Income Tax Slab Rates for FY 2024-25 (AY 2025-26)

Let’s have a look at what the new Union Budget holds for people in the Financial Year (FY) 2023-24 and Assessment Year (AY) 2024-25.

Highlights of Income Tax Slab Rate for FY 2024-25 (AY 2025-26)

Here are a few highlights of the Income Tax Slab 2023 – 24:

1. DIRECT TAX PROPOSALS

   • Next-gen Common IT Return Form for taxpayer convenience, stronger grievance mechanism

   • Personal Income Tax rebate limit increased to Rs. 7 lakh, no tax for income up to Rs. 7 lakh

   • Standard deduction of Rs. 50,000 for salaried individuals, deduction for family pension up to Rs. 15,000

   • Highest surcharge rate reduced from 37% to 25%, max personal income tax rate at 39%

   • Tax exemption limit on leave encashment increased to Rs. 25 lakh for non-govt salaried employees

   • Presumptive taxation limit increased for micro enterprises and certain professionals

   • Expenditure deduction for MSMEs allowed only when payment is made

   • Lower tax rate of 15% for new co-ops manufacturing till 31.3.2024

   • Relief of Rs. 10,000 crores for sugar co-ops to claim payments made to sugarcane farmers prior to 2016-17

   • Higher limit of Rs. 2 lakh for cash deposits and loans in cash by PACS and PCARDBs

   • Higher limit of Rs. 3 crore for TDS on cash withdrawal for co-op societies

   • Extension of date of incorporation for income tax benefits for start-ups to 31.3.24

   • Carry forward losses on change of shareholding of start-ups increased from 7 to 10 years

   • Capping of capital gains deduction on investment in residential house at Rs. 10 crore

   • Exemption of income tax for authorities and boards set up for housing and development

   • Removal of minimum threshold of Rs. 10,000 for TDS and clarification of taxability on online gaming

   • Conversion of gold into electronic gold receipt not treated as capital gain

   • Reduction of TDS rate from 30% to 20% on taxable portion of EPF withdrawal in non-PAN cases

   • Tax on income from Market Linked Debentures

   • Deployment of 100 Joint Commissioners for small appeals reduction

   • Increased selectivity in appeal cases scrutiny

   • Extension of tax benefits for funds relocating to IFSC till 2025

   • Decriminalization of liquidators under section 276A from 2023

   • Allowance of losses carry forward on strategic disinvestment including IDBI Bank

   • Exemption from taxes for payment from Agniveer Corpus Fund

   • Deduction in total income allowed for contribution to Seva Nidhi account

   • New 2020 personal income tax regime with 6 slabs reduced to 5 and exemption limit raised to Rs. 3 lakh for major relief to taxpayers

   SALARY	Old Tax Regime	New Tax Regime
   0-3 LAKHS	0%	NIL  (Income limit for rebate of income tax increased from Rs. 5 lakhs to Rs. 7 lakhs)
   3-6 LAKHS	0%
   6-9 LAKHS	10%	10%
   9-12 LAKHS	15%	15%
   12-15 LAKHS	20%	20%
   ABOVE 15 LAKH	30%	30%

2. INDIRECT TAX PROPOSALS

   • Number of basic customs duty rates reduced from 21 to 13 (excluding textiles and agriculture)

   • Minor changes in basic customs duty, cess, and surcharge on items such as toys, bicycles, automobiles, and naphtha

   • Excise duty exemptions on GST-paid compressed biogas

   • Customs duty extended on specified capital goods/machinery for manufacturing lithium-ion cells for EVs until 31.03.2024

   • Customs duty exemptions on vehicles and parts imported by notified testing agencies for testing and certification purposes

   • Customs duty reduced to zero on camera lens and inputs for use in manufacture of camera modules in mobile phones

   • Basic customs duty reduced on parts of open cells of TV panels, electric kitchen chimneys, heat coil for electric kitchen chimneys, acid grade fluorspar, on crude glycerin for use in epichlorohydrin, seeds for lab-grown diamonds, key inputs for domestic shrimp feed

   • Denatured ethyl alcohol for chemical industry exempt from basic customs duty

   • Increased duties on articles of Dore bars of gold and bars of platinum

   • Import duty on silver Dore, bars, and articles increased

   • Basic Customs Duty exemptions continued on raw materials for CRGO Steel, ferrous scrap, and nickel cathode

   • Concessional BCD of 2.5% on copper scrap continued

   • Basic customs duty rate on compounded rubber increased to 25%

   • National Calamity Contingent Duty (NCCD) on specified cigarettes revised upwards by 16%

3. Budget Allocation

   • Expenditure: Rs 45,03,097 crore proposed in 2023-24, up 7.5% from 2022-23 revised estimate

   • Receipts:  Rs 27,16,281 crore expected in 2023-24, up 11.7% from 2022-23 revised estimate

   • GDP: Nominal GDP growth rate estimated at 10.5% in 2023-24

   • Revenue deficit targeted at 2.9% of GDP in 2023-24 (lower than 4.1% in 2022-23)

   • Fiscal deficit targeted at 5.9% of GDP in 2023-24 (lower than 6.4% in 2022-23)

Income Tax Slab Rates for FY 2024-25 (AY 2025-26) – New & Old Tax Regimes

Taxpayers are divided into 4 categories and 1 for domestic companies when it comes to paying taxes according to the income tax slab. Let us take a look at these categories:

• Individuals less than 60 years old and Hindu Undivided Family (HUF), including Association of Persons (AOP), Body of Individuals (BOI), and Artificial Juridical Person

• Senior citizen with an age limit of 60 years and above but less than 80 years old

• Senior citizen who is 80 years or above

• Domestic companies

Comprehensive List of Income Tax Slab/Brackets Applicable for FY 2024-25

Income tax is imposed by the government of India on the income earned by individuals and businesses. One must file an Income Tax Return (ITR) to justify their income from all sources. In this regard, it is crucial to understand the income tax slab for the fiscal year 2023-2024 to avail of the tax advantages to their fullest.

1. Income Tax Slab Rate for Individuals below 60 Years Old, Hindu Undivided Family (HUF) and Other Artificial Juridical Person – Part (I)

   Annual Income	Old Regime Tax Rates	New Regime Tax Rates	Health and Education Cess
   Up to Rs.2.5 lakh	Nil	Nil	Nil
   Rs.2,50,001-Rs.5 Lakh	5%	5%	4% of Income Tax
   Rs.5,00,000-Rs. 7,50,000	20%	20%	4% of Income Tax
   Rs.7,50,000-Rs. 10,00,000	20%	20%	4% of Income Tax
   Above Rs.10,00,000	30%	30%	4% of Income Tax

   Additional Component – Surcharge

   • 10% surcharge is applicable in case the income of an individual is more than Rs. 50,00,000 and less than Rs. 1,00,00,000

   • 15% Surcharge is applicable in case the income of an individual is more than Rs. 1,00,00,000 and less than Rs. 2,00,00,000

   • 25% Surcharge is applicable in case the income of an individual is more than Rs. 2,00,00,000 and less than Rs. 5,00,00,000

   • 37% Surcharge is applicable in case the income of an individual is more than Rs. 5,00,00,000

   Note: The government has decided not to add an extra charge of either 25% or 37% on incomes under sections 111A, 112A and 115AD. The highest extra charge remains at 15%.

   Health and Education Cess

   A Health and education cess of 4% is applicable on the amount of tax calculated, inclusive of the surcharge.

2. Income Tax Slab Rate of Senior Citizens of age between 60 to 80 years – Part (II)

   Annual Income	Old Regime Tax Rates	New Regime Tax Rates	Health and Education Cess
   Up to Rs.3 lakh	Nil	Nil	Nil
   Rs.3,50,001-Rs.5 Lakh	5%	5%	4% of Income Tax
   Rs.5,00,001-Rs.750000	20%	20%	4% of Income Tax
   Rs.7,50,001-Rs.1000000	20%	20%	4% of Income Tax
   Above Rs.10,00,000	30%	30%	4% of Income Tax

   Additional Component – Surcharge:

   • 10% surcharge is applicable in case the income of an individual is more than Rs. 50,00,000 and less than Rs. 1,00,00,000

   • 15% Surcharge is applicable in case the income of an individual is more than Rs. 1,00,00,000 and less than Rs. 2,00,00,000

   • 25% Surcharge is applicable in case the income of an individual is more than Rs. 2,00,00,000 and less than Rs. 5,00,00,000

   • 37% Surcharge is applicable in case the income of an individual is more than Rs. 5,00,00,000

   Note: The government has decided not to add an extra charge of either 25% or 37% on incomes under sections 111A, 112A and 115AD. The highest extra charge remains at 15%.

   Health and Education Cess

   A Health and Education cess of 4% is applicable on the amount of tax calculated, inclusive of the surcharge.

3. Income Tax Slab Rate for Super Senior citizen of 80 years or more – Part (III)

   Annual Income	Old Regime Tax Rates	New Regime Tax Rates	Health and Education Cess
   Up to Rs.5 lakh	Nil	Nil	Nil
   Rs.5,00,001- Rs.10,00,00	20%	20%	4% of Income Tax
   Above Rs.1000000	30%	30%	4% of Income Tax

   Additional Component – Surcharge:

   • 10% surcharge is applicable in case the income of an individual is more than Rs. 50,00,000 and less than Rs. 1,00,00,000

   • 15% Surcharge is applicable in case the income of an individual is more than Rs. 1,00,00,000 and less than Rs. 2,00,00,000

   • 25% Surcharge is applicable in case the income of an individual is more than Rs. 2,00,00,000 and less than Rs. 5,00,00,000

   • 37% Surcharge is applicable in case the income of an individual is more than Rs. 5,00,00,000

   Health and Education Cess

   A Health and education cess of 4% is applicable on the amount of tax calculated, inclusive of the surcharge.

Income Tax Slab Rate for Domestic Companies

Applicable additional rates for these tax slabs are:

1. Cess: 4% of Corporate Tax

   • If the taxable income is more than Rs 1 crore but less than Rs. 10 crore, a surcharge of 7% of income tax is applicable.

   • If the taxable income is more than Rs. 10 crore, then a surcharge of 12% of income tax is applicable.

   • If Company opts for taxability u/s 115BAA or Section 115BAB, a surcharge of 10% of income tax is applicable.

2. Partnership Firms

   30% tax rate is applicable for any Partnership Firms & Limited Liability Partnership (LLP).

3. Additional Component

   The surcharge is applicable if the taxable income is more than Rs.1 crore, then a surcharge of 12% of income tax is applicable.

4. Health and Education Cess

   A Health and education cess of 4% is applicable on the amount of tax calculated, inclusive of the surcharge.

5. Local Authorities/Entity

   30% tax rate is applicable for local authorities.

Income Tax Slab Rate for Foreign Company/Entity

Additional Components

Income Tax Slab Rate for Co-operative Societies

Rural/Urban/Semi-Urban excluding Agricultural Societies and Self Help Group (SHG)

Additional Components

Income Tax Slab and Rates on Dividend

Starting from the Financial Year 2021-22, the dividend income exemption limit in India is set at Rs. 5,000. This implies that any dividend income received up to this threshold will not be subject to taxation. However, any dividend income received above this limit will be subject to income tax at the relevant rate.

Income tax Slab Rate for NRI

For the financial year 2023-24, the income tax slab rates are as follows:

1. OLD REGIME TAX RATES 

   Annual Income	Old Regime Tax Rates	Health and Education Cess
   Up to Rs 2.5 lakh	Nil	Nil
   Rs. 2,50,001 – Rs 5 Lakh	5%	4% of Income Tax
   Rs. 5,00,001 – Rs 7.5 lakh	20%	4% of Income Tax
   Rs.7,50,001 – Rs 10 lakhs	20%	4% of Income Tax
   Rs.10,00,001 – Rs 12.5 lakh	30%	4% of Income Tax
   Rs.12,50,001 – Rs 15 lakh	30%	4% of Income Tax
   Above Rs 15,00,000	30%	4% of Income Tax

2. New Tax Regime

   For the financial year 2023-24, the income tax slab rates are as follows:

   Income Slab	Income Tax Rate
   Up to Rs 3,00,000	Nil
   Rs. 3,00,000 – Rs.  6,00,000	5%
   Rs. 6,00,000 – Rs. 9,00,000	10%
   Rs. 9,00,00 – Rs. 12,00,000	15%
   Rs. 12,00,000 – Rs. 15,00,000	20%
   Above Rs. 15,00,000	30%

   Health and Education Cess:

   A Health and education cess of 4% is applicable on the amount of tax calculated, inclusive of the surcharge.

Income tax Slab Rate for Expats

For the financial year 2023-24, the income tax slab rates are the following:

Income tax Slab Rate for Freelancers

For the financial year 2023-24, the income tax slab rates are the following:

1. OLD REGIME TAX RATES 

   Annual Income	Old Regime Tax Rates	Health and Education Cess
   Up to Rs 2.5 lakh	Nil	Nil
   Rs.2,50,001 - Rs.5 Lakh	5%	4% of Income Tax
   Rs.5,00,001 - Rs.7,50,000	20%	4% of Income Tax
   Rs.7,50,001 - Rs.10,00,000	20%	4% of Income Tax
   Rs.10,00,001 - Rs.12,50,000	30%	4% of Income Tax
   Rs.12,50,001 - Rs.15,00,000	30%	4% of Income Tax
   Above Rs.15,00,000	30%	4% of Income Tax

2. New Tax Regime

   For the financial year 2023-24, the income tax slab rates are the following:

   Income Slab	Income Tax Rate
   Up to Rs. 3,00,000	Nil
   Rs. 3,00,000 – Rs.  6,00,000	5%
   Rs. 6,00,000 -Rs. 9,00,000	10%
   Rs. 9,00,00 – Rs. 12,00,000	15%
   Rs. 12,00,000 – Rs. 15,00,000	20%
   Above Rs. 15,00,000	30%

Income tax Slab Rate for Doctors

For the financial year 2023-24, the income tax slab rates are the following:

1. OLD REGIME TAX RATES 

   Annual Income	Old Regime Tax Rates	Health and Education Cess
   Up to Rs 2.5 lakh	Nil	Nil
   Rs.2,50,001 - Rs.5 Lakh	5%	4% of Income Tax
   Rs.5,00,001 - Rs.7,50,000	20%	4% of Income Tax
   Rs.7,50,001 - Rs 10,00,000	20%	4% of Income Tax
   Rs.10,00,001 – Rs 12,50,000	30%	4% of Income Tax
   Rs.12,50,001 - Rs 15,00,000	30%	4% of Income Tax
   Above Rs.15,00,000	30%	4% of Income Tax

2. New Tax Regime

   For the financial year 2023-24, the income tax slab rates are the following:

   Income Slab	Income Tax Rate
   Up to Rs. 3,00,000	Nil
   Rs. 3,00,000 – Rs.  6,00,000	5%
   Rs. 6,00,000 -Rs. 9,00,000	10%
   Rs. 9,00,00 – Rs. 12,00,000	15%
   Rs. 12,00,000 – Rs. 15,00,000	20%
   Above Rs. 15,00,000	30%

   Health and Education Cess:

   A Health and education cess of 4% is applicable on the amount of tax calculated, inclusive of the surcharge.

Income Tax Act, 1961

The Income Tax Act 1961 consists of the IT provisions that apply uniformly to the whole of India and have been in effect since 1962. The Act contains different provisions to determine tax based on parameters like existing liability, income, and current tax slab rate.

Key Factors

Income tax is based on the following key factors:

• Resident status of the assessee

• Income of assessee

• Rate of tax

• Assessment year

• Gross income

• Charge of Income Tax

Income Tax Eligibility

• Hindu Undivided Family (HUF)

• Salaried individual

• Firm/Company

• Local authority

• Body of individuals (BOI) or Association of Persons (AOP), whether incorporated or not

Comparison of the Income Tax Slab Rates for the Last Three Years 

1. Income Tax Slab Rate for FY 2022-2023 

   For individuals aged less than 60 years, Hindu Undivided Family (HUF) and Non-Resident Indians (NRI) with income in India:

   Net Taxable Income	New Tax Regime	Old Tax Regime
   Up to Rs 2.5 lakh	Exempt	Exempt
   Rs 2,50,001 to Rs 5 lakh	5%	5%
   Rs 5,00,001 to Rs 7.5 lakh	10%	20%
   Rs 7,50,001 to Rs 10 lakh	15%
   Rs 10,00,001 to Rs 12.5 lakh	20%	30%
   Rs 12,50,001 to Rs 15 lakh	25%
   Over Rs. 15 lakh	30%

2. Income Tax Slab Rate for FY 2021-2022 

   The Income Tax slab rate helps you decide whether your income is taxable or not. The finance minister has introduced many changes in the current tax slab rate for the financial year 2021-2022. 

   These are:

   Total Income	Income Tax Rate
   Up to ₹ 2,50,000	NIL
   ₹ 2,50,001 - ₹ 5,00,000	5%
   ₹ 5,00,001 - ₹ 7,50,000	10%
   ₹ 7,50,001 - ₹ 10,00,000	15%
   ₹ 10,00,001 - ₹ 12,50,000	20%
   ₹ 12,50,001 - ₹ 15,00,000	25%
   Above ₹ 15,00,000	30%

3. Income Tax Slab Rates for the FY 2020-2021 

   Income Tax Slab	Income Tax Slab Rates for FY 2020-21 (New Regime Applicable for HUF and all Individuals)
   ₹0.0 – ₹2.5 lakh	NIL
   ₹2.5 lakh – ₹3.00 lakh	5% (tax rebate u/s 87a is available)
   ₹3.00 lakh – ₹5.00 lakh
   ₹5.00 lakh – ₹7.5 lakh	10%
   ₹7.5 lakh – ₹10.00 lakh	15%
   ₹10.00 lakh – ₹12.50 lakh	20%
   ₹12.5 lakh – ₹15.00 lakh	25%
   > ₹15.00 lakh	30%

Key Comparisons

Here are the main points regarding the changes in income tax rates in India over the past three financial years:

1. Financial year 2020:

   • There were several tax slabs for different income brackets.

   • The maximum tax rate was 30% for individuals earning more than Rs. 10 lakhs per year.

2. Financial year 2021:

   • There were no changes to the tax rates.

   • The government introduced a new tax regime with lower tax rates for individuals who were willing to give up certain deductions and exemptions.

3. Financial year 2022:

   • The tax rates remained the same as the previous year.

   • The government increased the limit for tax exemption for senior citizens above 75 years of age.

Overall:

• The changes in income tax rates over the past three years reflect the government's efforts to simplify the tax system.

• The changes were also aimed at providing relief to certain groups of taxpayers, such as senior citizens.

Wrapping It Up! 

The income tax slab rates in India have undergone significant changes over the past few years. By introducing recent changes with the Income Tax slabs for FY 2023-24, the government is trying to simplify overall tax system for all individuals and businesses. 

These changes have brought a huge relief to taxpayers, especially salaried individuals. But to take the highest advantage of FY 2023-24 slabs, all individuals must stay updated and comply with tax laws.

FAQ's