Post Interim Budget 2024: Income Tax Slabs & Rates for FY 2024-25 

There are no alterations to the income tax slabs for the upcoming fiscal year, 2024-25 (April 1, 2024 - March 31, 2025), as per the interim budget 2024 presented by Finance Minister Nirmala Sitharaman. This implies that individuals will compute their income tax liabilities for the next fiscal year similarly to the current fiscal year, 2023-24 (April 1, 2023 - March 31, 2024).

According to income tax regulations, individuals (without any business income) must select between the new and old tax regimes annually. Consequently, one can opt for the new tax regime for one year and the old one for the following year.

Notably, significant changes were introduced in the new tax regime in Budget 2023. These alterations to the income tax slabs announced in Budget 2023 are applicable for the ongoing fiscal year from April 1, 2023, to March 31, 2024, and are anticipated to remain unaltered for FY 2024-25 (April 1, 2024, to March 31, 2025).

IT Slabs Under The New Tax Regime

Below are the income tax slabs for the financial year 2023-24 (assessment year 2024-25) in the new tax regime. These slabs will remain applicable for the fiscal year 2024-25 as per the interim Budget 2024 proposals:

New Tax Regime 2023-24

4% Cess will be levied on net income tax amount and sSurcharges will be applicable on incomes above Rs 50 lakh.

What Salaried Individuals Gain in the New Tax Regime!

In Budget 2023, significant changes were introduced to the new tax regime for salaried individuals. If you choose the new tax regime for the financial years 2023-24 and/or 2024-25, here are the key tax benefits to note:

a) Reduction of income tax slabs from six to five

b) Increase in basic exemption limit to Rs. 3 lakh from Rs. 2.5 lakh - providing an extra Rs. 50,000 in the new tax regime

c) Zero tax payable for incomes up to Rs. 7 lakh due to the increased rebate under Section 87A

d) Introduction of standard deduction for salaried, pensioners, and family pensioners

e) New tax regime set as the default tax regime

f) Reduction of surcharge on incomes above Rs. 5 crore to 25% from 37%

g) Marginal tax relief for small taxpayers with incomes exceeding Rs. 7 lakh.

Income Tax Slabs in the Old Tax Regime

Budget 2023 retained the existing income tax slabs under the old tax regime without any changes. In this regime, the applicable income tax slabs for individual taxpayers vary based on their age in the relevant financial year. For individuals below 60 years, the basic exemption limit remains at Rs. 2.5 lakh. 

Senior citizens (aged above 60 but below 80) have a basic tax exemption limit of Rs. 3 lakh, while super senior citizens (aged 80 and above) enjoy a limit of Rs. 5 lakh. Below are the income tax slabs for FY 2023-24 (AY 2024-25) in the old tax regime, applicable to individuals of different age groups. These slabs will also be in effect for FY 2024-25 (AY 2025-26).

Current income tax slab (Super senior citizen)

Current income tax slab rates (Senior citizens)

The current income tax slab (Individuals below 60 years)

4% Cess will be levied on net income tax amount and sSurcharges will be applicable on incomes above Rs 50 lakh.

Benefits for Salaried Individuals in the Old Tax Regime

In contrast to the new tax regime, the old tax regime offers salaried individuals several tax exemptions and deductions. These include deductions under Section 80C, 80D, and Section 80TTA, as well as exemptions for House Rent Allowance (HRA) and Leave Travel Allowance (LTA), among others.

It's important to note that the tax rebate under Section 87A is available in the old tax regime for taxable incomes up to Rs 5 lakh.

Choosing the Right Tax Regime

Taxpayers have the option to select between the new and old tax regimes based on their income sources and circumstances. They can switch between these regimes annually or only once, depending on their income sources for the specific year.

Income from Business or Profession

Individuals and Hindu Undivided Families (HUFs) earning income from business or profession can opt for the new tax rates once for a financial year, with the same rates applied in subsequent years. However, they can switch back to the old tax regime only once during their lifetime, until their business or professional income ceases.

Income from Other Sources

For individuals or HUFs without income from business or profession, they have the option to switch regimes annually. Salaried individuals' taxes are deducted by their employers before salary disbursement.

For salaried employees, it's crucial to inform their employers about their preferred tax regime at the beginning of the financial year. For example, if an employee opts for the new tax regime, taxes will be deducted based on the new regime's slab rates.

However, if during the year, the employee realizes that the old tax regime would be more advantageous, they can switch to it when filing their tax returns, even if taxes were withheld based on the new regime by the employer. This flexibility allows taxpayers to choose the regime that best suits their financial circumstances.

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