Income Tax Slab FY 2023-2024 (AY 2024- 2025) & Exemption (New & Old Regime Tax Rates)
Introduction
Income tax significantly contributes to the Indian government's revenue. Individuals and businesses pay this tax annually on their earnings. The tax slabs, rates, deductions, and exemptions undergo annual revisions, typically announced in the Union Budget.
This article focuses on the tax slab rates, surcharges, and exemptions for individual taxpayers, senior citizens, super senior citizens, the Association of Persons (AOP), Body of Individuals (BOI), and Artificial Juridical Person (AJP) for the financial year 2023-24 (Assessment Year 2024-25).
Income Tax Slabs In FY 2023-24 (AY 2024-25) For HUF And Individuals
Income tax rates for individuals and Hindu Undivided Families (HUFs) for the fiscal year 2023-24 are as follows:
Annual Taxable Income | New Tax Regime | Old Tax Regime |
Up to INR 2.5 lakh | Exempt | Exempt |
Over INR 2.5 lakh to INR 3 lakh | Exempt | 5% |
Over INR 3 lakh to INR 5 lakh | 5% | 5% |
Over INR 5 lakh to INR 6 lakh | 5% | 20% |
Over INR 6 lakh to INR 9 lakh | 10% | 20% |
Over INR 9 lakh to INR 10 lakh | 15% | 20% |
Over INR 10 lakh to INR12 lakh | 15% | 30% |
Over INR 12 lakh to INR 15 lakh | 20% | 30% |
Above INR 15 lakh | 30% | 30% |
Some key highlights of the above income tax slabs are:
- Under the old tax regime, the basic exemption limit remains unchanged at INR 2.5 lakh. However, the new regime has increased this exemption limit to INR 3 Lakh.
- In the new system, incomes below INR 3 lakh are tax-exempt. In the old system, there was a 5% tax exemption on incomes between INR 2.5 lakh and INR 3 lakh.
- The peak income tax rate remains unchanged at 30% for income above INR 15 lakh under both regimes. However, the new regime has expanded income brackets for the lower tax rates of 5%, 10%, 15%, and 20%.
- You can claim standard deductions and exemptions, such as Section 80C, 80D, etc., under the old regime but not the new one.
Income Tax Slabs And Rates For Senior Citizens In AY 2024-25 (FY 2023-24)
Senior citizens between the ages of 60 and 80 can avail a higher basic exemption limit under the old tax rules. This applies to super senior citizens as well.
The following income tax slab rates are applicable for senior citizens in FY 2023-24:
Annual Taxable Income | New Tax Regime | Old Tax Regime |
Up to INR 3 lakh | Exempt | Exempt* |
Over INR 3 lakh to INR 5 lakh | 5% | 5% |
Over INR 5 lakh to INR 6 lakh | 5% | 20% |
Over INR 6 lakh to INR 9 lakh | 10% | 20% |
Over INR 9 lakh to INR 10 lakh | 15% | 20% |
Over INR 10 lakh to INR 12 lakh | 15% | 30% |
Over INR 12 lakh to INR 15 lakh | 20% | 30% |
Above INR 15 lakh | 30% | 30% |
*indicates the higher exemption than individual citizens
The key highlights are:
- In the old regime, taxpayers below 60 years are allowed a higher basic exemption limit of INR 3 lakh. This is in comparison to the INR 2.5 lakh limit.
- Income tax rates are lower in the INR 5 lakh to INR 10 lakh income brackets under the old regime.
- Both regimes tax income above INR 10 lakh at the same rates.
Income Tax Slab For Super Senior Citizens In FY 2023-24 (AY 2024-25)
Super senior citizens, those aged over 80 years, get special attention in India's Income Tax Act. Under the old tax system, they enjoy higher exemption limits.
The income tax slab rates applicable to super senior citizens for FY 2023-24 (AY 2024-25) are:
Annual Taxable Income | New Tax Regime | Old Tax Regime |
Up to INR 3 lakh | Exempt | Exempt |
Over INR 3 lakh to INR 5 lakh | 5% | Exempt* |
Over INR 5 lakh to INR 6 lakh | 5% | 20% |
Over INR 6 lakh to INR 9 lakh | 10% | 20% |
Over INR 9 lakh to INR 10 lakh | 15% | 20% |
Over INR 10 lakh to INR 12 lakh | 15% | 30% |
Over INR 12 lakh to INR 15 lakh | 20% | 30% |
Above INR 15 lakh | 30% | 30% |
*indicates the higher exemption than senior citizens
Key highlights of the income tax slabs
- Super Senior Citizens can earn up to INR 5 lakh without paying any tax under the old system. This is higher than the new system's INR 3 lakh limit.
- Earnings between INR 5 lakh and INR 10 lakh fall under lower tax brackets in the old system.
- Tax rates are the same for income over INR 10 lakh in old and new systems.
- By sticking with the old tax system, super senior citizens can save more on taxes because of this higher exemption limit. The new tax slabs apply to all taxpayers, regardless of age.
Income Tax Slab For AOP, BOI, And AJP In FY 2023-24
The announced new tax regime is currently not applicable for categories of taxpayers other than individuals and HUFs.
The income tax slabs for FY 2023-24 are unchanged for AOP, BOI, and AJP under the old tax regime1.
Net Taxable Income | Income Tax Rate FY 2023-24 |
Up to INR 2.5 lakh | Exempt |
Over INR 2.5 lakh up to INR 5 lakh | 5% of income exceeding INR 2.5 lakh |
Over INR 5 lakh up to INR 10 lakh | INR 12,500 + 20% of income exceeding INR 5 lakh |
Over INR 10 lakh | INR 1,12,500 + 30% of income exceeding INR 10 lakh |
Surcharge On Income Tax for FY 2023-24
In the 2023 budget speech, the Finance Minister announced a reduction in the surcharge rate for the new tax system2. The surcharge is an additional tax imposed on the income tax. It is applicable when the taxpayer's annual earnings exceed INR 50 lakh.
The applicable surcharge rates on income tax for FY 2023-24 are:
Income | Surcharge Rate in Old Tax Regime | Surcharge Rate in New Tax Regime |
Less than INR 50 lakh | NIL | NIL |
INR 50 lakh – INR 1 crore | 10% | 10% |
INR 1 crore – INR 2 crore | 15% | 15% |
INR 2 crore – INR 5 crore | 25% | 25% |
INR 5 crore – INR 10 crore | 37% | 25% |
More than INR 10 crore | 37% | 25% |
The surcharge has been lowered from 37% to 25% in the new tax system. This change mainly affects people earning between INR 5 crore and INR 10 crore annually. This will provide some tax relief for high-networth individuals.
Conclusion
Budget 2023 announced several changes in the personal income tax slabs, rates, surcharges, and exemptions. Taxpayers can now choose between the old and new income tax regimes annually based on which is more beneficial. Those who want to save taxes through common deductions like 80C and 80D should opt for the old regime. On the other hand, individuals with lower incomes and the inability to claim many deductions stand to benefit from the reduced rates under the new regime.
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Frequently Asked Questions On Income Tax Deduction List And Exemption
1. What are the major changes in the Income Tax Slab for FY 2023-24 as compared to FY 2022-23?
- The major changes in the income tax slabs in FY 2023-24 compared to FY 2022-23 are:
- Higher basic exemption limit of INR 3 lakh under the new regime (increased from INR 2.5 lakh).
- Reduction in tax rates across some income slabs under the new regime.
- Expansion of income brackets for lower tax rates of 5%, 10%, 15%, and 20%.
- The highest tax rate remains unchanged at 30% for income above INR 15 lakh.
- The surcharge is capped at 25% under the new regime for income above INR 5 crore (reduced from 37%).
- The new regime is the default option for taxpayers from FY 2023-24.
- Inability to claim most deductions under the new regime.
2. What are the key features of the new tax regime?
The new tax regime brings several changes:
- Lower tax rates for most income groups than before.
- The basic tax-free amount is now INR 3 lakh, up from INR 2.5 lakh.
- From FY 2023-24, this new regime is the first choice for taxpayers.
- You can still get a standard deduction of INR 50,000.
- Tax rebate under Section 87A for incomes up to INR 7 lakh.
- A higher tax break of INR 25 lakh for leave encashment.
- For incomes over INR 5 crore, a smaller extra tax (surcharge) of 25%.
- Taxpayers cannot use common tax-saving options like 80C, 80D, etc.
3. When can I opt for the old vs new regime?
For salaried individuals:
- At the beginning of the financial year: You can choose the preferred regime by informing your employer at the beginning of the financial year. This choice applies for the entire year and cannot be changed midway.
- While filing income tax returns: If you have yet to choose for any income tax regime during the year, you can do that by opting either the old or new regime while filing your income tax return.
For non-salaried individuals (business owners, freelancers, etc.):
- While filing income tax returns: You can choose either the old or new regime while filing your income tax return for that year.
4. What tax changes were announced in the recent FY 2024-25 budget?
Although the recent budget's tax rates remain the same, the finance ministry proposed raising the tax rebate limit from INR 5 lakh to INR 7 lakh in the new FY 2024-25 tax regime.
References:
- Income Tax Department <https://tinyurl.com/4p5ydkuh>
- Union Budget <https://tinyurl.com/47k29ymr>
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