Income Tax Slabs and Rates in India for FY 2023-24/AY 2024-25

Income from salaries, business and profession, house property, capital gains, and other sources are all taxable under Indian law.

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Everyone with income has to pay some tax to the government. These taxes are decided by the government and divided into several categories. Different types of income incur different taxes. Paying income taxes not only helps the government with several social

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 or 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.

For people liable to pay taxes, it is necessary to know more about the tax slabs, how old and new tax regime works and, how you can calculate your income tax liability.

What is an Income Tax Slab?

The tax liability of an individual 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, and you must know about them before you start 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 income tax slabs in India differ as 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

New Income Tax Slabs as per Union Budget 2023

The Union Budget 2023 introduced new income tax slabs under the revised tax regime. The updated tax structure is designed to relieve the middle class and simplify the tax system by reducing the number of tax slabs from six to five. The new income tax slabs are as follows:

Income Tax Slab	Income Tax Rate
Up to ₹ 2,50,000	Nil
₹ 2,50,001 - ₹ 5,00,000	5% above ₹ 2,50,000
₹ 5,00,001 - ₹ 7,50,000	₹ 12,500 + 10% above ₹ 5,00,000
₹ 7,50,001 - ₹ 10,00,000	₹ 37,500 + 15% above ₹ 7,50,000
₹ 10,00,001 - ₹ 12,50,000	₹ 75,000 + 20% above ₹ 10,00,000
₹ 12,50,001 - ₹ 15,00,000	₹ 1,25,000 + 25% above ₹ 12,50,000

Also, the tax exemption limit has been increased to ₹3 lakhs, and the income tax rebate under Section 87A has been extended to individuals with an income of up to ₹7 lakhs, meaning they will not have to pay any taxes under the new regime.

The new tax regime will now be the default, although taxpayers can still opt for the old regime if they prefer. There are also changes to the highest surcharge rate, which has been reduced from 37% to 25%, effectively lowering the maximum tax rate from 42.74% to 39%.

Income Tax Slab Rates 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 that are 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:

Old Regime		New Regime
Income Tax Slab	Income Tax Rate	Income Tax Slab	Income Tax Rate
Up to ₹ 2,50,000	Nil	Up to ₹ 2,50,000	Nil
₹ 2,50,001 - ₹ 5,00,000	5% above ₹ 2,50,000	₹ 2,50,001 - ₹ 5,00,000	5% above ₹ 2,50,000
₹ 5,00,001 - ₹ 10,00,000	₹ 12,500 + 20% above ₹ 5,00,000	₹ 5,00,001 - ₹ 7,50,000	₹ 12,500 + 10% above ₹ 5,00,000
Above ₹ 10,00,000	₹ 1,12,500 + 30% above ₹ 10,00,000	₹ 7,50,001 - ₹ 10,00,000	₹ 37,500 + 15% above ₹ 7,50,000
		₹ 10,00,001 - ₹ 12,50,000	₹ 75,000 + 20% above ₹ 10,00,000
		₹ 12,50,001 - ₹ 15,00,000	₹ 1,25,000 + 25% above ₹ 12,50,000
		Above ₹ 15,00,000	₹ 1,87,500 + 30% above ₹ 15,00,000

The tax rates under the new tax regime are the same for all categories: individuals and HUF below the age of 60 years, senior citizens (above 60 years), and super senior citizens (above 80 years). Therefore, the basic exemption limit benefit has not been increased for senior citizens and super senior citizens.

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 the unique needs and challenges faced by senior citizens, the government has implemented specific income tax slabs tailored to their requirements. For the fiscal year 2023-2024, senior citizens falling in the age bracket of 60 to 80 years have distinct tax provisions aimed at reducing their tax burden and ensuring a more comfortable financial journey during their golden years. Let us understand them now.

Income Range (₹)	Old Tax Regime	New Tax Regime
Up to 3,00,000	Nil	Nil
3,00,001 to 5,00,000	5%	5%
5,00,001 to 10,00,000	20%	20%
Above 10,00,000	30%	30%

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 above the age of 60 or 80 years, commonly referred to as senior and super senior citizens, respectively. We will now guide you through the new tax regime for individuals above 80 years.

Tax Slab Old Regime		Tax Slab New Regime
Income Tax Slab	Income Tax Rate	Income Tax Slab	Income Tax Rate
Up to ₹ 5,00,000	Nil	Up to ₹ 2,50,000	Nil
₹ 5,00,001 - ₹ 10,00,000	20% above ₹ 5,00,000	₹ 2,50,001 - ₹ 5,00,000	5% above ₹ 2,50,000
Above ₹ 10,00,000	₹ 1,00,000 + 30% above ₹ 10,00,000	₹ 5,00,001 - ₹ 7,50,000	₹ 12,500 + 10% above ₹ 5,00,000
₹ 7,50,001 - ₹ 10,00,000	₹ 37,500 + 15% above ₹ 7,50,000
₹ 10,00,001 - ₹ 12,50,000	₹ 75,000 + 20% above ₹ 10,00,000
₹ 12,50,001 - ₹ 15,00,000	₹ 1,25,000 + 25% above ₹ 12,50,000
Above ₹ 15,00,000	₹ 1,87,500 + 30% above ₹ 15,00,000

Current Surcharge Rates for Different Taxpayers

Taxation is a fundamental aspect of any economy, providing governments with the necessary resources to fund public services, infrastructure development, and social welfare programs. To ensure a fair distribution of the tax burden and promote equity, many countries employ a progressive tax system, wherein tax rates increase with the taxpayer’s income level. However, in addition to the progressive tax rates, some jurisdictions implement surcharges on specific taxpayers or income brackets.

Surcharge rates are additional charges applied on top of regular tax rates, often targeting certain groups or categories of taxpayers. These surcharges serve various purposes, such as generating additional revenue for specific government initiatives, addressing wealth inequality, or curbing excessive consumption. The specific factors that determine surcharge rates can vary widely between jurisdictions, including income thresholds, marital status, property ownership, or specific industries.

Range of Income	Applicable Rate of Surcharge
Less than ₹50 lakhs	NIL
₹50 lakhs to ₹1 crore	10%
₹1 crore to ₹2 crore	15%
₹2 crore to ₹5 crore	25%
More than ₹5 crore	37%

Exceptions for Surcharge Applicability

Surcharges are typically levied on income exceeding a certain threshold. In India, there are a few exceptions for surcharge applicability on income tax. 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.

Different Types of Taxable Income in India

In India, the taxable income is levied on all individuals, including Hindu Undivided Families (HUFs), organizations, firms, bodies of individuals, and local authorities. Let us take a look at different types of taxable incomes:

Income from Salaries

As the name suggests, income from salary is taxable as per the Income Tax Act 1961. People earning above a standard set limit have to pay tax as per the old and new tax regimes.

Income from Business and Profession

If you are earning income from a business or any self-owned profession, you are liable to pay tax. It includes profits from trade, commerce, manufacturing, or any other business activities.

Income from House Property

Income from house property involves earnings from rental property or deemed rental income from properties owned by the taxpayer. Tax is applied on the rent received from letting out the property and notional rent from self-occupied or vacant properties.

Income from Capital Gains

If you are getting an income from the sale or transfer of capital assets like real estate, stocks, bonds, or mutual funds, it falls under income from capital gains.

Income from Other Sources

Income from sources other than the above-mentioned sources is also taxable under the Income Tax Act 1961. Dividends, winnings, and interest income from savings accounts, fixed deposits, and bonds.

Important Points to Consider When Selecting the New Tax Regime

Choosing between the old and new tax regimes can be a significant decision for taxpayers. Here are key points to consider when evaluating the new tax regime:

Tax Slabs and Rates

The new regime offers lower tax rates but does not allow most deductions and exemptions.
The old regime has higher tax rates but allows various deductions and exemptions that can significantly reduce taxable income.

Deductions and Exemptions

In the old regime, taxpayers could claim deductions such as those under Section 80C (up to ₹1.5 lakh), Section 80D (medical insurance), HRA, LTA, and others.
The new regime does not allow these deductions and exemptions, which can impact those with substantial investments and expenses eligible for tax benefits.

Standard Deduction

The new regime includes a standard deduction of ₹50,000 for salaried individuals, similar to the old regime.
The new regime does not allow additional deductions, such as professional tax and entertainment allowance (for government employees).

Income Level and Tax Savings

The new regime’s simplified structure and lower rates may benefit taxpayers with lower incomes or fewer investments.
Those with higher incomes and substantial tax-saving investments might find the old regime more beneficial.

Flexibility and Planning

The old regime offers flexibility in tax planning through investments and expenditures.
The new regime is straightforward, reducing the need for extensive tax planning and documentation.

How to Calculate Income Tax Liability Under the Old Tax Regime?

To calculate your income tax liability under the old tax regime, follow these steps:

Step 1. Calculate Gross Total Income

Sum up income from all sources: salary, house property, business/profession, capital gains, and other sources.

Step 2. Claim Deductions

Identify eligible deductions under Chapter VI-A, such as Section 80C (investments in PPF, ELSS, life insurance, etc.), Section 80D (medical insurance), and other relevant sections.

Step 3. Calculate Net Taxable Income

Subtract the total deductions from your gross total income to arrive at the net taxable income.

Step 4. Apply Tax Rates

Apply the applicable tax rates based on the tax slabs for the old regime which are as follows:

Up to ₹2.5 lakh: Nil
₹2.5 lakh to ₹5 lakh: 5%
₹5 lakh to ₹10 lakh: 20%
Above ₹10 lakh: 30%

Step 5. Add Cess

Add health and education cess at 4% on the total tax computed.

Step 6. Consider Rebate

If your net taxable income is up to ₹5 lakh, you can claim a rebate under Section 87A, reducing your tax liability to zero.

Right Time to Choose the Old Tax Regime and New Tax Regime

The Indian tax landscape has undergone a significant transformation with the introduction of the New Tax Regime in 2020, offering taxpayers an alternative method of calculating their income tax liability. Prior to this, individuals and Hindu Undivided Families (HUFs) had been following the traditional tax regime, which allowed for various deductions and exemptions to reduce taxable income. This shift has left taxpayers with a crucial decision to make – choosing between the Old Tax Regime and the New Tax Regime.

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 provides taxpayers with an option to choose a simplified tax structure with lower tax rates. It offers a lower number of tax slabs, resulting in a simpler and more straightforward calculation of taxes. 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 regime and the old regime 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 aligns best with their financial situation and goals. Consulting with a tax professional or financial advisor can also provide valuable guidance in making an informed decision.

Bottom Line

The income tax slabs and rates in India for the financial year 2023-24 and assessment year 2024-25 continue to provide a structure for individuals to determine their tax liabilities based on their income levels. The tax system aims to promote progressive taxation, with higher-income individuals paying a higher percentage of their income as tax. Paying income tax is the duty of every earning citizen in India. The money paid in taxes is used by the government towards the development of the country. However, not everyone has to pay the same amount of tax. An individual should pay taxes according to their income tax slab.

FAQs on New Regime Tax Slab

What is the current tax slab rate?

In India, there are two options when choosing taxing: the old tax regime and the new tax regime. Each has different slabs. You can find details on the income tax department website.

How much income is tax-free?

For the 2023-24 financial year (assessment year 2024-25), the tax-free income limit is ₹3,00,000 for individuals under both old and new regimes.

Is there any new tax regime slab for 2024-25?

No, the income tax slabs for the new regime have not changed for the 2023-24 financial year (assessment year 2024-25).

How much tax do I pay on 7.5 lakhs?

This depends on which tax regime you choose (old or new). You will need to calculate it based on the applicable slabs and rates. It is recommended that you use the online tax calculator for an accurate answer.

What is the minimum salary to pay income tax?

If your income falls below ₹3,00,000 in the 2023-24 financial year, you generally don’t need to pay income tax.

How to file an income tax return online?

The Income Tax Department website (https://www.incometax.gov.in/iec/foportal/) allows you to file income tax returns online.

Who decides the IT slab rates, and can they change?

The Government of India decides the income tax slab rates, which are announced in the annual budget. These rates can change from year to year.

What is the meaning of rebate under section 87A under the IT Act?

Section 87A of the Income Tax Act offers a rebate of up to ₹5,000 on income tax payable. This rebate is applicable only under the new tax regime.

Are there separate slab rates for different categories?

Yes, there are some variations in tax slabs for senior citizens and super senior citizens. For specific details, it is best to refer to the Income Tax Department website or consult a tax professional.

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