Income Tax Slabs for FY 2024-25: New & Old Regime Tax Rates
The income tax in India is a direct, progressive tax levied on individual incomes. Progressive taxation means that the tax rate increases with rising income, ensuring fairness by assigning higher tax rates to higher income brackets. The Income Tax Act of 1961 prescribes two distinct tax regimes: the Old Regime, which provides for various deductions and exemptions, and the New Regime, which offers reduced tax rates but limits deductions. In Budget 2024, significant changes were made to the New Regime’s tax slabs, making it more attractive for certain taxpayers.
- Income Tax Slabs under both regimes
- Comparison of tax rates for FY 2024-25
- Calculation of income tax under each regime
- Surcharge details and exemptions
- Consequences of not filing an Income Tax Return (ITR) within the due date
Revised Income Tax Slabs under the New Regime for FY 2024-25
The New Regime’s tax slabs were updated in Budget 2024 to provide tax relief. The tax slabs for the Financial Year (FY) 2024-25 are as follows:
- Up to ₹3,00,000: Nil
- ₹3,00,001 to ₹7,00,000: 5%
- ₹7,00,001 to ₹10,00,000: 10%
- ₹10,00,001 to ₹12,00,000: 15%
- ₹12,00,001 to ₹15,00,000: 20%
- Above ₹15,00,000: 30%
In addition to these revised slabs, the standard deduction under the New Regime has increased from ₹50,000 to ₹75,000, providing further tax savings. Moreover, the family pension deduction has also increased from ₹15,000 to ₹25,000.
New Regime Rebate: For FY 2024-25, a rebate up to ₹25,000 is available if the total income does not exceed ₹7,00,000 (except for NRIs).
Income Tax Slabs under the Old Regime for FY 2024-25
The Old Regime allows taxpayers to claim various exemptions and deductions such as HRA, 80C, and 80D deductions, making it beneficial for those with eligible expenses. Here are the slab rates under the Old Regime:
- Up to ₹2,50,000: Nil (for individuals and HUFs below 60 years)
- ₹2,50,001 to ₹5,00,000: 5%
- ₹5,00,001 to ₹10,00,000: 20%
- Above ₹10,00,000: 30%
Note:
- For senior citizens aged above 60 but below 80 years, the exemption limit is ₹3,00,000.
- For super senior citizens aged above 80 years, the exemption limit is ₹5,00,000.
Comparison of Tax Rates: New Regime vs. Old Regime
The main difference between the New and Old Regimes lies in the availability of deductions and exemptions. The New Regime has reduced tax rates but excludes deductions, while the Old Regime allows numerous exemptions and deductions, making it more beneficial for taxpayers with high eligible expenditures. Here’s a comparison of tax slabs:
| Income Bracket | New Regime Rate | Old Regime Rate |
|---|---|---|
| Up to ₹3,00,000 | Nil | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% | 5% |
| ₹5,00,001 – ₹7,00,000 | 5% | 20% |
| ₹7,00,001 – ₹10,00,000 | 10% | 20% |
| ₹10,00,001 – ₹12,00,000 | 15% | 30% |
| ₹12,00,001 – ₹15,00,000 | 20% | 30% |
| Above ₹15,00,000 | 30% | 30% |
Standard Deduction: Under the New Regime, the standard deduction has increased from ₹50,000 to ₹75,000, while under the Old Regime, it remains ₹50,000.
How to Calculate Income Tax under Each Regime
To calculate income tax, it is essential to assess the total income and choose the regime that offers the best tax benefits.
- New Regime:
- Calculate income according to the applicable slab rates without claiming deductions, except for the standard deduction.
- Apply the appropriate slab rate to each segment of income as per the revised slabs.
- Old Regime:
- Calculate the gross total income.
- Deduct eligible exemptions and deductions (e.g., 80C for investments, 80D for medical insurance).
- Apply the slab rates to the remaining income after deductions.
Surcharge and Cess
For both tax regimes, a surcharge is added if income exceeds certain limits:
- 10% on income between ₹50 lakh and ₹1 crore
- 15% on income between ₹1 crore and ₹2 crore
- 25% on income between ₹2 crore and ₹5 crore
- 37% on income above ₹5 crore
Additionally, a cess of 4% is applicable on the total tax and surcharge, intended for health and education.
Consequences of Not Filing ITR within the Due Date
Failing to file the Income Tax Return (ITR) within the due date can lead to penalties and other consequences, including:
- Late Filing Fee: A fee of ₹5,000 is charged if the return is filed after the due date (but before December 31). This fee is reduced to ₹1,000 if the total income is below ₹5 lakh.
- Loss of Interest: Taxpayers lose out on the interest component of any refund due from the income tax department if the return is delayed.
- Prosecution: In extreme cases, especially if tax dues exceed ₹10,000, a taxpayer may face prosecution, leading to imprisonment.
- Inability to Carry Forward Losses: Losses (except for house property losses) cannot be carried forward to future years if the return is filed after the due date.
Conclusion
Choosing the right tax regime can help maximize savings. The New Regime, with its revised tax slabs and higher standard deduction, is advantageous for those who prefer simplicity or do not have significant deductions. The Old Regime, however, remains beneficial for taxpayers with high eligible deductions, especially those with large investments in tax-saving instruments. The choice between these regimes depends on personal financial circumstances, and consulting a tax professional can provide clarity for individual situations.
