Income Tax Slabs FY 2023-24 and AY 2024-25

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