcoming tax regime, including an increased standard deduction from ₹50,000 to ₹75,000 for FY 2024-25. There is an increased threshold of a 5% tax rate from ₹5 lakh to ₹7 lakh. What a financial year!

Understanding the income tax slabs is essential for all taxpayers in India. As we enter FY 2024-25/AY 2025-26, it’s essential to grasp how the new tax structure impacts your income and what changes might affect your finances. Whether you’re sticking with the old regime tax slabs or exploring the new one, knowing your tax bracket and the associated benefits is key to effective tax planning. As a taxpayer, you need to understand the current tax rates, including the income tax deduction slab details and old vs new tax regime, to make informed financial decisions for the coming year.

Budget 2024 Income Tax Slabs Under New Regime Updated

With Budget 2024, there is a change in the tax slabs under the New Tax Regime. This is an update from the previous tax regime, which had higher tax rates for income slabs below ₹10 lakhs. The new regime tax slabs also offer other benefits, such as increased standard deduction and reduced surcharge.

What is an Income Tax Slab?

An individual’s tax liability in India depends on the amount of their annual income. It is divided into different slabs, depending on the annual earnings. The payable tax rate increases based on the growth of the slab. The government has fixed income tax rates on the different slabs; you must know about them before paying your taxes. One thing to keep in mind is that the tax slabs often change during the budget. Hence, keeping yourself updated about it every year is necessary.

The new tax slab 2024-25 in India differs per the taxpayer’s age. These fall under three categories:

• Individuals who are younger than the age of 60
• Senior citizens who are older than 60 years but younger than 80 years
• Super senior citizens who are older than 80 years

Income Tax Slabs under New Tax Regime FY 2024-25

As per the Budget 2024, there is a significant change in the tax slabs under the New Tax Regime. This has upgraded the tax limit for certain salary holders; let us take a look at the budget 2024 tax slab:

What Changed Under the New Tax Regime Budget 2024?

Budget 2024 introduced several changes to the new tax regime. One of the most significant changes was an increase in the basic exemption limit from ₹2.5 lakhs to ₹3 lakhs for individuals and from ₹3 lakhs to ₹5 lakhs for senior citizens. Tax rates before budget 2024:

What are the Current New Tax Regime Features?

The new tax regime for the financial year 2024-25 offers several features, including:

• Increased exemption limit: The basic exemption limit has been increased from ₹2.5 lakhs to ₹3 lakhs for individuals and from ₹3 lakhs to ₹5 lakhs for senior citizens.
• Reduced tax rates: The tax rates for income slabs up to ₹10 lakhs have been reduced.
• No surcharge: as per the new tax regime, no surcharge is applicable under the new tax regime.
• Increased standard deduction: The standard deduction in new tax regime has been increased from ₹50,000 to ₹75,000.
• Increased family pension deduction: The family pension deduction has been increased from ₹15,000 to ₹25,000.

These changes are made so you can get tax relief as taxpayers, especially those in the lower and middle-income brackets. However, it’s important to note that the overall tax liability will depend on various factors, such as your total income, deductions, and exemptions.

Comparison of Tax Rates Under New Tax Regime & Old Tax Regime

When filing income tax, you must understand which tax regime you are opting for. Under the Income Tax Act of 1961, you can choose between new and old tax regimes. Before choosing that, take a quick look at a comparison of tax rates under the new tax regime and old tax regime:

Income Tax Slab for FY 2023-24 (AY 2024-25) for Individuals Below 60 years

According to the new tax regime, the income tax slab for AY 2024-25 allows taxpayers to pay tax at lower rates by giving up certain deductions and exemptions available under income tax. The other option is to continue paying higher taxes under the existing regime and avail themselves of certain rebates and exemptions. The income tax rates for AY 2024-25 are given below:

Income Tax Slab for Senior Citizens (60 to 80 years)

As individuals progress through different stages of their lives, their financial circumstances and responsibilities often change. Recognizing senior citizens’ unique needs and challenges, the government has implemented specific income tax slabs tailored to their requirements. For the AY 2024-2025, senior citizens in the 60 to 80 age bracket have distinct tax provisions to reduce their tax burden and ensure a more comfortable financial journey during their golden years.

Income Tax Slabs for Individuals above 80 years (Super Senior Citizen)

In many countries, including India, the income tax system includes special provisions for individuals over 60 or 80 years old, commonly referred to as senior and super senior citizens, respectively. Here are the tax slabs and rates for the new and old tax regimes for individuals above 80 years:

Revised Income Tax Slab for FY 2024-25 (AY 2025-26) - For New Regime

So now that you skimmed through the tax slabs for AY 2024-25, there will be no time when the new tax cycle will start, and you will have to file your income tax for that new cycle. To do so, you must know about the revised income tax slab for FY 2024-25 (AY 2025-26):

Revised Income Tax Slab for FY 2023-24 (AY 2024-25) - For New Regime

As per the latest Budget 2024 announcements, the revised or new slab rate for AY 2024-25 are as follows:

Anyone filing their taxes for the financial year 2023-24 must follow this tax slab and rate table and avail of the exemptions and deductions as per this table.

Income Tax Slabs for Resident Individual or HUF Under New Tax Regime

As an individual or HUF under a new tax regime, there are some changes you have to follow after Budget 2024 announcements. Here is the table showing how tax slabs and rates have changed for resident individuals and HUF under the new tax regime:

Income Tax Slabs for Non-Resident Individuals under New Tax Regime

As a non-residential individual, it is important to know how the latest income tax slab changes can impact your tax liability. Under the new tax regime, some changes are introduced per global tax standards. Take a look at these changes:

What is a Surcharge and the Applicable Rates?

The surcharge is an additional tax levied on top of the income tax calculated on your taxable income. The rate of surcharge depends on your total taxable income. Here are the applicable surcharge rates for the financial year 2024-25:

For individuals and Hindu Undivided Families (HUFs):

• No surcharge if taxable income is up to ₹15,00,000.
• 10% surcharge if taxable income is between ₹15,00,001 and ₹50,00,000.
• 15% surcharge if taxable income is above ₹50,00,000.

For companies and other taxpayers:

• 7% surcharge if taxable income is between ₹1 crore and ₹10 crore.
• 12% surcharge if taxable income is between ₹10 crore and ₹100 crore.
• 15% surcharge if taxable income exceeds ₹100 crore.

Exceptions for Surcharge Applicability

Surcharges are typically levied on income exceeding a certain threshold. There are a few exceptions for surcharge applicability on income tax in India. However, here are some examples to consider:

Income Tax Slab System

Surcharges only apply after you cross a certain income threshold. For example, in India, for individuals in the 2024-2025 tax year, there is no surcharge on income up to ₹50 lakh.

Marginal Relief

In some cases, a marginal relief provision can limit the total tax paid (including surcharge) to a certain percentage of income exceeding the surcharge threshold. This is applicable in India for certain taxpayer categories.

How to Calculate Income Tax from Income Tax Slabs?

To calculate the income tax from tax slabs, you must know which tax regime you fall under. To understand this better, let us take a few examples:

Example 1: Mr. Amit has a total taxable income of ₹9,00,000, including salary, rental income, and interest income. He is an individual taxpayer assessee with a standard deduction of ₹50,000. Deductions under Section 80C have been reduced. He wants to know his tax dues as per the old regime for FY 2023-24 (AY 2024-2025). Let us do the tax calculation:

Example 2: Ananya has a total taxable income of ₹9,00,000. This income includes earnings from salary, rental income, and interest income. Deductions under Section 80 have already been reduced. Ananya wants to know her tax dues as per the new regime for FY 2023-24 (AY 2024-2025).

Which is Better, the New Regime or the Old Regime?

The income tax system in India plays a crucial role in the country’s economic framework. It is designed to collect revenue for the government while ensuring a fair distribution of the tax burden. In recent years, the Indian government introduced a new income tax regime, which raised questions about its effectiveness compared to the traditional, old regime.

Old Regime

Under the old regime, individuals were accustomed to a progressive tax structure consisting of various slabs and rates. The income tax slabs were divided into different categories based on income levels, and each category had a corresponding tax rate. The tax rates gradually increased as the income level rose, with the highest rate applicable to individuals with the highest income bracket.

New Regime

The new income tax regime introduced in recent years allows taxpayers to choose a simplified tax structure with lower tax rates. It offers fewer tax slabs, resulting in a simpler and more straightforward tax calculation. However, this regime eliminates several deductions and exemptions available under the old regime, making it a less attractive option for some taxpayers.

The choice between the new and old regimes under income tax slabs and rates in India is subjective and depends on individual circumstances. While the new regime offers lower tax rates and simplified calculations, it lacks the extensive deductions and exemptions available in the old regime. Taxpayers must evaluate their income, deductions, and preferences to determine which regime best fits their financial situation and goals. Consulting with a tax professional or financial advisor can also provide valuable guidance in making an informed decision.

Key Takeaways

• Income tax liability in India is determined by annual income and divided into slabs.
• The government periodically revises tax rates and slabs, making it essential to stay updated with budget announcements.
• Taxpayers can choose between the old regime, with higher rates and more deductions, and the new regime, with lower rates and fewer deductions.
• Under the new tax regime, the tax exemption limit is increased to ₹3 lakhs, and the rebate under Section 87A extends to incomes up to ₹7 lakhs.

FAQs on New Regime Tax Slab