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The Union Budget 2024, presented by India’s Finance Minister, Nirmala Sitharaman on February 1, 2024, has ushered in significant alterations to the income tax structure. This article delves into the intricacies of the newly introduced income tax slabs and rates for both the new and old tax regimes, shedding light on the implications for diverse categories of taxpayers.
Changes in Income Tax Slabs for FY 2023-24:
The new tax regime, initially introduced in Budget 2020, witnessed a reduction in the number of income tax slabs from 6 to 5 for regular individuals, senior citizens, and Hindu Undivided Families (HUF). Additionally, the basic exemption limit under the new tax regime for FY 2023-24 has been raised to Rs. 3 lakh from the previous Rs. 2.5 lakh. Conversely, the tax slabs and rates for the old tax regime remain unaltered for the Assessment Year 2024-25, mirroring those of the income tax slab for FY 2022-23 (AY 2023-24).
Income Tax Slabs for Individuals and HUF in FY 2023-24:
The updated income tax slabs for FY 2023-24 (AY 2023-24) for individuals and HUF under both the new and old tax regimes are as follows:
| Annual Taxable Income | New Tax Regime | Old Tax Regime |
|---|---|---|
| Up to Rs. 2.5 lakh | Exempt | Exempt |
| Rs. 2.5 lakh to Rs. 3 lakh | Exempt | 5% |
| Rs. 3 lakh to Rs. 5 lakh | 5% | 5% |
| Rs. 5 lakh to Rs. 6 lakh | 5% | 20% |
| Rs. 6 lakh to Rs. 9 lakh | 10% | 20% |
| Rs. 9 lakh to Rs. 10 lakh | 15% | 20% |
| Rs. 10 lakh to Rs. 12 lakh | 15% | 30% |
| Rs. 12 lakh to Rs. 15 lakh | 20% | 30% |
| Above Rs. 15 lakh | 30% | 30% |
Notably, opting for the new tax regime entails foregoing several common deductions and exemptions, including those related to life insurance benefits.
Income Tax Slab for Super Senior Citizens in AY 2024-25 (FY 2023-24):
Super senior citizens, aged 80 years and above, receive a higher exemption limit of Rs. 5 lakh under the old tax regime, a benefit not extended to those opting for the new tax regime. Their tax liabilities are as follows:
| Annual Taxable Income | New Tax Regime | Old Tax Regime |
|---|---|---|
| Up to Rs. 3 lakh | Exempt | Exempt |
| Rs. 3 lakh to Rs. 5 lakh | 5% | Exempt |
| Rs. 5 lakh to Rs. 6 lakh | 5% | 20% |
| Rs. 6 lakh to Rs. 9 lakh | 10% | 20% |
| Rs. 9 lakh to Rs. 10 lakh | 15% | 20% |
| Rs. 10 lakh to Rs. 12 lakh | 15% | 30% |
| Rs. 12 lakh to Rs. 15 lakh | 20% | 30% |
| Above Rs. 15 lakh | 30% | 30% |
While super senior citizens can choose between the old and new tax regimes, the former provides a higher exemption limit of Rs. 5 lakh.
Income Tax Slabs & Rates for Senior Citizens in AY 2024-25 (FY 2023-24):
For taxpayers aged between 60 and less than 80 years, the income tax slabs for FY 2023-24 under both the old and new tax regimes are as follows:
| Annual Taxable Income | New Tax Regime | Old Tax Regime |
|---|---|---|
| Up to Rs. 3 lakh | Exempt | Exempt |
| Rs. 3 lakh to Rs. 5 lakh | 5% | 5% |
| Rs. 5 lakh to Rs. 6 lakh | 5% | 20% |
| Rs. 6 lakh to Rs. 9 lakh | 10% | 20% |
| Rs. 9 lakh to Rs. 10 lakh | 15% | 20% |
| Rs. 10 lakh to Rs. 12 lakh | 15% | 30% |
| Rs. 12 lakh to Rs. 15 lakh | 20% | 30% |
| Above Rs. 15 lakh | 30% | 30% |
Read Also: Budget 2024 Highlights In Hindi PDF
Although the basic exemption limit for senior citizens remains at Rs. 3 lakh under both regimes, those choosing the new tax regime will experience lower income tax slab rates, accompanied by the sacrifice of certain common tax-saving investments.
Income Tax Slab for AOP, BOI & AJP in AY 2024-25:
Taxpayers falling under categories such as Association of Persons (AOP), Body of Individuals (BOI), and Artificial Judicial Person (AJP) are not eligible for the new tax regime. Consequently, their income tax slabs and rates for AY 2024-25 align with the old tax regime slabs for AY 2023-24:
| Net Taxable Income | Income Tax Rate FY 2023-24 |
|---|---|
| Up to Rs. 2.5 lakh | Exempt |
| Rs. 2.5 lakh to Rs. 5 lakh | 5% of income exceeding Rs. 2.5 lakh |
| Rs. 5 lakh to Rs. 10 lakh | Rs. 12,500 + 20% of income exceeding Rs. 5 lakh |
| Over Rs. 10 lakh | Rs. 1,12,500 + 30% of income exceeding Rs. 10 lakh |
Surcharge on Income Tax for FY 23-24:
The Budget 2023 announcement includes a reduction in the highest surcharge under the new tax regime applicable to income tax from 37% in AY 23-24 to 25% in AY 24-25. The surcharge rates for both regimes are as follows:
| Income | Surcharge Rate in Old Tax Regime | Surcharge Rate in New Tax Regime |
|---|---|---|
| Less than Rs. 50 lakh | NIL | NIL |
| Rs. 50 lakh – Rs. 1 crore |
| 10% | 10% |
| Rs. 1 crore – Rs. 2 crore | 15% | 15% |
| Rs. 2 crore – Rs. 5 crore | 25% | 25% |
| Rs. 5 crore – Rs. 10 crore | 37% | 25% |
| More than Rs. 10 crore | 37% | 25% |
Conclusion:
In conclusion, the Union Budget 2023 has brought about substantial changes in the income tax landscape, impacting various categories of taxpayers. As individuals, senior citizens, and other entities navigate the choices between the new and old tax regimes, understanding the nuances of the updated income tax slabs and rates becomes crucial for effective financial planning.