The new income tax slabs in the financial year 2023-24 differ depending on the tax regime you choose. In India, taxpayers get a choice between two tax regimes – the old regime and the new regime. Under the old tax regime, individuals have the option to claim various deductions and exemptions to reduce their taxable income. While this grants taxpayers the benefit of reducing their overall tax liability, the trade-off is a higher tax rate. The old regime classifies taxpayers into three distinct categories based on age – below the age of 60, between the ages of 60 and 80 and over the age of 80.
The income tax slabs are different under the old and the new tax regimes. Further, the slab rates under the old tax regime are divided into three categories
- Indian Residents aged < 60 years + All the non-residents
- 60 to 80 years: Resident Senior citizens
- More than 80 years: Resident Super senior citizens
What is Income Tax Slab?
In India, income tax is levied based on a slab system. This means different tax rates are applied to different income ranges. As your income increases, so does the tax rate. This progressive system ensures that higher earners pay a higher percentage of their income in taxes.
The Income Tax applies to individuals based on a slab system, where different tax rates are assigned to different income ranges. As the person’s income increases, the tax rates also increase. This type of taxation allows for a fair and progressive tax system in the country. The income tax slabs are revised periodically, typically during each budget. These slab rates vary for different groups of taxpayers.
Income Tax Slabs for FY 2023-24 (AY 2024-25): Old vs. New Regime
Income Tax Slabs under Old Tax Regime
For Individuals Below 60 Years & NRIs
Income Tax slab (Rs.) | Tax Rate |
Up to 2,50,000 | Nil |
2,50,001 – 5,00,000 | 5% |
5,00,001 – 10,00,000 | 20% |
Above 10,00,001 | 30% |
For Senior Citizens (60 to 80 years)
Income Tax slabs (Rs.) | Tax Rate |
Up to 3,00,000 | Nil |
3,00,001 – 5,00,000 | 5% |
5,00,001 – 10,00,000 | 20% |
Above Rs. 10,00,001 | 30% |
For Super Senior Citizens (Above 80 years)
Income Tax slabs (Rs.) | Tax Rate |
Up to 5,00,000 | Nil |
5,00,001 – 10,00,000 | 20% |
Above 10,00,000 | 30% |
Note: A rebate of up to ₹12,500 is applicable if the total income does not exceed ₹5,00,000.
Income Tax Slabs under New Tax Regime
Income Tax Slab (Rs.) | Tax Rate |
Up to 3,00,000 | Nil |
3,00,001 – 6,00,000 | 5% (Tax Rebate u/s 87A) |
6,00,001 – 9,00,000 | 10% (Tax Rebate u/s 87A up to Rs 7 lakh) |
9,00,001 – 12,00,000 | 15% |
12,00,001 – 15,00,000 | 20% |
Above 15,00,000 | 30% |
Note: A rebate of up to ₹25,000 is applicable if the total income does not exceed ₹7,00,000.
Surcharge and Cess
In addition to the basic tax rates, a surcharge and cess are applicable:
- Surcharge:
- 10% of income tax if total income exceeds ₹50 lakh but does not exceed ₹1 crore.
- 15% of income tax if total income exceeds ₹1 crore but does not exceed ₹2 crore.
- 25% of income tax if total income exceeds ₹2 crore but does not exceed ₹5 crore.
- 37% of income tax if total income exceeds ₹5 crore.
Note: In Budget 2023, the highest surcharge rate was reduced from 37% to 25% under the new tax regime.
- Health and Education Cess: 4% of income tax and surcharge.
Tax Slabs for Domestic Companies
Particulars | Old Regime Tax Rates | New Regime Tax Rates |
Company opts for section 115BAB (not covered in section 115BA and 115BAA) & is registered on/after October 1, 2019 and has started manufacturing on/before 31st March 2023 | – | 15% |
Company opts for Section 115BAA , where the total income of a company has been calculated without claiming specified deductions, exemptions, incentives, and additional depreciation | – | 22% |
Company opts for section 115BA registered on/after March 1, 2016, and is in the manufacture of any article or thing and does not claim a deduction as specified in the section | – | 25% |
Turnover/gross receipt of the company is less than ₹400 crores in the previous year | 25% | 25% |
Other Domestic Company | 30% | 30% |
Surcharge applicable for companies:
- 7% of Income tax where total income is more than ₹1 crore
- 12% of Income tax where total income is more than ₹10 crores
- 10% of income tax where domestic company opted Section 115BAA and 115BAB
- Additional Health & Education Cess Rate – 4%
Income Tax Rate for Partnership Firm or LLP as Per Old/New Regime
A partnership firm or an LLP is taxable at 30%
Note –
- A Surcharge of 12% is levied on incomes above Rs 1 crore.
- Health and Education Cess Rate – 4 %
Choosing Between Old and New Regime
- Old Regime: Suitable if you have significant deductions and exemptions (e.g., 80C, 80D, HRA).
- New Regime: Ideal for those with minimal deductions and seeking simplified filing.
Deductions and Exemptions under New Tax Regime
Certain deductions and exemptions present under the old tax regime will not be applicable under the new tax regime. Around 70 deductions and exemptions that are present in the old tax regime will not be applicable in the new tax regime. Some of the common deductions that are allowed and not allowed in the new tax regime are mentioned below:
Deductions that are Allowed
- Travelling allowance in the case of transfer or for employment
- Apart from additional depreciation, other deductions under Section 32
- Deduction under Section 80JJAA for new employees (employment)
- Any investments that are made in the Notified Pension Scheme (Section 80CCD(2))
- Any conveyance allowance due to work travel
- Specially abled individuals will be provided transport allowance
Deductions that are Not Allowed
- Housing Loan interest under Section 24
- Professional tax
- Standard deduction on salary
- Special allowances under Section 10(14)
- Children education allowance
- Helper allowance
- Relocation allowance
- Conveyance allowance
- House Rent Allowance
- Leave Travel Allowance
Old Tax Regime Vs New Tax Regime with Example
Here’s a simple example to illustrate:
Let’s consider an example to see the tax calculation under both regimes.
Example: Rohit has a total taxable income of ₹8,00,000.
Old Regime:
- Income up to ₹2,50,000: Nil
- Income from ₹2,50,001 to ₹5,00,000: 5% of ₹2,50,000 = ₹12,500
- Income from ₹5,00,001 to ₹8,00,000: 20% of ₹3,00,000 = ₹60,000
- Total Tax = ₹12,500 + ₹60,000 = ₹72,500
- Health and Education Cess: 4% of ₹72,500 = ₹2,900
- Total Tax Payable: ₹72,500 + ₹2,900 = ₹75,400
New Regime:
- Income up to ₹3,00,000: Nil
- Income from ₹3,00,001 to ₹6,00,000: 5% of ₹3,00,000 = ₹15,000
- Income from ₹6,00,001 to ₹8,00,000: 10% of ₹2,00,000 = ₹20,000
- Total Tax = ₹15,000 + ₹20,000 = ₹35,000
- Health and Education Cess: 4% of ₹35,000 = ₹1,400
- Total Tax Payable: ₹35,000 + ₹1,400 = ₹36,400
Difference between FY 2023-24 and 2022-23 for New Tax Regime
Tax Slab (FY 2022-23) in Rs. | Tax Slab (FY 2023-24) in Rs. | Tax Rate |
Up to 2,50,000 | Up to 3,00,000 | NIL |
2,50,001 to 5,00,000 | 3,00,001 – 6,00,000 | 5% |
5,00,001 to 7,50,000 | 6,00,001 – 9,00,000 | 10% |
7,50,001 to 10,00,000 | 9,00,001 – 12,00,000 | 15% |
10,00,001 to 12,50,000 | 12,00,001 – 15,00,000 | 20% |
12,50,001 – 15,00,000 | – | 25% |
Above 15,00,001 | Above 15,00,000 | 30% |
Note: You must note that under the new tax regime, the rebate for income tax has been increased to Rs.7 lakh from the earlier limit of up to Rs.5 lakh.
FAQs
Can I claim 80C deductions and opt for a new income tax slab regime?
No, the new tax regime does not allow many deductions and exemptions which are otherwise available in the old tax regime. Deductions u/s 80C cannot be claimed if the taxpayer is opting for a New tax regime.
How does the government collect the taxes?
Taxes are collected by the Government through three means:
- Voluntary payment by taxpayers through various designated Banks. For example, Advance Tax and Self Assessment Tax payments,
- Taxes deducted at source [TDS] and
- Taxes collected at source [TCS].