The Union Budget is announced by the Government of India in the month of February every year. Apart from providing report of incomes and expenditures of the Government, announcing future projects and allocating funds to various sectors, the budget statement also talks about the changes in tax laws. Here, we will see the income tax rates applicable to individuals for the assessment years 2023-24 and 2024-25, under both old and new tax regime.
Previous Year and Assessment Year
- Previous Year (PY) is the financial year in which the income is earned.
- Assessment Year (AY) is the financial year in which the income tax return is filed for the income earned in the previous year.
Old and New Tax regime
The new tax regime was introduced by the Finance Act, 2020 as an alternative tax structure. The new regime offered lower income tax rates and more tax slabs, but without the option to avail any tax exemptions and deduction available under the earlier tax structure. The old regime was made the default option, while taxpayers could opt for new tax regime.
As announced by the Finance Minister during the presentation of Union Budget 2023-24, the new income tax regime has been made the default tax regime, however, citizens will continue to have the option to avail the benefit of the old tax regime.
Further, for those person having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime. For those not having income under the head “profit and gains of business or profession”, option for old regime may be exercised in each year.
Income tax rates for individuals (old tax regime)
| Income | Tax rate (AY 2023-24) | Tax rate (AY 2024-25) |
| Individuals up to the age of 60 years | ||
| Up to ₹2.5 Lakh | Nil | Nil |
| ₹2.5 Lakh to ₹5 Lakh | 5% | 5% |
| ₹5 Lakh to ₹10 Lakh | 20% | 20% |
| Above ₹10 Lakh | 30% | 30% |
| Individuals more than 60 years of age | ||
| Up to ₹3 Lakh | Nil | Nil |
| ₹3 Lakh to ₹5 Lakh | 5% | 5% |
| ₹5 Lakh to ₹10 Lakh | 20% | 20% |
| Above ₹10 Lakh | 30% | 30% |
| Individuals more than 80 years of age | ||
| Up to ₹5 Lakh | Nil | Nil |
| ₹5 Lakh to ₹10 Lakh | 20% | 20% |
| Above ₹10 Lakh | 30% | 30% |
Taxpayers can claim standard deduction of ₹50,000 from salary, deduction up to ₹15,000 from family pension, deductions under Chapter VIA, etc.
Further, under section 87A, a rebate of ₹12,500 is available to resident individuals whose total income during the previous year does not exceed ₹5 Lakh. That is, if the taxable income is less than ₹5 Lakh, no tax is payable by the individual.
Income tax rates for individuals (new tax regime)
| Income | Tax rate (AY 2023-24) |
Income | Tax rate (AY 2024-25) |
| Up to ₹2.5 Lakh | Nil | Up to ₹3 Lakh | Nil |
| ₹2.5 Lakh to ₹5 Lakh | 5% | ₹3 Lakh to ₹6 Lakh | 5% |
| ₹5 Lakh to ₹7.5 Lakh | 10% | ₹6 Lakh to ₹9 Lakh | 10% |
| ₹7.5 Lakh to ₹10 Lakh | 15% | ₹9 Lakh to ₹12 Lakh | 15% |
| ₹10 Lakh to ₹12.5 Lakh | 20% | ₹12 Lakh to ₹15 Lakh | 20% |
| ₹12.5 Lakh to ₹15 Lakh | 25% | Above ₹15 Lakh | 30% |
| Above ₹15 Lakh | 30% | ||
| Standard deduction not available. | Taxpayers can claim standard deduction of ₹50,000 from salary and deduction up to ₹15,000 from family pension. | ||
| Under section 87A, a rebate of ₹12,500 is available to resident individuals whose total income during the previous year does not exceed ₹5 Lakh. That is, if the taxable income is less than ₹5 Lakh, no tax is payable by the individual. | Under section 87A, a rebate of ₹25,000 is available to resident individuals whose total income during the previous year does not exceed ₹7 Lakh. That is, if the taxable income is less than ₹7 Lakh, no tax is payable by the individual. | ||
Surcharge (old tax regime)
Surcharge on income tax is applicable as follows –
| Income | Surcharge (AY 2023-24) |
Surcharge (AY 2024-25) |
| ₹50 Lakhs to ₹1 Crore | 10% | 10% |
| ₹1 Crore to ₹2 Crores | 15% | 15% |
| ₹2 Crores to ₹5 Crores | 25% | 25% |
| Exceeding ₹5 Crores | 37% | 37% |
Surcharge (new tax regime)
Surcharge on income tax is applicable as follows –
| Income | Surcharge (AY 2023-24) |
Income | Surcharge (AY 2024-25) |
| ₹50 Lakhs to ₹1 Crore | 10% | ₹50 Lakhs to ₹1 Crore | 10% |
| ₹1 Crore to ₹2 Crores | 15% | ₹1 Crore to ₹2 Crores | 15% |
| ₹2 Crores to ₹5 Crores | 25% | Exceeding ₹2 Crores | 25% |
| Exceeding ₹5 Crores | 37% |
Health and Education Cess
Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.
Total Tax liability
Total Tax Liability = (Income tax as per applicable slab rates) + (Surcharge on Income tax) + (Health and Education cess on Income Tax plus Surcharge)
References
Government of India. (2023, February 01). 'Budget 2023-2024 - Speech of Minister of Finance'. Retrieved from https://incometaxindia.gov.in/budgets%20and%20bills/2023/budget_speech.pdf
Income Tax Department. (n.d.). 'Tax Rates'. Retrieved from https://incometaxindia.gov.in/Tutorials/2%20Tax%20Rates.pdf
Comments
Post a Comment