Income tax slabs for FY 2024-25: As the new fiscal year began on April 1, salaried individuals must pick between the new and old tax regimes. With the new income tax regime becoming the default option starting in FY 2023-24, taxpayers must understand the applicable income tax rates and slabs.
If you're having trouble picking between the two regimes, these guidelines can help you make the proper decision.
New vs. Old Tax Regime
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The primary distinction between the old and new income tax regimes is how they handle exclusions and deductions. Under the previous regime, taxpayers may claim significant deductions, including those listed in Sections 80C, 80D, and 80TTA of the Income Tax Act.
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Individuals who choose the new regime, on the other hand, will benefit from lower tax rates depending on their income band, but there will be fewer deductions.
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Since no changes were announced in Finance Minister Nirmala Sitharaman's Interim Budget on February 1, 2024, the standard deduction for the fiscal year 2024-2025 remained unaltered. The amount remains at ₹50,000 for both the previous and new income tax regimes.
The new tax regime's income tax slabs are constructed as follows:
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There would be no tax on income up to ₹3 lakh.
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Income between ₹3-6 lakh will be taxed at 5%, plus a tax credit under Section 87A.
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Income between ₹6-9 lakh will incur a 10% tax rate, with a tax credit under Section 87A applicable for income up to ₹7 lakh.
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For income between ₹9-12 lakh, the tax rate is 15%.
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Income between ₹12-15 lakh will be taxed at 20%.
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Income over ₹15 lakh will be taxed at 30%.
4) Under the previous tax regime, the income tax slabs were constituted as follows:
Income up to ₹2.5 lakh is exempt from tax.
Income from ₹2.5 lakh to ₹5 lakh is taxed at 5%.
Personal income between ₹5 lakh and ₹10 lakh is taxed at 20%.
Personal income above ₹10 lakh is taxed at 30%.
5) Since the new income tax system is applied automatically, it is critical for employed individuals to notify their employer at the start of the fiscal year about their desired tax regime. If you neglect to notify your employer, you can still transfer between regimes when completing your income tax return, as long as you do it by the due date.
