Income Tax Slab FY 2024-25: Latest Income Tax Slab Rates for FY 2023-24 (AY 2024-25), Old & New Income Tax Regime, Income Tax Slabs Rate in India | ET Wealth (2024)

The income tax slabs in new tax regime will remain unchanged for FY 2024-25 (AY 2025-26). No changes have been announced in the interim budget. The last year's budget (Budget 2023) announced changes in the income tax slabs in the new tax regime. The changes were made to make the new tax regime more attractive for individual taxpayers. Currently, new tax regime has basic exemption limit of Rs 3 lakh. This was hiked in last year's budget from Rs 2.5 lakh by Rs 50,000.

Here are the income tax slabs under new tax regime.

Changes announced in the new tax regime in Budget 2023

Given below are the changes that were announced in the new tax regime in Budget 2023 for FY 2023-24:

• New income tax regime is the default tax regime. Thus, unless an individual specifically opts for the old tax regime, their incomes will be taxed at the new tax regime's slabs and rates
• Rebate under Section 87A increased to taxable income of Rs 7 lakh (tax rebate of 25,000) from 5 lakh (tax rebate of Rs 12,500). This effectively means that any individual opting for the new tax regime with taxable income of up to Rs 7 lakh will not pay any taxes. Earlier, this tax rebate was available till taxable income of Rs 5 lakh
• Basic exemption limit hiked to Rs 3 lakh from Rs 2.5 lakh in the new tax regime
• The number of income tax slabs under the new tax regime reduced to five from six
• Standard deduction of Rs 50,000 introduced under the new tax regime for salaried and pensioners
• Family pensioners can also claim standard deduction of Rs 15,000 under the new tax regime
• Highest surcharge rate of 37% reduced to 25% under the new tax regime

No changes are announced in the old tax regime in interim budget. Thus, anyone opting for the old tax regime for FY 2024-25 (April 1, 2024-March 31, 2025) will continue to calculate the income tax payable under the same tax rates as in FY 2023-24 (April 1, 2023 - March 31, 2024).

Given below are the income tax rates for FY 2024-25 (AY 2025-26), FY 2023-24 (AY 2024-25), FY 2022-23 (AY 2023-24) and FY 2021-22 (AY 2022-23) under the old tax regime. The basic exemption limit depends on the age of an individual and status of an individual under the old tax regime.

For an individual below 60 years of age, the basic exemption limit is of Rs 2.5 lakh. For senior citizens (aged 60 years and above but below 80 years) the basic income exemption limit is of Rs 3 lakh. For super senior citizens (aged 80 years and above), the basic income exemption limit is Rs 5 lakh. For non-resident individuals, the basic income exemption limit is of Rs 2.5 lakh irrespective of age.

If you have decided to opt for the new tax regime for the current financial year, i.e., FY 2023-24, then here's how to calculate the income tax payable. It is important to note that the incomes tax slabs and income tax rates have been kept unchanged for upcoming financial year 2024-25. The calculation will work in the similar fashion for next financial year as well.

For FY 2023-24 and FY 2024-25, a salaried individual can claim two deductions - i) standard deduction of Rs 50,000 from salary and pension income and ii) Section 80CCD (2) for employer's contribution to the employee's NPS account.

Here is an example of how to calculate income tax payable under the new tax regime.

Suppose an individual's gross total income is Rs 20 lakh in FY 2023-24. Further, his/her employer has deposited Rs 1.5 lakh in his/her Tier-I NPS account. This makes him eligible to claim deduction under section 80CCD (2) of the Income-tax Act.

Hence, the net taxable income on which income tax payable is to be calculated will be Rs 18 lakh (Rs 20 lakh minus Rs 2 lakh).

Under the new income tax regime, income between 0 to Rs 3 lakh is exempted from tax. Hence, no tax will be payable on this income. Above this, the income left which is still chargeable to tax is Rs 15 lakh (Rs 18 lakh minus Rs 3 lakh).

The next income tax slab is above Rs 3 lakh and up to Rs 6 lakh. Thus, out of the taxable income of Rs 15 lakh, Rs 3 lakh (falling in this slab) will be taxed at 5%. The tax payable here will be Rs 15,000. Above this, the income left which is still chargeable to tax is Rs 12 lakh (Rs 15 lakh minus Rs 3 lakh).

The next income tax slab is above Rs 6 lakh and up to 9 lakh. Thus, out of the taxable income of Rs 12 lakh, Rs 3 lakh (falling in this slab) will be taxed at 10%. The tax payable here will be Rs 30,000. Above this, the income left which is still chargeable to tax is Rs 9 lakh (Rs 12 lakh minus Rs 3 lakh).

The next income tax slab is above Rs 9 lakh and up to 12 lakh. Thus, out of the taxable income of Rs 9 lakh, Rs 3 lakh (falling in this slab) will be taxed at 15%. The tax payable here will be Rs 45,000. Above this, the income left which is still chargeable to tax is Rs 6 lakh (Rs 9 lakh minus Rs 3 lakh).

The next income tax slab is above Rs 12 lakh and up to 15 lakh. Thus, out of the taxable income of Rs 6 lakh, Rs 3 lakh (falling in this slab) will be taxed at 20%. The tax payable here will be Rs 60,000. Above this, the income left which is still chargeable to tax is Rs 3 lakh (Rs 6 lakh minus Rs 3 lakh).

The last income tax slab is above Rs 15 lakh. Thus, the balance taxable income of Rs 3 lakh (falling in this slab) will be taxed at 30%. The tax payable here will be Rs 90,000.

The total tax payable amount comes to Rs 2,40,000. One must note that cess and surcharge amount is yet to be added.

Cess is levied at the rate of 4% on the income tax payable. The surcharge is applicable if the income is above Rs 50 lakh.

After adding cess of Rs 9,600, the final tax amount is Rs 2,49,600.

If you have decided to opt for the old tax regime for the current financial year 2023-24 or plan to opt for the same in upcoming financial year 2024-25, then it is important to know which income tax slab your income falls under. The slab rate applicable to your income will determine the tax rate at which the last rupee of your income will be taxed at. It is important to note that interim budget 2024 has kept income tax slabs under old tax regime unchanged.

Under the old income tax regime, an individual taxpayer can claim various deductions and tax exemptions to bring down their gross total income. Once eligible tax exemptions and deductions are deducted from the gross total income, then you will arrive at net taxable income. It is on this income, an individual will calculate tax payable.

Here is an example on how to calculate income tax payable under the old tax regime.

Suppose an individual aged below 60 years has a gross total income of Rs 17 lakh for the current financial year, i.e., FY 2023-24 (April 1, 2023-March 31, 2024). An individual has decided to opt for the old tax regime for the current financial year. Further, he/she is eligible to claim following tax exemption and deductions - section 80C for up to Rs 1.5 lakh, section 80CCD(1b) for NPS investment of Rs 50,000, section 80D of Rs 25,000 for medical insurance premium paid and section 80TTA of Rs 10,000 on savings account interest earned.

After deducting the deductions from the gross total income, one arrives at the net taxable income of Rs 14,65,000. The tax payable will be calculated on the net taxable income.

As per the income tax slab rates table, the first Rs 2.5 lakh from net taxable income will be exempted from tax. This is because there is no tax on income up to Rs 2.5 lakh as per current income tax slabs. Post this, income left on which tax has to be calculated is Rs 12,15,000 (14,65,000-2,50,000). The second slab in the income tax slab table is Rs 2.5 lakh and Rs 5 lakh which is taxed at Rs 5%. This means that out of Rs 12,15,000, then next Rs 2,50,000 will be taxed at 5%. The tax amount will be Rs 12,500.

Now the income left which is still chargeable to tax is Rs 9,65,000. The third slab in the income tax slab table is Rs 5 lakh and Rs 10 lakh, taxed at 20%. This means that out Rs 9,65,000, Rs 5,00,000 will be taxed at 20%. The tax payable here will be Rs 1,00,000.

The balance income on which tax has to be calculated is Rs 4,65,000. The tax amount on this balance income (Rs 14,65,000 minus Rs 10,00,000) will be calculated on the basis of the last slab, i.e., above Rs 10 lakh at the rate of 30%. The tax payable amount comes out to be Rs 1,39,500.

Hence, the total tax payable by an individual will be Rs 2,52,000 (Rs 12,500 + 1,00,000+ 1,39,500).

Do note that cess and surcharge are also levied on the income tax payable. Cess is levied at the rate of 4% and surcharge is levied if the total income exceeds Rs 50 lakh.

From the example above, the cess amount is Rs 10,080. The surcharge will not be applicable as net taxable income does not exceed Rs 50 lakh. The final tax amount payable by individual is Rs 2,62,080.

To calculate the income tax payable in a particular financial year, one needs to know the tax slabs their income falls in. Also, it will also depend on the income tax regime chosen by him/her in a particular financial year. An individual will compare the income tax payable in both the tax regimes before choosing the one.

To know the income tax slabs and rates applicable to your income, one must first know the taxable income on which tax has to be calculated. If an individual continues with old, existing income tax regime, then he/she is eligible to claim tax exemption (such as House Rent Allowance exemption, Leave Travel Allowance exemption, standard deduction) and deductions under sections 80C to 80U, as eligible for. After claiming and deducting the tax exemptions and deductions that an individual is eligible for, he/she arrives at the taxable income on which income tax payable is calculated.

For example, your total income from all sources is Rs 12 lakh and you are eligible to claim deduction of Rs 2.10 lakh under sections 80C, 80TTA, 80CCD(1b). The taxable income on which you have to calculate tax will be Rs 9.9 lakh (Rs 12 lakh - Rs 2.10 lakh). Your income tax slab in the old tax regime will be between Rs 5 lakh and Rs 10 lakh. The tax rate is the 20%.

However, if he/she opts for a new, concessional tax regime, then one cannot claim the tax exemption and deductions mentioned above. The new tax regime allows two deductions - Standard deduction of Rs 50,000 from salary and pension income and Section 80CCD (2) for employer's contribution to the employee's Tier-I NPS account. From the example above, after claiming deduction, the taxable income is, say, Rs 10 lakh (Gross taxable income of Rs 12 lakh minus Rs 2 lakh). The net taxable income of Rs 10 lakh falls under the income tax slab of Rs 9,00,001 and Rs 12,00,000. This will be taxed at 15%.

If an individual's net taxable income exceeds a specified level, then a surcharge is levied. The surcharge is levied on the income tax payable amount before the levy of cess. According to income tax laws, a surcharge is applicable if an individual's taxable income exceeds Rs 50 lakh.

From FY 2023-24, the government made changes in the surcharge rates under the new tax regime. The new surcharge rates have come into effect from April 1, 2023. It is important to note that no changes are announced in the interim budget 2024. The income tax slabs, income tax rates and surcharge rates have been kept unchanged for FY 2024-25.

However, individuals opting for the old tax regime in FY 2023-24 will continue to pay the surcharge rate they were paying in the previous financial years.

There are certain exceptions to the surcharge rates mentioned above. If an individual has earned income from capital gains (short term or long term) through the sale of equity shares and equity mutual funds or dividend income, the surcharge will not exceed 15%, irrespective of the income range.

While understanding the concept of surcharge, one must also know the term marginal relief. The concept of marginal relief kicks in when the amount of surcharge on income tax payable exceeds the increase in income over the specified limit.

Suppose an individual has a net taxable income of Rs 51 lakh. As the income exceeds Rs 50 lakh, the surcharge will be applicable at the rate of 10%. The tax payable on Rs 51 lakh (without surcharge) is Rs 13,42,500. The surcharge amount will be Rs 1,34,250.

Here the surcharge amount (Rs 1,34,250) is higher than the additional income above Rs 50 lakh (Rs 1,00,000). This is where the concept of marginal relief kicks in.

To know the amount of marginal relief that is applicable, one needs to calculate income tax payable on Rs 50 lakh. This is because no surcharge will be applicable till the income exceeds Rs 50 lakh. The income tax payable will be Rs 13,12,500. Now add income above Rs 50 lakh (Rs 1 lakh) to the income tax payable amount. The tax payable amount under marginal relief will be Rs 14,12,500.

To ascertain the actual income tax payable with surcharge, compare the normal tax liability (before surcharge and cess) and tax liability after marginal tax relief (without cess). Normal tax liability is Rs 13,42,500 and tax liability after marginal tax relief is Rs 14,12,500. The surcharge that will be applicable is Rs 70,000 (Rs 14,12,500 - Rs 13,42,500).

The final tax payable amount will be Rs 13,42, 500 (Tax payable amount) + Rs 70,000 (Surcharge) + Rs 56,500 (Cess at 4% on Rs 14,12,500) = Rs 14,69,000.

Effective from April 1, 2020 (FY 2020-21), an individual has an option to continue with the old tax regime (claim deductions and tax exemptions) or opt for the new tax regime without any deductions and tax exemptions. The new tax regime when announced was optional in nature and was offering lower tax rate as compared to the old tax regime. However, from FY 2023-24, the new tax regime has become default option. If no tax regime is chosen by the individual, then income tax payable will be calculated using new tax regime now.

Here are latest income tax slabs and rates applicable for FY 2020-21 (AY 2021-22), FY 2021- 22 (AY 2022-23) and FY 2022-23 (AY 2023-24)