Income Tax Slabs

The income tax slabs are ranges of income that determine how much tax you need to pay. The tax rates are determined as per your income level, where people who are earning higher incomes will pay higher taxes. Making it a fair system for all taxpayers. The income tax slabs and rates are revised every year by the Government of India during the annual Union Budget presentation.

Checking your income tax slabs is important as it makes tax calculations more accurate and efficient. Helping you pay the correct percentage of tax that is required for your income level so you can better plan your finances for the year. It also helps you to choose the right tax regime, using the exemptions and deductions to your advantage. There are two income tax slabs provided based on the tax regime you choose. Given below are details of the income tax slabs.

Under the new tax regime for the FY 2023- 24 (AY 2024-25) the tax rates applicable ranges from 5% to 30% with tax rebates under Section 87A for income of up to ₹7,00,000.

Income Tax Slab Rates

Income tax slab rates are the rates set by the government for different income slab levels. There are currently two different income tax slab rates based on the different tax regimes; old tax regime and new tax regime.

The old tax regime offers more deductions and exemptions, which increases the income threshold before the taxes apply and potentially lowering the amount of tax that you need to pay.

On the other hand, the new tax regime offers lower tax rates but lesser deductions and exemptions. This makes tax filing simpler but may lead to higher taxes for certain income levels. Here are the income tax slabs for the old and new tax regimes.

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Income Tax Slabs under New Tax Regime

There is a general income tax slab under the new tax regime that will be applicable to taxpayers of all age groups, unlike the old tax regime. Here are the income tax slabs under the new tax regime for the FY 2023-24:

Income Tax Slabs Income Tax Rates
Up to ₹3,00,000 Nil
₹3,00,001 - ₹6,00,000 5% (Tax rebate Under Section 87A)
₹6,00,001 - ₹9,00,000 10% (Tax rebate Under Section 87A up to ₹7,00,000.
₹9,00,001 - ₹12,00,000 15%
₹12,00,001 - ₹15,00,000 20%
Above ₹15,00,000 30%

Income Tax Slabs under Old Regime

The old tax regime offers different tax slabs for three different categories based on the age of the investors; Tax slabs for individuals below 60 years and HUFs, for senior citizens between 60 - 80 years and super senior citizens above the age of 80. The tables are given below:

Income Tax Slab for Individuals Below 60 Years & HUF

Income Tax Slabs Income Tax Rates
Up to ₹2,50,000 Nil
₹2,50,001 - ₹3,00,000 5% (Tax rebate Under Section 87A)
₹3,00,001 - ₹5,00,000 5% (Tax rebate Under Section 87A up to ₹5,00,000)
₹5,00,001 - ₹10,00,000 20%
Above ₹10,00,000 30%

Income Tax Slab for Senior Citizens (60 to 80 Years)

Income Tax Slabs Income Tax Rates
Up to ₹2,50,000 Nil
₹2,50,001 - ₹3,00,000 Nil
₹3,00,001 - ₹5,00,000 5% (Tax rebate Under Section 87A up to ₹5,00,000)
₹5,00,001 - ₹10,00,000 20%
Above ₹10,00,000 30%

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Income Tax Slabs for Individuals Above 80 Years

Check income tax slabs for super senior citizens from the table below:

Income Tax Slabs Income Tax Rates
Up to ₹2,50,000 Nil
₹2,50,001 - ₹3,00,000 Nil
₹3,00,001 - ₹5,00,000 Nil
₹5,00,001 - ₹10,00,000 20%
Above ₹10,00,000 30%

Difference Between Current & Previous Year for New Tax Regime

The new tax regime offers lower tax rates and fewer deductions. There are also some differences between the current and previous rates of the new tax regime. These are given in the table below:

Income Tax Slab Previous New Tax regime FY 2022-23 (AY 2023-24) Current New Tax Regime FY 2023-24 (AY 2024-25)
₹2,50,000 Nil Nil
₹2,50,000 - ₹3,00,000 5% Nil
₹3,00,000 - ₹5,00,000 5% 5%
₹5,00,000 - ₹6,00,000 10% 5%
₹6,00,000 - ₹7,50,000 10% 10%

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Income Tax-Slabs For Domestic Companies

Companies operating in India are required to pay the Income Tax as per its profits and not as per income tax slabs. Furthermore, the tax rate of the company is determined by the company’s total income and any tax benefits it qualifies for.

Here are the applicable rates for domestic companies.

Components Old Tax Regime New Tax Regime
A company that opts for Section 115BAB, which is not covered under Sections 115BA or 115BAA,is registered on or after October 1st, 2019, and has commenced manufacturing on or before March 31, 2023. Nil 15%
Company that opts for Section 115BAA , where the total income has been calculated without claiming specified deductions, exemptions, incentives, and additional depreciation. Nil 22%
If the Company opts for section 115BA registered on/after March 1, 2016, and is in the manufacturing industry of any article or thing and does not claim any deductions as specified in the section. Nil 25%
If the company’s turnover or gross receipt is less than ₹400 crores in the previous year. 25% 25%
For other domestic companies 30% 30%

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Income Tax Rate For Partnership Firm or LLP

The income tax rate for partnership firms or LLPs is set at 30% as per both the old and new regime.

Deductions & Exemptions under New Tax Regime

The new tax regime introduced offers you lower tax rates but limited deductions and exemptions as compared to the old tax regime. However, there are still some deductions that are available if you opt for the new tax regime. These include the following:

  • Contributions or investments made to notified pension schemes under Section 80CCD(2) of the Income Tax Act.
  • Allowance for expenses incurred for commuting to work.
  • Regular depreciation of assets excluding additional assets as per Section 32 of the Income Tax Act.
  • Deduction of employment of new employees under Section 80JJAA.
  • Allowance for travel expenses due to employment or transfer.
  • Allowance to cover transportation costs for persons with disabilities.

Current Surcharge Rates for Different Taxpayers

Surcharge is an additional tax levied on top of the existing and applicable tax rate. It is usually imposed on taxpayers with an income that exceeds a certain threshold. It is imposed to ensure that high earning individuals and entities must contribute more to the government’s revenue. The rates will vary as per the income levels and can increase the overall tax payable.

Another additional charge imposed by the government is the Cess, which is added to the tax to raise funds for specific purposes like education, health or building infrastructure. However, unlike a surcharge, cess is applicable to all taxpayers.

Here are the different surcharges and cess applicable for different taxpayers:

Current Surcharge Rates for Individuals & HUFs

Income Tax Slab Rate applicable
Above ₹50 lakhs - less than ₹1 Crore 10%
Above ₹1 Crore - less than ₹2 Crore 15%
Above ₹2 Crore - less than ₹5 Crore 25%
Above ₹5 Crore 37%
Health and Education Cess 4%

Please note: Surcharge rates of 25% or 37% do not apply to income from dividends and capital gains taxable under Sections 111A (Short Term Capital Gains on Shares), 112A (Long Term Capital Gains on Shares), and 115AD (Tax on Foreign Institutional Investors' income). For these types of income, the maximum surcharge rate on the tax payable is limited to 15%.

Current Surcharge Rates for Association of Persons

Surcharge Rate 15%

Current Surcharge Rates for Companies:

Total Income Rate applicable
Above ₹1 Crore 7%
Above ₹10 Crore 12%
For domestic company that opted Section 115BAA and 115BAB 10%
Health and Education Cess 4%

Current Surcharge Rates for Partnership Firms & LLPs

Surcharge for income above ₹1 Crore 12%
Health and Education Cess 4%

Old Tax Regime Vs New Tax Regime with Example

For a better understanding of how the old tax regime and new tax regime works, here is an example. Old Tax Regime Vs New Tax Regime comparison can help you in your decision when choosing between the old or new tax regime.

Let's imagine that Saranya has a total income of 7,00,000 per annum.

In the old tax regime, the income tax calculations will be as follows:

  • For income up to ₹2,50,000 tax applicable is 0%.
  • For income of ₹2,50,001 to ₹5,00,000 tax is 5% of ₹2,50,000 = ₹12,500.
  • For income of ₹5,00,001 to ₹8,00,000 tax is 20% of 3,00,000 = ₹60,000.

Therefore, the total tax is ₹12,500 + ₹60,000 = ₹72,000.
With the addition of Health and Education Cess which is 4% of ₹72,000 = ₹2,900.

The total tax payable will be ₹72,000 + ₹2,900 = ₹75,400.

However, in the new tax regime, the calculations will be:

  • For income up to ₹3,00,000 tax applicable is 0%.
  • For income of ₹3,00,001 to ₹6,00,000 tax is 5% of ₹3,00,000 = ₹15,000.
  • For income of ₹6,00,001 to ₹8,00,000 tax is 10% of 2,00,000 = ₹20,000.

Therefore, the tax is ₹15,000 + ₹20,000 = ₹35,000.
WIth the additional Health and Education Cess, 4% of ₹35,000 = ₹1,400.
The total tax payable is ₹35,000 + ₹1,400 = ₹36,400.

Tips to Choose New Tax Regime or Old Tax Regime

Choosing the Old Tax Regime or the New Tax Regime will depend on your individual preferences and financial situations. You can choose either the old or new tax slabs based on the following points:

  • You can choose the old tax regime if you wish to take advantage of various deductions and exemptions, have significant investments in sections like 80C (LIC, PPF, etc.), 80D (medical insurance), 24(b) (home loan interest), and others. As it may lower taxable income and tax liability. This regime best suits taxpayers who prefer to maximise their tax savings through strategic investments and expenditures.
  • You can opt for the new tax regime if you prefer a simplified tax structure with lower tax rates and minimal paperwork. Especially, if you have fewer deductions or exemptions to claim, this regime might be more beneficial as it offers reduced tax rates across income slabs.

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Frequently Asked Questions

Income tax slabs are determined based on income levels, economic conditions, social equity, government policies, and annual budget allocations.

Income tax slabs ensure a progressive and just tax system where higher incomes are taxed at higher rates to promote fairness and revenue generation.

The current income tax slabs are given in the table above. Please refer to the table for a clear understanding of the income tax slabs and rates.

Income tax slabs determine your tax rate based on your income level, impacting how much tax you pay each financial year.

Yes, income tax slabs can change as per the government policies, economic conditions and the government’s budget allocation.

Yes, there are certain deductions and exemptions available within income tax slabs.

Your applicable income tax slab depends on your total annual income, which determines your tax amount payable as per the tax regime of your choice.

You cannot change income tax slabs personally; they are determined by your annual income.

If you fall into a higher income tax slab, you may be subject to a surcharge, which increases your overall tax liability.

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