Taxonomy

Understanding the nuances of income tax slabs is crucial for effective tax planning and compliance. The Assessment Year (AY) 2024-25 brings into focus the tax obligations and potential savings for individuals and entities alike. 

This article aims to demystify the income tax slabs for FY 2023-24 and AY 2024-25, guiding you through the complexities of tax planning.

What are Income Tax Slabs?

Income tax slabs are ranges of income that are taxed at specific rates set by the government within a financial year. These slabs determine how much tax you will pay on your income, with rates increasing as your income does. 

The tax slabs in India are part of a progressive tax system designed to ensure fairness; if you earn more, you pay a higher rate. 

Income tax income slabs vary for different groups, such as individuals, HUF, and companies, and are updated annually. For individuals, these categories often include special rates for senior and super-senior citizens. 

The government updates these income tax slabs annually during the budget presentation, adjusting the income ranges and tax rates to reflect economic conditions, inflation, and policy goals. 

Additionally, you can choose from old and new tax regimes, allowing you to choose the most beneficial for your financial situation. 

In essence, income tax income slabs categorize your income into ranges; each taxed at a specific rate. The lowest range typically starts tax-free, with rates escalating for higher income brackets. 

This system aims to distribute the tax burden equitably, ensuring those with higher earnings contribute more to government revenues.

Income Tax Slabs for FY 2023-24 and AY 2024-25: Old Tax Regime vs New Tax Regime 

The FY 2023-24 also continues the option between the old and new tax regimes for salaried tax slabs. While the old regime allows for numerous deductions and exemptions, the new income tax slabs offer simplified tax rates with fewer deductions. 

This choice empowers taxpayers to select the regime that best suits their financial situation, potentially leading to significant tax savings.

Income Tax Slabs (in ₹)	Old Regime Income Tax Rate			New Regime Income Tax Rate (FY 2023-24)
	Age < 60 years	Age 60 – 80 years	Age > 80 years
Up to 2.5 Lakhs	–	–	–	–
2.5 lakhs to 3 lakhs	5%*	–	–	5%*
3 lakhs to 5 lakhs	5%*	5%*	–	5%*
5 lakhs to 6 lakhs	20%	20%	20%	10%
6 lakhs to 7.5 lakhs	20%	20%	20%	10%
7.5 lakhs to 10 lakhs	20%	20%	20%	15%
10 lakhs to 12.5 lakhs	30%	30%	30%	20%
12.5 lakhs to 15 lakhs	30%	30%	30%	25%
Above 15 lakhs	30%	30%	30%	30%

Note: The “5%*” in the old and new tax regimes indicates that there is a rebate available under section 87A for certain taxpayers i.e., for those whose taxable income is 5 lakhs or less. 

Example to Understand Tax Liability of Old Taxable Income Slabs vs. New Income Tax Slabs 

To understand the income tax slabs, let us look at the example of Mr. Anish Gupta, a salaried employee with a fixed income of ₹9,00,000. 

• As per the old regime, he is eligible for an overall tax deduction worth ₹1,00,000/- under Section 80C due to his ownership of a life insurance policy. 
• As per the new regime, he is only allowed to benefit from the standard deduction of ₹50,000/-.

As you can see, the old tax regime is more beneficial to those who like investing in tax-saving instruments like life insurance, medical insurance, PPFs, etc. On the other hand, the new regime is best for those who have fewer investments overall.

Hence, if you are some one with long-term stock investments, we highly recommend checking what deductions and benefits apply to you under each regime, so you can make the most out of your returns.

Should You Opt for the New Tax Regime? Some Things to Consider 

When considering the new tax regime introduced in India, it is crucial to weigh several factors to determine its suitability for your financial situation:

• Tax Rates vs. Deductions: The new regime offers lower tax rates but eliminates most deductions and exemptions. Analyze if the reduced rates outweigh the benefits of deductions you currently claim.
• Investment and Expenses: Your investment habits and significant expenses, like home loan interest and education loans, could influence your decision, as the old regime may offer more tax-saving opportunities through various deductions.
• Income Level: The effectiveness of each regime can vary based on your income. Lower-income individuals or those who do not utilize many tax-saving options might benefit from the new regime’s simplified structure.
• Flexibility and Simplicity: The new regime provides simplicity and the flexibility to switch between regimes annually for salaried individuals, appealing to those seeking a straightforward salaried tax slab and tax filing process.

If you are confused between the old vs. new taxable income slabs, consider consulting a tax advisor for personalized advice, taking into account your financial goals and tax-saving potential under each regime.

What is Surcharge in Income Tax 

The surcharge is an additional charge on the income tax payable by taxpayers whose income exceeds certain thresholds. For the Financial Year (FY) 2023-24, the income tax surcharge rates apply to individuals, HUFs, AOPs, BOIs, and artificial juridical persons under both the old and new tax regimes.

Here’s a concise table summarizing the surcharge rates for FY 2023-24:

Income Levels (₹)	Surcharge Rate (%)	Income Levels (₹)	Surcharge Rate (%)
Old Tax Regime		New Tax Regime
Up to 50 lakhs	0	Up to 50 lakhs	0
Over 50 lakhs, up to 1 crore	10	Over 50 lakhs, up to 1 crore	10
Over 1 crore, up to 2 crores	15	Over 1 crore, up to 2 crores	15
Over 2 crores, up to 5 crores	25	Over 2 crores	25
Over 5 crores	37	–	–

What is Rebate in Income Tax? 

A rebate in income tax is a provision that allows eligible taxpayers to reduce the amount of tax they owe to the government. It is not a deduction from income but a direct reduction in tax liability, making it a beneficial feature for those with lower incomes. 

One of the most common rebates under the Indian Income Tax Act is under Section 87A, which is designed to provide relief to taxpayers with a total income below a certain threshold.

For the Financial Year (FY) 2023-24, the rebate under Section 87A is available for both the old and new tax regimes. Its eligibility criteria and limits remain the same under both regimes. 

Here’s a table summarizing the rebate limits for FY 2023-24:

Tax Regime	Income Limit for Rebate	Rebate Amount
Old Tax Regime	Income up to ₹5 Lakhs	Up to ₹12,500
New Tax Regime	Income up to ₹7 Lakhs	Up to ₹25,000

It means that if your total taxable income after deductions is up to ₹5 lakhs, and you opt for the old regime, you are eligible for a rebate of up to ₹12,500. This can reduce your tax liability to zero if your calculated tax is less than or equal to ₹12,500. 

If your calculated tax is more than ₹12,500, you will only have to pay the difference. The rebate is applied to the total tax before adding the Health and Education Cess of 4%.

Deductions and Exemptions Applicable for FY 2023-24 

While learning about tax planning, it is crucial to know how to pay less tax. For FY 2023-24, you can access several deductions and exemptions to minimize your taxable income and tax liability. 

Key tax deductions for FY 2023-24 include:

• Section 80C: Up to ₹1.5 lakh on investments and certain expenses.
• Section 80D: For medical insurance premiums, offering up to ₹25,000 for individuals and ₹50,000 for senior citizens.
• Section 80E: On interest paid for education loans with no upper limit.
• Section 24: Deduction of up to ₹2 lakhs on home loan interest for self-occupied property.
• Section 80G: For donations, with deductions varying by the entity.

Notable tax exemptions for FY 2023-24 are:

• House Rent Allowance (HRA) and Leave Travel Allowance (LTA) for salaried individuals, which vary based on specific criteria.
• Standard Deduction of ₹50,000 for salaried employees and pensioners under the old tax regime.

Special Mention:

Section 80TTA offers a deduction of up to ₹10,000 on the interest income from savings accounts, which increases to ₹50,000 for senior citizens under Section 80TTB. 

Leveraging these can significantly reduce tax obligations, making it crucial for you to plan your investments and expenses strategically.

Conclusion 

The FY-24 and AY 2024-25 bring forth considerations that require careful navigation to optimize tax liabilities. With informed decision-making, you can significantly benefit from the structured income tax slabs and available deductions.

For more assistance, you can reach out to an investment advisory to help you manage your investment portfolio.  They can help with personalized tax and financial planning, such as choosing between tax savings vs. equity investment.

Income Tax Slabs FAQs

With the digitization of most processes, paying taxes no longer requires you to hire experts or queue in municipal offices. Be it paying taxes on property or on the profits from renting the said property, it can all be conveniently done online. 

There are also alternate payment options that you can use to pay property tax online. This further increases the convenience of the process as it lets you choose options that better suit your individual preferences.

However, paying taxes on property online can have a process that takes time to follow. Hence, here is a detailed overview of how to pay house tax online and the available options.

What is House Tax? 

Property tax, also known as house tax, is levied by local governments on property owners. The taxation rates are assessed based on the value of the real estate that taxpayers hold.   Beyond a legal obligation, it is also a vital resource for governments to fund public services.  

Paying house tax online ensures timely compliance, avoids penalties, and contributes to civic development. It’s not only faster but also environmentally friendly and hassle-free.

How to Pay House Tax Online? 

You can also learn how to pay home tax online using multiple tools:

• Through official city municipal websites (e.g., BBMP, MCGM, GHMC, etc.)
• Via authorized platforms like Paytm, PhonePe, or Bharat BillPay
• Using UPI-enabled apps linked to government channels

You can also learn how to pay home tax online using multiple tools:

• Through official city municipal websites (e.g., BBMP, MCGM, GHMC, etc.)
• Via authorized platforms like Paytm, PhonePe, or Bharat BillPay
• Using UPI-enabled apps linked to government channels

Step 1: Navigate to the official website of your local municipal corporation.

Step 2: Log in to the portal. This will require you to register if it is your first attempt to pay property tax online. You will need to submit your personal information for identity verification. 

Step 3:  Once logged in, a ‘Property Tax’ tab should be available for you to access under a Services Tab. Click on it.

Step 4: Option  for property types should be available on the screen E.g., You may see an option called “COC-603 Collection of Property Tax”; select one to continue.

Step 5: A tab with the option of assessment year should also be displayed. Select your desired financial year of assessment. 

Step 6: Further personal details such as your name, property identification number, and other property-related information will need to be submitted for calculation.

Step 7: Once the calculation is done, the total tax amount to be paid will be presented.  Preview it. 

Step 8: Once done, a list of payment options will be displayed. Select one that is most convenient. 

Step 9: Upon completion of payment, a download or print option for the challan will be displayed.

Step 10: Save and keep it handy for your future reference. 

Step-by-Step Guide to Filling Out the Property Tax Form

1. Go to your city’s municipal corporation site
2. Click on the ‘Property Tax’ or ‘Online Tax Payment’ option
3. Select the property category and assessment year
4. Fill in owner and property details as required
5. Preview the form and proceed to calculate tax

Required Documents and Information

• Property ID / Assessment number
• Owner name and contact details
• Previous tax receipts (if applicable)

Please Note: The exact steps may vary depending on your location and the municipal corporation that runs the portal. However, the basic steps involved in your house tax payment procedures will remain similar to the steps mentioned above. 

Benefits of Paying House Tax Online  

1. Convenience

You no longer need to visit municipal corporations or even hire chartered accountants to file and pay your property taxes. Moreover, the online process allows for flexibility in time and location, ensuring that you can pay property tax online no matter where you are or what time it is. 

2. Time-Saving

The online payment procedure eliminates the requirement of paperwork as well as long waiting times. This allows you to make quick transactions at your convenience.

3. Accuracy

Digital platforms provide you with accurate, quick, and reliable calculations. This greatly reduces the risks associated with errors in manual calculations. 

4. Security

Reputable online payment portals have advanced encryptions and security measures. This helps ensure the safety of your financial transactions that are made online. 

5. Record-Keeping

Online payment portals also generate detailed digital receipts and transaction records speedily. This can make it easier for you to track payment history as well as access relevant information whenever required. 

Common Issues When Paying House Tax Online

• Payment Failures and Refund Process: Retry later or contact customer support; refunds usually take 3–5 business days
• System Errors or Technical Issues: Clear cache or try a different browser/device

How to Resolve Payment Discrepancies: Contact the property tax helpdesk with transaction details and proof

Alternative Online Payment Methods for Property Taxes

Apart from the official portals of the local municipal corporations, you also have the option of using third-party platforms like Paytm. The platform has an easy, streamlined process similar to the one mentioned above and has a user-friendly interface as well. 

It is, however, recommended to use the official portals if you need to become more familiar with how to pay house tax online. 

Conclusion 

The online payment process for taxes on property has simplified the experience of paying taxes on property. This process not only offers convenience but also accuracy and security. 

Just like the online process simplifies the payment of taxes on property, a reliable financial advisory like Research & Ranking can simplify the process of achieving financial goals for property owners and property renters alike. 

The intricacies of deductions, like the HRA tax exemption rules, are often complicated to follow. The team at Research & Ranking not only provides you with personalized investment portfolios but also provides advice on tax deductions. This can include guidance on topics like how you can reduce income tax on rent. 

The equity research and technology provided by Research & Ranking allows for more competent portfolio management. It also provides advice on investments like high-growth stocks. This can benefit you if you are a new or even an experienced investor in the market. 

Property Tax Online Payment FAQs

Financial planning for businesses and individuals involves proper asset/expense allocation and being informed about tax liabilities. There are commonly two types of taxes applicable in India: indirect and direct tax. 

Being aware of the different direct tax types and how they work – especially direct taxation, is important. This can help you avoid paying any fines or penalties when filing your taxes due to any discrepancies. 

Through this blog, you will learn what direct tax is, different direct tax types, and other crucial information regarding direct tax.

What is Direct Tax? 

Direct tax in India is a type of taxation where the burden falls directly on the individual or organization being taxed. It is levied directly on the income or wealth of individuals and organizations. 

Governed by the Central Board of Direct Taxes (CBDT), these taxes are a primary source of revenue for the government. 

Notable direct tax types include Income Tax, levied on the annual income of persons; Corporate Tax, imposed on the earnings of companies; and Capital Gains Tax, applied to the profit from the sale of assets. 

Direct taxes are progressive in nature. The tax rate is decided based on the income earnings of businesses and individuals. It follows the simple rule that the higher the income, the higher the direct tax rate, and vice versa, thereby aiming to achieve equity in the taxation system. 

Direct tax liabilities cannot be transferred, and failure to make timely payments against direct taxes can result in fines and other consequences.  

Difference Between Direct Tax and Indirect Tax 

The primary difference between direct and indirect taxes is who bears the burden of the taxes. 

• Direct taxes are levied on the income or wealth of individuals or organizations and must be paid directly by them to the government. These taxes cannot be passed on to someone else. Examples include Income Tax, Corporate Tax, and Wealth Tax.
• Indirect taxes, on the other hand, are levied on the sale of goods and services and can be passed on from the seller to the buyer. The burden of these taxes shifts from the producer or seller to the consumer, who ultimately bears the tax. Examples include Goods and Services Tax (GST) and Value Added Tax (VAT).

Different Direct Tax Types 

• Income Tax – As the name suggests, income tax is imposed on the earned income of individuals and businesses. the tax rate is determined based on the total income from different sources minus the available deductions and exemptions. 
• Capital Gains Tax – The capital gains tax is applied to all the gains incurred by the sale of capital assets like stocks, mutual funds, real estate, etc. There are two types of capital gains tax – 
• Short-Term Capital Gains – The tax rate for this direct tax depends on the total income of the individual and the holding period, which should be less than 36 months. 

The applicable tax rate is 15% when STT (Securities Transaction Tax) is applicable. When it it does not apply, you will taxed as per normal slab rates.

Note: STT is a direct tax applied to every sale and purchase of a security listed on recognised stock exchnages in India. It is similar to TCS and the rates are decided by the governement. STT amounts must be paid over and above the transaction value.

• Long-Term Capital Gains – The tax rate for this direct tax is fixed at a flat 20% and is applicable for assets with a holding period longer than 36 months. 

It is applied at a rate of 10% for income over ₹1 lakh from sales of equity shares or equity-oriented mutual funds.

• Wealth Tax – Wealth tax was abolished in the 2015 budget (effective FY 2015-16), simplifying the tax structure. As an alternative, the finance minister hiked the surcharge from 2% to 12% for people with annual incomes over ₹1 Crore and for companies with annual incomes over ₹10 Crore.  
• Property/ Estate Tax – Another type of direct tax is property tax. The state authorities levy this tax category on individual property owners based on their area-based rating. Government lands or properties and vacant land are exempted under this tax. 
• Corporate Tax – The corporate tax is applied to all domestic companies based on their earned income from business operations. This direct tax is also applicable to any foreign business entity running its operations in India.  
• Securities Transaction Tax – There is a direct tax applicable on the sale and purchase of listed securities like bonds, equity, mutual funds, etc., called the securities transaction tax. This tax is applicable to the buyer or the seller based on the nature of the transaction.

Direct Taxation Rates 

Income Tax Rates: New Tax Regime for AY 2024 – 25 

Income Tax Slabs (in ₹)	New Regime Tax Rate (%)
Upto Rs. 3,00,000	–
From Rs. 3,00,001 to Rs. 6,00,000	5%
From Rs. 6,00,001 to Rs.9,00,000	10%
From Rs. 9,00,001 to Rs. 12,00,000	15%
From Rs. 12,00,001 to Rs. 15,00,000	20%
Above Rs. 15,00,000	30%

Income Tax Rates: Old Tax Regime 

Income Tax Slabs (in ₹)	Old Regime Tax Rate (%)
Up to 60 years of age
Up to 2.5 Lakhs	Nil
2.5 Lakhs to 5 Lakhs	5%
5 Lakhs to 10 Lakhs	20%
Above 10 Lakhs	30%
Senior Citizens (60-79 years)
Up to 3 Lakhs	Nil
3 Lakhs to 5 Lakhs	5%
5 Lakhs to 10 Lakhs	20%
Above 10 Lakhs	30%
Super Senior Citizens (80 years and above)
Up to 5 Lakhs	Nil
5 Lakhs to 10 Lakhs	20%
Above 10 Lakhs	30%

Capital Gains Tax Rates 

• Short-term capital gains follow the same tax slabs as the income tax slabs. 
• For long-term capital gains with indexation benefits, a 20% tax is implied. 
• For long-term capital gains without indexation benefits, a 10% tax is implied. 

Corporate Tax Rates 

Domestic Company	Turnover < ₹250 crores	25%
	Turnover > ₹250 crores	30%
	Surcharge for income between ₹1 crore – ₹10 crore	10%
	Surcharge for income between > ₹10 crore	12%
	Cess	4%
International Company	Turnover < ₹1 crore	40% Tax + 3% cess
	Turnover > ₹1 crore	40% Tax + 3% ceess + 2% surcharge
	Turnover > ₹10 crore	Basic tax + 5% surcharge

Top Advantages of Direct Tax 

• Promotes Equity – Based on the direct tax examples, the main purpose of imposing these taxes is to ensure a fair distribution of wealth by applying higher tax rates on high incomes and lower tax rates on low incomes. This further improves the tax system in the country.
• Promotes Economic Well-being – Direct taxation is collected by the government. The contributions collected via different direct tax types increase the government revenue to provide better public services and infrastructure. 
• Encourages Investments – Along with the distinctive direct tax rates applicable to individuals and businesses, there are several deductions and exemptions on a range of investments. This encourages people to save and invest more. 
• Increases Accountability – With the strict deadlines for filing all direct tax returns, individuals and businesses are encouraged to comply with the law, improving accountability and promoting responsible citizenship.

Conclusion 

When it comes to direct tax, having a thorough understanding of all the forms, deductions, calculations, etc., is necessary before application. With the knowledge of what direct tax is and different direct tax examples and slabs, you can assess ways to reduce your tax liability.

Investments in tax-free bonds, stocks, and other such categories can help you manage your finances better and reduce your tax liability. However, assessing which stocks to buy can be challenging.  

To resolve this, you can seek consultation from an investment advisory to benefit from improved portfolio management and daily reporting. 

Direct Tax Most Common FAQs

Are you searching for ways to save on taxes? If so, you would have probably encountered the terms ‘tax deduction’ and ‘tax exemption.’ While they might seem similar at first glance, they’re quite distinct from each other, both stemming from the Income Tax Act of 1961 provisions. 

Many people find these terms confusing and opt to have their accountants, parents, or friends handle their tax filing. However, understanding these terms is crucial for maximizing the benefits of available schemes and policies. This article aims to clarify the difference between tax deductions and tax exemptions, their impact on taxes, and what investors can keep in mind.

What are Tax Deductions?

Tax deductions refer to specific investments and expenses that individuals can subtract from their taxable income, thereby reducing it. These deductions serve as incentives to promote retirement planning and foster long-term financial stability among taxpayers. Using a tax calculator also helps to find the deductions.

For example, if your total income is Rs. 10,00,000 and you’ve invested Rs. 1,50,000 in eligible instruments under Section 80C, then your taxable income would be reduced to Rs. 8,50,000.

Various sections of the Income Tax Act of 1961 offer avenues for tax deductions. Here’s a glimpse:

• Section 80C: Investments in schemes like the Public Provident Fund (PPF), Equity Linked Saving Scheme (ELSS), home loan principal repayments, and more, up to Rs. 1.5 lakhs annually, are deductible from taxable income. This is in addition to the standard deduction of Rs. 50,000 available to all taxpayers.
• Section 80D: Premiums paid for health insurance, ranging from Rs. 25,000 to Rs. 1 lakh, are tax deductible, along with other deductions for specified treatments.
• Section 80E: Interest paid on education and housing loans for first-time buyers can be deducted from taxable income, encouraging education and domestic real estate investment.
• Section 80G: Contributions to social causes and political parties are eligible for tax deductions, supporting charitable initiatives and social welfare activities.
• Section 80TTA: Interest income from savings accounts, up to Rs. 10,000, can be deducted from taxable income.

What are Tax Exemptions?

Tax exemptions refer to tax-free portions of one’s income, requiring no additional spending or investment to qualify for the exemption. These exemptions play a crucial role in reducing the overall tax burden for individuals.

Here are some examples of tax exemptions:

• Long-Term Capital Gains: Equity mutual funds’ LTCG is exempt from taxation up to a limit of Rs. 1 lakh per annum.
• Housing Rent Allowance (HRA): Part of an employee’s salary, HRA is exempt from income tax if the employee lives in a rented house.
• Leave Travel Allowance (LTA): Some employers provide LTA, which can be used for traveling during leaves. This exemption can be availed of once in four years.
• Agricultural Income: All agricultural income in India is exempt from taxation. This exemption is crucial as agriculture is the primary source of income for a large part of rural India, and the country is heavily dependent on it for food security.
• Lowest Income Tax Slab: An income of Rs. 5 lakhs and below is completely exempt from income tax. For instance, if one has an income of Rs. 7 lakhs, only Rs. 2 lakhs is taxable.

A tax calculator can help individuals assess their tax liability more accurately by factoring in exemptions and deductions. Understanding these exemptions is essential for taxpayers to optimize their tax planning and minimize their tax burden legally and ethically.

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What is the Difference Between Exemptions vs. Deductions?

Here’s a table highlighting the key differences between exemptions and deductions in taxable income in India:

Aspect	Exemptions	Deductions
Definition	Portion of income not subject to tax.	Amount subtracted from taxable income.
Nature	Fixed amount or specific categories.	Varies based on specified expenses or investments.
Applicability	Available to specific individuals or entities based on criteria set by the government.	Available to individuals or entities who meet specific conditions outlined by tax laws.
Examples	HRA exemption, LTC exemption, agricultural income exemption.	Section 80C, 80D, 80E deductions for investments, insurance premiums, education loan interest, etc.
Limitations	Usually capped at a certain percentage of total income or a fixed amount.	Typically subject to maximum limits specified in tax laws.
Impact on Taxable Income	Directly reduces the taxable income by the exempted amount.	Reduces taxable income by the deducted amount after computing the total income.
Documentation Required	May require specific proofs or documents to claim.	Often requires receipts or documents as evidence for eligible expenses or investments.

This table should provide a clear overview of the distinctions between exemptions and deductions in taxable income in India. In conclusion, understanding the difference between exemptions and deductions is crucial for taxpayers in India to optimize their tax liabilities. By using a tax calculator and leveraging these provisions effectively, investors and individuals can minimize their tax burdens and enhance their financial planning. 

*Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considerea d as recommendation or investment advice by Research & Ranking. We will not be liable for any losses that may occur. Investment in securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL, and certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ

In India, the government offers two income tax regimes: the old tax slab and the new tax slab. 

While the new tax regime introduced in the 2020 budget features lower tax rates with no deductions, the old tax regime continues to entice taxpayers with its numerous deductions and exemptions.

This choice and flexibility with the new vs old tax regime allows you to choose a tax regime that benefits you the most based on your financial situation, investments, and spending pattern.

This blog delves deep into the old tax regime, outlining its tax slabs and exploring the various tax-saving opportunities it presents.

Old Regime Tax Slabs: Income and Tax Rates

The old tax regime’s structure is meticulously designed to cater to individuals across different age groups, offering three distinct categories: general taxpayers (individuals below 60 years), senior citizens (aged 60 years but below 80 years), and super senior citizens (aged 80 years and above). 

Here’s a detailed breakdown of the tax slabs in the old regime:

Income Range (₹)	Tax Rate
For General Taxpayers (Below 60 Years)
Up to 2,50,000	Nil
2,50,001 – 5,00,000	5%
5,00,001 – 10,00,000	20%
Above 10,00,000	30%
For Senior Citizens (60-79 Years)
Up to 3,00,000	Nil
3,00,001 – 5,00,000	5%
5,00,001 – 10,00,000	20%
Above 10,00,000	30%
For Super Senior Citizens (80 Years and Above)
Up to 5,00,000	Nil
5,00,001 – 10,00,000	20%
Above 10,00,000	30%

Note: Health and Education cess of 4% is levied on the income tax amount, along with surcharges applicable to incomes exceeding ₹50 lakhs.

Standard Deduction Under the Old Regime Tax Slab

Introduced in Budget 2018, the standard deduction replaced the transport allowance and medical reimbursement, simplifying tax calculations for salaried employees and pensioners.

The standard deduction under the old tax regime offered a flat deduction of ₹50,000 for salaried employees and pensioners, providing relief without the need to prove any expenses. 

This deduction directly reduces taxable income, enhancing the take-home pay of eligible individuals.

What are Surcharges in the Old Regime Tax Slab? What are the Surcharge Rates?

In India’s tax system, surcharges are additional taxes imposed on incomes above specific thresholds, making the tax system more progressive. This means that those with higher incomes must pay more taxes than those with lower incomes. 

These are calculated before the Health and Education Cess of 4%.

Income Range (₹)	Surcharge on Income Tax
50 lakhs to 1 crore	10%
1 crore to 2 crores	15%
2 crores to 5 crores	25%
Above 5 crores	37%

What are Rebates in the Old Tax Regime Slab?

In the old tax regime, a rebate under Section 87A allows you to receive a rebate, or equivalent, of up to  ₹12,500 if your net taxable income is up to ₹5,00,000. 

This can reduce your tax liability to zero. 

Tax rebates provide significant relief to low-income earners and make taxation more equitable.

Old Regime	New Regime
Salary	8,00,000	8,00,000
Allowance	2,50,000	–
Effective Salary	8,00,000 – 2,50,000	–
	5,50,000	8,00,000
Exemption	50,000	50,000
Effective income	5,00,000	7,50,000
Slab 1 Tax	2,50,000 x 0% = 0	3,00,000 x 0% = 0
Slab 2 Tax	50,000 x 5% = 2,500	3,00,000 x 5% = 15,000
Slab 3 Tax	2,00,000 x 5% = 10,000	1,50,000 x 10% = 15,000
Due Tax	12,500	30,000
Rebate (87A	12,500	0
Health and Education Cess	0	1200
Payable Tax	0	31,200

*Remember, a rebate is applicable on your taxable income only when it is less than 5 lakhs in the old regime and 7 lakhs in the new regime. Anything above this threshold and the rebate under section 87A is no longer available.

Tax Saving Opportunities in the Old Tax Slabs 

Tax Deductions Under the Old Tax Regime Slab

Tax deductions are expenses or investments that can be subtracted from gross total income to reduce the overall taxable income and, thus, the tax liability.

Below are some key sections under which deductions can be claimed:

Section 80C Deductions

Under the old tax regime, Section 80C is one of the most vital tax-saving incentives. You can claim a deduction of up to ₹1.5 lakhs on listed investments and expenses.

This section provides details of tax-saving options that can be useful for your future financial plans.   

Investment Option	Interest Rate	Minimum Lock-in Period	Risk Associated
ELSS	12%-15%(varies depending on market fluctuations)	3 Years	High
FD(Fixed Deposit)	Up to 8.40%	5 Years	Low
NPS	8% – 10%	Till the investor is 60 years of age.	High
NSC	7.7%	5 Years	Low
PPF	7.10%	15 Years	Low
SCSS	8.20%	5 Years	Low
Sukanya Samriddhi Yojana	8.20%	21 Years	Low
ULIP	8% – 10%(varies depending on market fluctuations)	5 Years	Moderate

Note: Under Section 80C, the total combined deduction from all the above investments cannot exceed ₹1.5 lakhs.

Home Loan Tax Benefit

If you are an aspiring homeowner, you are eligible for various deductions related to home loans with the old tax regime slabs. 

Here are some details of the tax-saving options under this criteria.   

Deductions Category	Sections	Maximum Deduction
Principal	80C	₹1.5 Lakh
Interest	24b	₹2 Lakh
Interest	80EE	₹50,000
Stamp Duty	80C	₹1.5 Lakh
Interest	80EEA	₹1.5 Lakh

Note: Deduction limits are applicable only when specific conditions under the categories are met.

Section 80TTA Deductions

Section 80TTA under the old tax regime provides individuals and Hindu Undivided Families (HUFs) in India with a deduction on interest income earned from eligible sources. 

Here are some details of the tax-saving options under this section that you can choose to avail yourself of.

Type of Interest Income	Eligibility	Maximum Deduction
Savings Account Interest	Individuals and HUFs	₹10,000
Cooperative Society Deposit Interest	Individuals and HUFs	₹10,000

Note: Deduction limits are applicable only per individual or HUF, not per account.

Section 80D Deductions

Section 80D under the old tax regime provides individuals and Hindu Undivided Families (HUFs) in India with a deduction on Medical insurance premiums. 

Here are some details of the tax-saving options that you can avail of under this section.

Policy Holder	Deduction(Self & Family)	Deduction(Parents)	Preventive Health Check-Up	Maximum Deduction
Self & Family (below 60 years)	₹25,000	–	₹5,000	₹25,000
Self & Family + Parents (all below 60 years)	₹25,000	₹25,000	₹5,000	₹50,000
Self & Family (below 60) + Parents (above 60 years)	₹25,000	₹50,000	₹5,000	₹75,000
Self & Family + Parents (all above 60 years)	₹50,000	₹50,000	₹5,000	₹1,00,000
Members of HUF(below 60 years)	₹25,000	₹25,000	₹5,000	₹25,000
Members of HUF(a member is above 60 years)	₹50,000	₹50,000	₹5,000	₹50,000

Section 80E Deductions

Section 80E under the old tax regime provides a limitless tax exemption on the interest paid on your children’s education loans. Here,  either of the parents repaying the loan can avail of this taxation exemption.

Nature of Loan	Deduction Limit
Interest paid on loan for higher education	No upper limit (for 8 years or until interest is paid, whichever is earlier)

Section 80G

Section 80G of the Income Tax Act allows deductions for donations made to specified charitable organizations, offering taxpayers the opportunity to reduce their taxable income while contributing to social causes.

Type of Donation	Deduction Limit
Donations to certain funds, charitable institutions	50% or 100% of the donation, subject to specified limits

Tax Exemptions

Exemptions are allowances offered on specific components of an individual’s income, which are not subject to tax, thereby reducing the taxable income.

House Rent Allowance

If you are a renter, the House Rent Allowance provides tax benefits on submission of valid rent receipts. Under the old tax regime, exemption depends on the salary, rent paid, and HRA received. 

The exemption depends on the least of the following:

• Actual HRA received.
• 50% of basic salary (for metros) or 40% (for non-metros).
• Rent is paid minus 10% of the basic salary.

If your annual rent is over ₹1 Lakh, you will need the landlord’s PAN. 

Leave Travel Allowance (LTA)

Exemption for travel expenses (not accommodation or food) to any destination in India twice in a block of four years.

Conclusion

The old tax regime, with its detailed tax slabs and many tax-saving opportunities, offers a significant advantage in efficiently planning taxes. 

By understanding and utilizing the deductions, exemptions, and rebates available with old tax regime slabs, you can significantly reduce your tax liability, making an informed choice crucial for your financial well-being.

FAQs on Old Tax Regime

Wondering what is professional tax? Are you earning an income from a salary in India? Are you a practicing professional like a lawyer, doctor, or chartered accountant? If yes, then you must pay Professional Tax in India.

Professional tax stands out as a unique component in India’s complex taxation tapestry. It is a tax levied by state governments. 

Despite its name, professional tax return filing is not just confined to professions but extends to all trades and employment. 

This blog aims to demystify what Professional Tax is, outlining its rates, due dates, compliance requirements, and eligibility criteria.

What is Professional Tax?

Professional tax is a direct tax levied by state governments on the income earned by individuals working in government or non-government entities or practicing professionals such as lawyers, doctors, and chartered accountants. 

The maximum amount that can be levied as professional income tax is ₹2,500 per annum, as per the Constitution of India. It is important to note that not all states impose professional tax.. It varies from state to state based on the respective state government’s legislation.

Eligibility Criteria for Professional Income Tax

The eligibility for professional tax is determined by the income threshold set by the respective state governments. If you are earning above a certain amount specified by the state’s legislation, you are required to pay this tax. 

Professional tax will be applicable if you belong to any one of the following:

• Employees with fixed annual salaries
• Self-employed individuals like part-time earners or freelancers
• All professionals, like lawyers, architects, chartered accountants, or doctors
• Pensioners 

How is Professional Tax Calculated?

1. Understanding Professional Tax Slabs for Different Salary Brackets

Professional tax is calculated based on the salary brackets defined by each state. For instance:

• Karnataka: Rs. 200/month for salaries above Rs. 15,000.
• Maharashtra: Rs. 200/month for 11 months and Rs. 300 in the last month for salaries above Rs. 10,000.

2. Example Calculation of Professional Tax Deduction

Let’s say an individual earns Rs. 20,000 per month in Maharashtra:

• Professional tax deduction: Rs. 200 for 11 months + Rs. 300 for the 12th month.
• Annual professional tax: Rs. 2,500.

3. Factors That Impact Professional Tax Amount

• State-specific slabs and rates.
• Type of employment (salaried or self-employed).
• Applicable exemptions (e.g., physical disability).

Professional Tax Deduction: Benefits and Compliance

1. Benefits of Professional Tax Deduction for Employees

• Tax Benefits: Professional tax is eligible for income tax deductions under Section 16 of the Income Tax Act.
• Compliance Advantage: Ensures compliance with state laws, avoiding penalties.

2. Importance of Timely Compliance by Employers

Employers must deduct and remit professional tax on time to avoid penalties and maintain their credibility.

3. Penalties for Non-Payment or Late Payment of Professional Tax

Failure to comply can result in penalties, often calculated as a percentage of the unpaid amount, along with interest.

States With and Without Professional Income Tax

States/union territories that levy professional tax	States/union territories that do NOT levy professional tax
Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Odisha, Puducherry, Sikkim, Tamil Nadu, Telangana, Tripura, West Bengal	Andaman and Nicobar Islands, Arunachal Pradesh, Chandigarh, Dadra and Nagar Haveli, Daman & Diu, Delhi, Goa, Haryana, Himachal Pradesh, Jammu & Kashmir, Lakshadweep, Punjab, Rajasthan, Uttarakhand, Uttar Pradesh

List of Some State-Wise Professional Income Tax Slabs

State	Salary Slabs	Professional Tax
Karnataka	Salary > ₹15,000	₹200/ month
Andhra Pradesh	Salary between ₹15,001 -₹20,000	₹150/ month
	Salary > ₹20,001	₹200/ month
	For Certain Professionals	Tax Per Month
	For contractors with annual turnovers below ₹10 lakhs	Nil
	For contractors, owners/lessees of factories, hotels, bars, etc., with a turnover above ₹25 lakhs + Anyone employed in the entertainment industry	₹2500/month
West Bengal	Salary between ₹10,001 -₹15,000	₹110/ month
	Salary between ₹15,001 -₹25,000	₹130/ month
	Salary between ₹25,001 -₹40,000	₹150/ month
	Salary > ₹40,000	₹200/ month
	For professionals with an annual gross income of ₹4,80,001 and above	₹2400 per annum
Maharashtra	Salary up to ₹10,000 (women)	–
	Salary between ₹7,501 -₹10,000 (others)	₹175/ month
	Salary > ₹10,000	₹200 all month and ₹300 for last month
Tamil Nadu	Salary between ₹3,501 -₹5,000	₹22.5/ month
	Salary between ₹5,001 -₹7,500	₹52.5/ month
	Salary between ₹7,501 -₹10,000	₹115/ month
	Salary between ₹10,001 -₹12,500	₹171/ month
	Salary > ₹12,500	₹208/ month
Telangana	Salary between ₹15,000 -₹20,000	₹150/ month
	Salary > ₹20,000	₹200/ month
Kerala	Salary between ₹3,000 -₹4,999	₹20/ month
	Salary between ₹5,000 -₹7,499	₹50/ month
	Salary between ₹7,500 -₹9,999	₹75/ month
	Salary between ₹10,000 -₹12,499	₹100/ month
	Salary between ₹12,500 -₹16,666	₹125/ month
	Salary between ₹16,667 -₹20,834	₹166/ month
	Salary > ₹20,834	₹208/ month

It’s important to note that these slabs are subject to change based on the state government’s policies.

Who Should Collect and File the Professional Tax Returns?

The maximum amount anyone is liable to pay when it comes to Professional Tax is ₹2500 per year, regardless of which Indian state you are a resident of.. The responsibility for professional tax return filing varies:

• Employers: If you are a salaried employee, then your employer must deduct the Professional Tax from your salary and deposit it with the state government. 
• Individual Professionals: If you are practicing law, medicine, or accountancy, you must directly file professional tax returns with the state government based on the slabs applicable to your earnings.
• Business Owners: If you are a sole proprietor and business owner (partnership firm, corporate), pay professional tax on your earnings, in addition to collecting and depositing the tax for your employees.

In this scenario, the business owner is required to secure two types of certificates: one for paying professional tax on their business activities, known as a professional tax registration certificate, and another, a professional tax enrollment certificate, which authorizes them to withhold the tax from their employees’ salaries and remit it. Additionally, the laws of the particular state may necessitate individual registrations for each branch of the business.

Professional Tax Return Filing: Compliance and Due Dates

Statewise Due Dates ?

State	Periodicity	Professional Tax Due Date
Andhra Pradesh	Monthly	10th every month
Assam	Monthly	28th every month
Bihar	Yearly	30th of November
Gujarath	Monthly	15th every month
Jharkhand	Yearly	October 31st
Karnataka	Monthly	20th every month
Kerala	Half Yearly	28th of February and 31st of August
Madhya Pradesh	Monthly	10th every month
Maharashtra	Monthly	On the last day of every month
Manipur	Yearly	30th of March
Meghalaya	Monthly	28th of every month
Odisha	Monthly	On the last day of every month
Mizoram	Yearly	June 30th
Puducherry	Half Yearly	30th of June and the 31st of December
Sikkim	Quarterly	The 31st of July, the 31st of October, the 31st of January, and the 30th of April
Tamil Nadu	Half Yearly	30th of September and the 31st of March
Telangana	Monthly	10th of every month
West Bengal	Monthly	21st of every month

Compliance

Compliance with professional tax regulations involves timely deductions and payments to the state government. 

Employers must obtain a registration certificate from the professional tax office when they employ staff, and they are required to file returns – monthly, quarterly, or annually, depending on the state’s regulations.

Failure to comply with professional tax regulations can lead to a penalty of up to 2% of the tax amount due to be paid.  Therefore, both employers and professionals must stay informed about the due dates and compliance requirements in their respective states.

All About Professional Tax Return Filing

• The applicability of professional tax is based on the state of profession, employment, or trade.
• Each state that implies professional tax also follows a strict payment deadline. Failure to comply with the same can result in penalties. 
• You require proper identification documents and company documents as an employer to complete professional tax return filing. These can be documents like your PAN Card, Aadhar, bank statements, address proof like utility bills,  etc.
• Professional tax can be paid online if your state offers an online portal or website. States like Tamil Nadu, Karnataka, Maharashtra, West Bengal, etc., offer dedicated online portals.  If this option is unavailable in your state, you can pay the same offline in your state.  

Exemptions for Professional Tax Return

The professional tax is applicable to all income earners. However, there are some exemptions in this category, and they are as follows. 

• An employee or working professional who is 40% mentally or physically challenged 
• Factory workers hired on a contractual basis. 
• Any income earner above the age of 60.
• Any worker in government bodies like the Army, Navy, Air Force, etc. 
• Workers from any union territory. 
• Female employees with a specific limit of monthly income. However, this is an individual decision of each state that applies professional tax. 

Conclusion 

Professional tax, impacts individuals and businesses. 

Understanding how it works, what rates apply to you, when you need to make your payments and the subsequent penalties regarding late payments and professional tax return filing is essential for everyone subject to this tax. 

Since professional tax is governed by state legislation, it is important to be aware of the specific rules and regulations applicable in each state. Staying compliant not only contributes to the state’s revenue but also ensures avoidance of any legal repercussions.

To reduce your tax liability in other tax brackets, like capital gains tax, consulting a SEBI-registered advisory can help. You will get professional guidance on which long-term stocks to buy and how to manage them with detailed reports for better financial independence.

FAQs on Professional Tax

With the financial year ending, do you fear the upcoming tax season? Do you find yourself struggling to calculate your tax liability? Do you wish a magic tool could do this task for you? Well, there is! A tax calculator is a tool that allows you to estimate your taxes based on your income, deductions, and exemptions. Sounds interesting, right? 

But wait, there is a catch. A tax calculator is only as useful when you give the right inputs. If you make some common mistakes when estimating your taxes, you might get a nasty surprise when you file your return. 

Do you know that filing incorrect tax returns can result in severe penalties such as imprisonment? Yes, you heard me correctly! That is why you should exercise caution and avoid making these common mistakes when using tax calculators.

What is a Tax Calculator?

Tax Calculator is an online tool that helps you calculate your net income and tax liability after taking into account various deductions, exemptions, and rebates available under the Income Tax Act. You can use this tool to plan your investments and savings and optimize your tax outgo.

Inputs Required in A Tax Calculator

Some of the common inputs are:

Basic details: Your age, residential status, financial year, and assessment year. These details help determine your applicable tax slab and rates.

Income details: Your income from various sources, such as salary, house property, capital gains, business or profession, and other sources. These details help calculate your gross total income.

Exemptions: The income exempt from tax, such as HRA, LTA, EPF, gratuity, etc. These details help reduce your taxable income.

Deductions: The amount of investments or expenses eligible for tax deduction, such as 80C, 80D, 80G, 80E, 80TTA, etc. These details help lower your tax liability.

Tax credits: The amount of tax already paid or deducted, such as TDS, TCS, advance tax, self-assessment tax, etc. These details help adjust your final tax payable or refundable.

How to use a tax calculator correctly?

Here are some tips on how to use a tax calculator properly:

1. Choose a tax calculator that suits your needs

You can choose a tax calculator based on the complexity of your income calculations.  For example, if you are self-employed, you might want to use a specialized tax calculator that can handle your business income and expenses.

If you only have salary income, you might prefer a simple tax calculator that only asks for your basic information.

2. Enter your information carefully and completely

The utility of a tax calculator is limited to the data you enter. Make sure to enter your income, deductions, and loans accurately and honestly. 

Don’t forget to include any additional sources of income you may have, such as interest, dividends capital gains etc. Also, don’t miss out on any loan obligations you have.

3. Check the results for errors or inconsistencies

A tax estimator can help you estimate your tax liability, but it is not a substitute for professional tax consultants. 

You should always review and compare the results to previous tax returns, pay slips, and bank statements.

Common sources of income and deductions that people miss or miscalculate

Here are some of the most common sources of income and deductions that people miss or miscalculate:

Self-employment income 

You may be working as a freelancer, contractor, or consultant, you need to report your self-employment income and pay self-employment tax on it. You also need to deduct your business expenses, such as equipment, supplies, travel, or home office. 

However, many people either forget to include their self-employment income, or overstate or understate their business expenses, which can result in paying too much or too little tax.

Capital gains 

If you sell any assets, such as stocks, bonds, or property, you need to report your capital gains or losses on your tax return. You also need to distinguish between short-term and long-term capital gains, which are taxed at different rates. 

However, many people either fail to report their capital gains, or mix up the holding periods, which can lead to paying the wrong amount of tax.

Alimony 

If you pay or receive alimony as part of a divorce or separation agreement, you need to report it on your tax return. The payer can deduct the alimony payments, while the recipient must include them as income. 

However, many people either neglect to report their alimony, or confuse it with child support, which is not taxable or deductible, which can cause tax problems for both parties.

Charitable donations

If you make any donations to qualified charitable organizations, you can deduct them from your taxable income. You need to keep track of your donations and provide proof of them when filing your tax return. 

However, many people either forget to keep receipts of their donations or claim more than the actual amount they donated, which can result in overstating their deductions and underpaying their taxes.

Tax Blunders: How to Avoid the Top 5 Pitfalls of Tax Estimation

Here are the top five tax blunders that you should avoid at all costs:

1. Not choosing the right tax regime

The government has introduced two tax regimes – the old one with higher tax rates but more deductions and exemptions, and the new one with lower tax rates but fewer deductions and exemptions.

Don’t blindly follow the new regime just because it has lower rates, or stick to the old one just because you are used to it. Choose wisely and save more.

2. Not declaring all your income sources 

You might have income from various sources, such as salary, house property, capital gains, business or profession, and other sources. You need to declare all of them in your tax return, even if they are exempt or below the taxable limit.

If you fail to do so, you might face penalties and interest for under-reporting or concealing your income. Don’t fall into this trap and be honest and transparent.

3. Not claiming all your deductions and exemptions 

You might be eligible for various deductions and exemptions that can reduce your taxable income and tax liability. These include investments under section 80C, health insurance premiums under section 80D, donations under section 80G, education loan interest under section 80E, and many more. 

You need to claim them in your tax return and provide the relevant proofs and documents. Don’t miss out on any of these tax-saving opportunities, make the most of them.

4. Not paying advance tax on time

You need to pay advance tax if your tax liability exceeds Rs. 10,000 in a year, and you don’t have enough TDS or TCS deducted from your income. 

You need to pay advance tax in four instalments – 15% by June 15, 45% by September 15, 75% by December 15, and 100% by March 15. 

If you fail to pay advance tax on time, you might have to pay interest and penalty for late payment of tax. So, be punctual and disciplined.

5. Not verifying your tax return and refund status 

After filing your tax return, you must verify it either online or offline within 120 days of filing. If you do not verify your tax return, the tax department will not process it, and you will not receive a refund or acknowledgment.

You should also check the status of your refund online to see if there are any discrepancies or delays. If there is an issue, you must contact the tax department to resolve it. Do not ignore your tax return or refund status; instead, be proactive and vigilant. 

The Bottom Line

Tax estimation is a crucial but challenging task for taxpayers, especially those with multiple income sources, deductions, and exemptions. Many common mistakes can lead to inaccurate tax estimation, resulting in penalties, interest, or refunds from the tax authorities. 

A tax calculator can help you avoid common mistakes in tax estimation by providing a clear and comprehensive breakdown of your income, deductions, and tax payable. 

It can also help you compare different scenarios under both tax regimes and optimize your tax savings. By using a tax calculator, you can ensure that you pay the right amount of tax at the right time, and avoid any hassles or surprises later.

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