Your Guide to Income Tax Slabs for F.Y. 2023-24 & A.Y. 2024-25: What You Need to Know

Income Tax Slabs F.Y. 2023-24 [A.Y. 2024-25]

Understanding the income tax slabs is crucial for every individual, as it directly impacts the amount of tax payable. For F.Y. 2023-24 & A.Y. 2024-25, there will be two tax regimes: the old and the new.

Notably, the default one for taxpayers will be the new tax regime. However, individuals can choose the old tax regime if they prefer it. In other words, taxpayers will automatically be placed under the new tax regime unless they actively opt for the old tax regime.

Our tax experts have curated this guide who will provide a thorough understanding of the income tax slabs for the upcoming fiscal year.

What Is The Income Tax Slab?

Income tax slabs refer to the different levels of taxable income, each of which is subject to a specific income tax rate. Taxpayers are grouped into different slabs based on their income, and each slab has its own set of tax rates.

The fundamental idea is simple: as your income goes up, the corresponding tax rates also increase.

Changes to these slabs typically come with the annual budget announcements. Taxpayers are classified into three categories, which helps determine the applicable income tax slab for each individual.

➔    Individuals below 60 years old

➔    Senior citizens whose age is between 60 and 80 years

➔    Super senior citizens whose age is 80 years and above

New Income Tax Slabs For FY 2023-24 (AY 2024-25)

Income Tax Slab Rate under New Tax Regime

Income Tax Slab Rate under Old Tax Regime (For Individuals below 60 years)

Income Tax Slab Rate under Old Tax Regime (For Individuals Between 60 to 80 Years)

Income Tax Slab under Old Tax Regime (For Individuals above 80 Years)

Income Tax Slab Rate under New Tax Regime

Old Tax Regime Vs. New Tax Regime

Here’s the comparison between the old and new tax regimes.

New Tax Regime

Under Section 115 BAC of the IT Act, 1961, the Indian government introduced a new tax regime in the Union Budget 2020. However, it was revised in the Union Budget 2023 and brought several key features.

●       The basic tax exemption limit in the new system has risen from Rs. 2.5 lakhs to Rs. 3 lakhs.

●       A tax rebate under Section 87A has been increased to Rs. 7 lakhs, which was previously Rs. 5 lakhs.

●       A standard deduction of Rs. 50,000 remains applicable for salaried income. This deduction can be subtracted from the gross salary before calculating taxable income.

●       The family pension deduction increased to Rs. 15,000 or 1/3rd of the pension (whichever is lower).

●       High-net-worth individuals (exceeding 5 crores) witnessed a reduction in the surcharge rate on income, from 37% to 25%, resulting in a lower effective tax rate from 42.74% to 39%.

●       Non-government employee's exemption limit was increased from Rs. 3 lakhs to Rs. 25 lakhs. 

●       No LTCG (Long-Term Capital Gains) benefit was provided on debt funds invested after March 31, 2023.

Old Tax Regime

The existing tax regime or the old tax regime was used to calculate income tax before the introduction of the new rules. Under this system, individuals had the flexibility to utilize various strategies, such as deductions like Section 80C, HRA, LTA, and more, to reduce their taxable income.

In simple terms, we can say that the 2023 Budget simplified tax rates but cut back on exemptions. The old system had more complex slabs but offered additional tax benefits.

Comparison of Tax Rates Under The New tax regime & Old tax regime

How to Calculate Income Tax from Income Tax Slabs?

Now that we have explained everything about the old and new tax regime. But as the concepts are very complex, let’s understand these more with an example.

Priya has an annual income of ₹12,00,000/- and makes an investment of Rs.1,50,000/- u/s 80C.

The tax calculation for her income in both the old and new tax regimes will be as follows.

After taking a deduction of ₹1,50,000 u/s 80C, the taxable income will be 10,50,000.

Thus it is evident is New tax regime is more beneficial to Priya. However it depends on taxable income and various deductions as to which tax regime will be beneficial to whom.

Exemptions/Deductions That Are Not Available Under The New Tax Regime?

Under the new tax regime, individuals will have to forgo various exemptions and deductions. Here’s the list.

●       House Rent Allowance (HRA)

●       Leave Travel Allowance (LTA)

●       Meal and Food Coupons

●       Conveyance Allowance

●       Deductions under Chapter VI-A (Sections 80C, 80D, 80G)

Exemptions/Deductions Available Under The New Tax Regime?

●       Taxpayers can claim an additional deduction of 10% of their salary for contributions made to the National Pension System (NPS) under section 80CCD(2).

●       Employees with disabilities can avail exemption for transport allowance to cover everyday travel expenses between their residence and workplace.

●       Standard Deduction for Rental Income

●       Home Loan Interest Offset Against Rental Income

●       Conveyance Allowance for Official Duties

●       Allowances for Official Tours or Transfers

Taxable Income Sources in India

In India, when it comes to paying taxes, the government considers different types of income. Whether you're an individual, a business, or part of a trust, your money is subject to taxation. Here are some of the sources.

●       Business Income: If you run a business, the money you make from it is considered taxable income. Rates for taxing individual and corporate business income can vary, and if you're an individual with business income, your tax is calculated based on the rates set for the fiscal year.

●       Salary or Pension: If you're working for a salary or receive a pension after retiring, the government taxes that, too. This accounts

➔    Basic salary,

➔    Any extra allowances and

➔    Other salary-related gains.

The tax rates differ based on your age during the year you're earning that salary or pension.

●       Property Income: If you own multiple properties and earn rental income by leasing them out, that money is considered part of your taxable income.

●       Capital Gains: Profits made from selling assets like gold, real estate, stocks, or other investments fall under capital gains income.

Confused About Income Tax Slabs? Consult Karr Tax for Clear Guidance Today!

Frequently Asked Questions (FAQs)

1.    What is the tax-free threshold under the latest budget update?

According to 2023 budget amendments, individuals who choose the new tax regime won't be required to pay any taxes if their taxable income is up to Rs 7 lakh.

2.    How can I file an Income Tax Return in India?

You can file your IT return through our tax filing platform, which is safe, secure, and super fast. If you are not sure about which form to file, get our tax experts' guidance and hassle-free filing process.

3.    What are the different slab rates for different categories?

The slab rates for income tax in India differ based on the taxpayer's age and entity type.

For Individuals:

●       Below 60 years

●       60 to 80 years (Senior Citizens)

●       Above 80 years (Super Senior Citizens)

For Other Entities:

●       Partnership Firms and LLPs

●       Companies

●       Local Authorities, cooperative societies, etc.

4.    Is it allowed to claim 80C deductions and choose a new income tax slab regime?

In the new income tax slab regime, it's not possible to avail deductions under section 80C.

Need Assistance in Choosing between Old or New Tax Regime - Ask your Experts