INCOME TAX SLAB RATE FOR INDIVIDUALS

SLAB RATES- INDIVIDUALS

1. What is an Income Tax Slab?

In India, the Income Tax applies to Individuals based on a slab system, where different tax rates are assigned to different income ranges and different ages. As the person’s income increases, the tax rate also increases. This type of system is known as progressive tax system.

2. Income Tax Slab for F.Y 2024-25 (A.Y 2025-26) Under New Regime

The budget 2024 has introduced significant changes to the tax rates under new regime, which will be applicable from A.Y 2025-26. Taxpayers can now avail higher standard deduction, family pension deductions and so on. The new slab rate under new regime is as follows: -

NOTE: -

Tax rebate upto Rs. 25,000 is applicable if the total income does not exceed Rs. 7,00,000. However, this rebate is not applicable to NRI.

3. Income Tax Slab for F.Y. 2024-24 (A.Y 2025-26) Under Old Regime

Under old regime there were no changes in the 2024 budget. The slab rate under old regime is as follows.

Individuals below 60 Years.

Individuals aged 60 to 80 years.

Individual Above 80 Years

4. Surcharges?

The additional charge levied on higher income earning individuals over and above tax is known as surcharges. It is levied on tax payable, not on income generated. Basically, it is tax on tax. The Surcharge under new & old regime is as follows: -

NOTE: -

From A.Y 2025-26 the surcharge under new regime is capped at 25% as compared to 37% under old regime.

For Dividends and Capital Gain taxable under 111A, 112A and 115D highest rate of surcharge will be 15%.

5. Cess for Individuals?

A 4% Health & Education cess is applicable on the total tax payable after including surcharge.

6. Exemptions & Deduction not claimable under new tax regime?

The following are some major deduction & exemptions you cannot claim under new regime: -

• Deduction under 80TTA/ TTB.
• Professional tax and entertainment allowance on salaries.
• Leave travel allowance (LTA).
• Allowances to MP/ MLAs.
• House rent allowance (HRA).
• Children education allowance.
• Other special allowances (Section 10(14)).
• Additional depreciation under Section 32(1)(iia).
• Various deductions for donations or expenditure on scientific research contained in Section 35(2AA) or 35(1)(ii) or (iia) or (iii).
• Deduction under Section 35AD or section 35CCC.
• Interest on housing loan on self-occupied property or vacant property.
• Chapter VI-A deductions except deductions under Section 80CCD(2) and Section 80JJAA.
• Employee’s contribution to NPS.
• Donation to Political party/ Trust etc.

7. Exemptions & deductions available under new tax regime?

• Transport allowance in case of a specially- abled person.
• Conveyance allowance received to meet the conveyance incurred as a part of the employment.
• Perquisites for official purposes.
• Exemption on voluntary retirement scheme 10(10C), gratuity under 10(10) and leave encashment under 10(10AA).
• Interest on home loan on let-out-property.
• Gift upto Rs. 50,000.
• Deduction of employer contribution to NPS under 80CCD(2).
• Deduction for additional employee cost under Section 80JJAA.
• Standard deduction of Rs. 75,000 for salaries employees.
• Deduction under family pension under 57(iia) upto Rs. 25,000.
• Deduction of amount paid or deposited in the Agniveer corpus fund under Section 80CCH(2).
• The deduction on employers contribution to pension scheme as per Section 80CCD(2) has been increased from 10% of salary to 14% of salary in Budget 2024.

8. Old tax regime vs New tax regime which is better?

The new tax regime is beneficial for middle class taxpayers who have a taxable income up to Rs. 15 lakhs. The old regime is better of high-income earners.

The new income tax regime is beneficial for those people who make low investment. As the new regime offer six income tax slabs, anyone paying taxes without claiming tax deductions can benefit from paying a lower rate of tax under the new tax regime.

EXAMPLE: -

Mr. Anil Kumar aged 30 years has Income from Salary Rs. 15 lakhs, income from short term capital gain Rs. 1 lakhs and interest from savings bank Rs. 12,000. He invested Rs. 1,50,000 in 80C and Rs. 50,000 in NPS (employee contribution same as employee contribution). What is his tax liability under new regime as well as old regime?

Tax liability under old regime

Tax liability under new scheme

CONCLUSION: -

Since his tax liability is less in new regime so he should for tax under new regime as it would lead to saving in Rs. 57,920.

9. When can I opt for old vs new regime?