It is important for anyone understanding fiscal policy to understand what income tax is and how it affects individuals as well as business entities. The income tax system adopted in India is as per India tax slabs which are recommended and changed in some years. Here are new FY 2023-24 and AY 2024-25 tax slabs and rates that were recently provided and they have induced some changes – like a new tax regime. In this article, there is a comparison of income tax slabs for the fiscal year 2023-24 in old tax slabs and new tax regime slabs.
Income Tax Slabs in India: A Brief Idea
The Indian income tax has a progressive structure that rates the revenues according to slabs depending on the income bracket. The new income tax scenario for the FY 2023-24 is based on the progressive scale – where income tax is calculated based on the increasing rates. This progressive system means that the amount of increased revenue would decline as higher incomes rise to meet new revenue targets.
Old Tax Regime Slabs
The old tax slab system permitted taxpayers to claim different deductions and exemptions and was preferred by individuals with big investments in specified savings schemes. The old tax regime slabs for various taxpayer categories are listed below:
| Category | Income Range | Tax Rate |
| Individuals (Below 60 Years of Age) and HUF | Up to Rs. 2.5 lakh | Nil |
| Rs. 2,50,001 to Rs. 3 lakh | 5% | |
| Rs. 3,00,001 to Rs. 5 lakh | 5% | |
| Rs. 5,00,001 to Rs. 10 lakh | 20% | |
| Above Rs. 10 lakh | 30% | |
| Senior Citizens (60 Years and Over but Below 80 Years) | Up to Rs. 2.5 lakh | Nil |
| Rs. 2,50,001 to Rs. 3 lakh | Nil | |
| Rs. 3,00,001 to Rs. 5 lakh | 5% | |
| Rs. 5,00,001 to Rs. 10 lakh | 20% | |
| Above Rs. 10 lakh | 30% | |
| Super Senior Citizens (80 Years & Older) | Up to Rs. 2.5 lakh | Nil |
| Rs. 2,50,001 to Rs. 3 lakh | Nil | |
| Rs. 3,00,001 to Rs. 5 lakh | Nil | |
| Rs. 5,00,001 to Rs. 10 lakh | 20% | |
| Above Rs. 10 lakh | 30% |
New Tax Regime Slabs
The new tax regime slabs proposed in Budget 2023 will bring down the tax burden on taxpayers by providing lower tax rates but with almost no deductions and exemptions available under the old tax regime slabs. The new tax regime slabs for FY 2023-24 (AY 2024-25):
| Income Range | Tax Rate |
| Up to Rs. 4,00,000 | NIL |
| Rs. 4,00,001 to Rs. 6,00,000 | 5% (Tax Rebate under Section 87A) |
| Rs. 6,00,001 to Rs. 9,00,000 | 10% (Tax Rebate under Section 87A up to Rs. 7 lakh) |
| Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
Key Changes in the New Tax Regime
The new tax regime included several modifications meant to make the tax system even more appealing to people:
- Increased basic Exemption: From 2.5 lakh, the Basic exemption limit is now increased to three lakh.
- Revised Tax Slabs: The brand new tax slabs in India have lower rates for various income brackets.
- Standard Deduction: A regular deduction of 50,000 for salaried individuals & A deduction for household pension up to 15,000 are introduced.
- Rebate Under Section 87A: Increased rebate implies no income tax will be levied on anybody over 7 lakh.
- Default Tax Regime: The brand new tax regime is now the default regime, though taxpayers can choose the old tax regime slabs in case they so choose.
- Reduced Surcharge Rate: The highest surcharge amount drops to 25% from 37%.
The Old and New Tax Regimes
Choice of the old tax regime slabs or new tax regime slabs depends upon individual finances and deduction and exemption preferences. The old tax regime is advantageous for individuals with big investments and expenditures which qualify for a tax deduction.
The new tax regime instead offers a simplified structure with reduced tax rates but without most deductions. It may be better for individuals with no many investments or who need a straightforward tax computation.
| Category | Income Range / Condition | Tax Rate | Surcharge | Cess |
| Domestic Companies | Standard corporate tax rate | 30% | N/A | 4% Health and Education Cess |
| Companies with turnover over Rs. 400 crore in the prior year | 25% | N/A | 4% Health and Education Cess | |
| New companies under Section 115BAB (registered on/after October 1, 2019, and beginning manufacturing on/before March 31, 2023) | 15% | N/A | 4% Health and Education Cess | |
| Companies under Section 115BAA (total income before specified deductions) | 22% | N/A | 4% Health and Education Cess | |
| Companies under Section 115BA (registered on/after March 1, 2016, manufacturing any article or thing, not opting for specified deductions) | 25% | N/A | 4% Health and Education Cess | |
| Domestic Companies with Surcharge | Total income over Rs. 1 crore but not exceeding Rs. 10 crore | N/A | 7% | 4% Health and Education Cess |
| Total income exceeding Rs. 10 crore | N/A | 12% | 4% Health and Education Cess | |
| Partnership Firms or LLP Companies | Standard corporate tax rate | 30% | N/A | 4% Health and Education Cess |
| Total income exceeding Rs. 10 crore | N/A | 12% | 4% Health and Education Cess | |
| Foreign Companies | Standard corporate tax rate | 40% | N/A | 4% Health and Education Cess |
| Royalty income & technical service fees | 10% (on gross) | N/A | 4% Health and Education Cess | |
| Foreign Companies with Surcharge | Total income over Rs. 1 crore but not exceeding Rs. 10 crore | N/A | 2% | 4% Health and Education Cess |
| Total income exceeding Rs. 10 crore | N/A | 5% | 4% Health and Education Cess |
Conclusion
Income tax slabs for FY 2023-24 and AY 2024-25 substantially simplify the tax code and also relieve taxpayers. While the new tax regime slabs promise lowered rates and easy strategy, the old tax regime slabs keep advantages with various deductions and exemptions.
The taxpayer must weigh his financial situation, investment behavior and deduction eligibility to decide which regime is best suited. The details of both regimes can help taxpayers make educated decisions and enhance their tax liability.
Together with particular taxpayers, businesses have to also know the applicable tax rates to their business to comply with new laws. The progressive nature of the tax slabs in India keeps a balanced tax load for India’s economic growth and development.
FAQs
What income tax slabs do we receive for FY 2023-24 under the brand new tax regime?
The new tax regime slabs for FY 2023-24 (AY 2024-25) are the following :
- Up to Rs. 4,00,000: NIL
- Rs. 4,00,001 to Rs. 6,00,000: 5% (Tax Rebate u / s 87A).
- Rs. 6,00,001 in Rs. 9,00,000 : 10% (Tax Rebate u/s 87A as much as Rs 7 lakh)
- Rs. From 9,00,001 to Rs. 12,00,000: 15%
- Rs. 11,00,001 in Rs. 15,00,000 : 20%
- Above Rs. 15,00,000 : 30%
What income tax slabs can be found for FY 2023-24 under the old tax regime?
The old tax regime slabs for FY 2023-24 (AY 2024-25) are classified by age of taxpayer:
For Individuals (Below 60 Years) & HUF:
- Up to 2.5 lakh: Nil.
- 1,50,001 to 3 lakh: 5%.
- 3,00,001 to 5 lakh: 5%.
- 5,00,001 to 10 lakh: 20%
- Above’ ten lakh: 30% off
For Senior Citizens (60 Years and Above but Below 80 Years):
- Up to 2.5 lakh: Nil.
- 2,50,001 to 3 lakh: Nil.
- 3,00,001 to 5 lakh: 5%.
- 5,00,001 to 10 lakh: 20%
- Above ten lakh: 30% off
For Super Senior Citizens (80 Years and Over): Up to 2.5 lakh: Nil.
- 2,50,001 to 3 lakh: Nil.
- 3,00,001 to 5 lakh: Nil.
- 5,00,001 to 10 lakh: 20%
- Above’ ten lakh: 30% off
What tax regime should I make use of for FY 2023-24: Old or new?
In case you desire a straightforward tax structure with several investments and low rates, the totally new tax regime may be much better for you.
You need to compute your tax liability under both regimes to see which saves you most according to your earnings plus admissible deductions.
