Taxpayers currently have the option to choose between two tax regimes: the old tax regime and the new tax regime. The new tax regime was introduced in the Financial Year 2020-21 by the Finance Minister in the Union Budget to simplify the tax laws, reduce tax rates, and enhance compliance for easier administration. Since its inception, there has been a continuous effort to refine and improve this regime to better serve taxpayers. In line with this, the Union Budget 2024 brought further revisions to the slabs under the new tax regime.
What is an Income Tax Slab?
In India, we follow a progressive tax system designed to ensure that individuals with higher earnings contribute more in taxes compared to those with lower incomes, thereby helping to reduce income inequality. This system applies income tax based on a slab structure, where different tax rates are assigned to various income ranges.
Let us understand the income tax slabs under old tax regime and new tax regime for FY 2023-24 i.e., AY 2024-25.
Income Tax Slabs under Old Tax Regime
Many taxpayers are familiar with the old tax regime. It offers the benefit of various deductions and exemptions, but the slab rates might be higher compared to the new tax regime. Here are the slab rates for individual taxpayers under the old regime for the financial year 2024-25:
For HUFs and Individuals below the age of 60 years
| Income Tax Slab | Income Tax Rate |
| Up to INR 2.5 lakhs | NIL |
| INR 2.5 lakhs to INR 5 lakhs | 5% |
| INR 5 lakhs to INR 10 lakhs | 20% |
| Above INR 10 lakhs | 30% |
Important Note
- For senior citizens between the age of 60-80 years, the basic exemption limit is extended to INR 5 lakhs
- For super senior citizens above the age of 80 years, the basic exemption limit is extended to INR 5 lakhs
Cess: An additional 4% Health and Educational Cess will apply to the calculated tax amount.
Surcharge: Surcharge is applied on the tax amount (i.e. taxes as applicable + cess). Rates of surcharge for individuals/HUFs opting for old tax regime rates are as follows:
| Income Range | INR 50 lakhs to INR 1 Cr. | INR 1 Cr. to INR 2 Cr. | INR 2 Cr. to INR 5 Cr. | Above INR 5 Cr. |
| Surcharge Rate | 10% | 15% | 25% | 37% |
Income Tax Slabs for Individuals/HUFs under New Tax Regime
For the Financial Year 2024-25, the Budget has introduced revisions to the tax slabs under the New Tax Regime, offering taxpayers an opportunity to reduce their tax liability by up to INR 17,500. Additionally, the standard deduction has been increased to INR 75,000, and the family pension deduction has been raised to INR 25,000 from the previous INR 15,000. Below is a comparison of the tax slabs under the New Tax Regime before and after the budget announcement.
| Income Tax Slab (FY 2023-24) | Income Tax Rate | Income Tax Slab (FY 2024-25 onwards) | Income Tax Rate |
| Up to INR 3 lakhs | NIL | Up to INR 3 lakhs | NIL |
| INR 3 lakhs to INR 6 lakhs | 5% | INR 3 lakhs to INR 6 lakhs | 5% |
| INR 6 lakhs to INR 9 lakhs | 10% | INR 7 lakhs to INR 10 lakhs | 10% |
| INR 9 lakhs to INR 12 lakhs | 15% | INR 10 lakhs to INR 12 lakhs | 15% |
| INR 12 lakhs to INR 15 lakhs | 20% | INR 12 lakhs to INR 15 lakhs | 20% |
| Above INR 15 lakhs | 30% | Above INR 15 lakhs | 30% |
Note: The tax saving of INR 17,500 is calculated as below:
- INR 10,000 difference between tax liability as per the slab rates pre and post-budget.
- INR 7,500 tax liability is reduced due to an increase in the standard deduction (30% of INR 25,000).
Cess: An additional 4% Health and Educational Cess will be applicable to the tax amount calculated.
Surcharge: Rates of surcharge for individuals/HUFs opting for new tax regime rates are as below:
| Income Range | INR 50 lakhs to INR 1 Cr. | INR 1 Cr. to INR 2 Cr. | Above INR 2 Cr |
| Surcharge Rate | 10% | 15% | 25% |
Income Tax Slabs for Other than Individuals/HUFs
Rate for AOP/BOI/Any other artificial juridical person
| Net Income Range | Income Tax Rates |
| Up to INR 2.5 lakhs | NIL |
| INR 2.5 lakhs to INR 5 lakhs | 5% |
| INR 5 lakhs to INR 10 lakhs | 20% |
| Above INR 10 lakhs | 30% |
Cess and Surcharge are the same as the rate applicable to Individuals and HUFs.
Rates for Partnership Firms
| Tax rate | 30% |
| Cess | 4% |
| Surcharge (applicable only if total income exceeds INR 1 Cr.) | 12% |
Rates for Domestic Companies
| Domestic Company | Tax Rates |
| if opted for Section 115BA | 25% |
| if opted for Section 115BAA | 22% |
| if opted for Section 115BAB (Manufacturing) | 15% |
| Any other Domestic Company | 30% |
Cess: An additional 4% Health and Educational Cess will apply to the tax amount and surcharge.
Surcharge applicable to companies:
| Income Range | Above INR 1 Cr. | Above INR 10 Cr. |
| Surcharge Rate | 7% | 12% |
The surcharge is applicable at a flat 10% in case the company opts for Section 115BAA & 115BAB
Rates for co-operative society
| Net Income Range | Income Tax Rates |
| Up to INR 10,000 | 10% |
| INR 10,000 to INR 20,000 | 20% |
| Above INR 20,000 | 30% |
Cess: An additional 4% Health and Educational Cess will apply to the tax amount calculated above.
Surcharge with effect from AY 2023-24
- 7% in case the net income range is INR 1 Cr. to INR 10 Cr.
- 12% in case net income is more than INR 10 Cr.
Rates for local authority
The local authority is taxable at 30%.
Cess: An additional 4% Health and Educational Cess will apply to the tax amount calculated above.
Surcharge: 12% of Income Tax when total income exceeds INR 1 Cr.
What is Surcharge on Income Tax?
A surcharge is an additional charge on Income Tax. It was introduced with the principle that the rich should contribute more by way of tax, as compared to the poor. A Surcharge is calculated on total income tax and not on total income.
Surcharge Rates
The below table shows the surcharge on income tax applicable to any individual, HUF, AOP, BOI, or any artificial judicial person.
| Nature of Income | More than 50L and up to 1 Cr. | More than 1 Cr. and up to 2 Cr. | More than 2 Cr. and up to 5 Cr. | More than 5 Cr. |
| STCG chargeable to tax u/s 111A | 10% | 15% | 15% | 15% |
| LTCG chargeable to tax u/s 112A | 10% | 15% | 15% | 15% |
| Any Other Income | 10% | 15% | 25% | 37% (25% in case of new tax regime u/s 115BAC) |
FAQs
The surcharge is an additional tax levied on taxpayers who have a higher income. It is calculated as a percentage of the total tax payable and the rate of the surcharge depends upon the income slab that the taxpayer falls under.
1. Calculate your Gross Total Income (GTI)
2. Reduce the deductions under sections 80C to 80U
3. Calculate your Tax Payable as per Income Tax slabs
4. Deduct the amount of rebate allowed
The basic exemption limit depends upon the age and income of the taxpayer.
Basic exemption limit under old tax regime:
Individuals below the age of 60 years: INR 2.5lakh,
Senior citizens between the age of 60 years and 80 years: INR 3 lakh,
Super senior citizens above the age of 80 years: INR 5 lakh.
In case of new tax regime, the basic exemption limit is INR 3 lakh.
No. Only resident individuals can claim the benefit of rebate u/s 87A.
Hey @TeamQuicko
Can I opt out of New Scheme once opted in???
If I want to opt for the New regime but had told my employer that I am choosing the existing one, can I select new tax regime while filing ITR??
Hey @riya_gupta
An individual having salaried income and no business income has the option to choose between the old and new tax regimes every year i.e. he/she can switch regimes from year to year.
However, individuals having business income are not eligible to choose between the new and old tax regime every year. Once they have opted for the new tax regime, they only have a one-time option of switching back to the old tax regime in their lifetime.
Once they switch back, they will not be allowed to opt for new tax regime again.
Hey @TanyaChopra
If you have opted for old tax regime with your employer for TDS on salary, and plan to opt the new tax regime at the time of filing ITR, then you can do that by filling the new form i.e. 10-IE.
Can full-time traders claim expenses like Broker charges STT, GST + other expenses like computer buy for trading, internet connection bill etc under new tax slabs?
Apart from the tax-saving criteria, which tax slab is better for a first-time taxpayer?
Hey @HarishMehta
If you forget to fill the new form i.e. Form 10-IE, at the time of filing ITR, then you may be disallowed the tax rates available under the new tax regime. The tax department will calculate your income tax liability based on the existing/old tax regime.
Hey @SonalYadav
These budget changes will be applicable from FY 2020-21. From FY 2020-21 it will be up to the taxpayer to select the tax regime based on their Income and Investments situation.
Following are the pros of following a new tax regime:
Following are the cons of following a new tax regime:
Hope this helps!
Hey @HarshitShah
Yes, any individual taxpayer can opt for new tax slabs, there are no restrictions based on type of income earned by a taxpayer.
Under new tax slabs, you will be able to claim all the direct expenses related to your business activity while calculating your taxable income.
Hope this helps!
I have carry forward losses in the previous financial years, is it allowed to claim losses under the new tax regime?