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Income Tax Slabs FY 2023-24 and AY 2024-25 (New & Old Regime Tax Rates)

What is the Income Tax slab?

When an individual or a business earns in one or many ways, then the individual or business is obliged to share a percentage of the respective earned Income with the government as Income Tax. However, this percentage is not uniform, which makes it more convenient for all classes of taxpayers. The percentage of Tax varies according to various categories, the primary of which is Income, and then the age. The Industry of Income is also an affecting factor when it comes to generating the tax percentage. This categorization and indifference of the Tax percentage according to various factors is known as the Income Tax Slab. Using this, any individual’s or business’ income tax is calculated.

Budget 2023 Update (Revised Slabs for New Tax Regime)

The budget proposed in 2023 by the Finance Minister, Nirmala Sitharaman, has removed a major factor varying the income tax rates for individuals, i.e., age. In the revised slab, the income tax rates have been classified merely according to the Income of the individual, keeping age outside the picture. The proposed regime can be seen as follows:

Income Range	Income Tax Rates
< Rs. 3,00,000	0%
Rs. 3.00,000 – Rs. 6,00,000	5%
Rs. 6,00,000 – Rs. 900,000	10%
Rs. 9,00,000 – Rs. 12,00,000	15%
Rs. 12,00,000 – Rs. 1500,000	20%
> Rs. 15,00,000	30%

Old Tax Regime [FY 2023-24 and AY 2024-25]

The old tax regime was introduced in Budget 2020 and was applicable from the Financial Year 2020-21, which remains effective till the Financial Year 2022-23, making this regime a default option. However, for the successive Assessment Year (2024-25), the taxpayer is obliged to exercise the decision as per section 115BAC (6) to retain the advantage of the old tax regime. Consequently, a salaried individual has the option to choose from the old tax regime and, therefore, continue to avail tax deductions & tax exemptions. Otherwise, one can opt for the new income tax regime, which is concessional, but cannot avail of any common tax deductions or tax exemptions. The new tax regime allows the individual to forego 70 deductions and tax exemptions, including HRA tax exemption, deduction less than Rs 1.5 lakh (under Section 80C), LTA tax exemption, and so on.

Individuals

The old tax regime was based on two primary factors: Income and age. Apart from the Income of the individual, his or her age would also be a determining factor in calculating the Tax for that individual. The age would be categorized in the following ways:

1. Individual residents below 60 years of age
2. Individual residents between 60-80 years of age
3. Individual residents of 80 or above 80 years of age

1. Residents below 60 years of age

Net Income Range	Rate of Income Tax
	Assessment Year (2023-2024)	Assessment Year (2024-2025)
Up to Rs. 2,50,000	–	–
Rs. 2,50,000 to Rs. 5,00,000	5%	5%
Rs. 5,00,000 to Rs. 10,00,000	20%	20%
Above Rs. 10,00,000	30%	30%

• Residents between 60 and 80 years of age

Net Income Range	Rate of Income Tax
	Assessment Year (2023-2024)	Assessment Year (2024-2025)
Up to Rs. 3,00,000	–	–
Rs. 3,00,000 to Rs. 5,00,000	5%	5%
Rs. 5,00,000 to Rs. 10,00,000	20%	20%
Above Rs. 10,00,000	30%	30%

• Resident 80 or above 80 years of age

Net Income Range	Rate of Income Tax
	Assessment Year (2023-2024)	Assessment Year (2024-2025)
Up to Rs. 5,00,000	–	–
Rs. 5,00,000 to Rs. 10,00,000	20%	20%
Above Rs. 10,00,000	30%	30%

Notes:

1. Income (under sections 111A, 112, 112A and 115AD). Therefore, the surcharge rate on such Income shall not exceed 15%.
2. The surcharge rate on dividend income shall not exceed 15%.
3. However, the surcharge rate for AOP (with all members as a company shall not be more than 15%.

Marginal relief:

1. The surcharge rate amounts to 0 if the gross income of a ‘specified fund’ as referred to in section 10(4D) involves any sort of Income in respect of securities as given under section 115AD(1)(a). [For the assessment year 2024-25]
2. If gross income exceeds INR 50 lakhs but is less than INR 1 Crore, the income tax and surcharge amount shall be less than the total amount (payable) as income tax on gross Income of INR 50 Lakh by an amount higher than Rs 50 Lakhs.
3. In case lies between INR 1 Crore to INR 2 crore, marginal relief shall be available (from surcharge) in a manner that the Income Tax amount and surcharge amount shall not exceed the total payable amount as income-tax on gross Income of INR 1 crore by more the amount higher than INR 1 Crore.
4. In case lies between INR 2 Crore to INR 5 crore, marginal relief shall be available (from surcharge) in a manner that the Income Tax amount and surcharge amount shall not exceed the total payable amount as income-tax on gross Income of INR 2 crore by more the amount higher than INR 2 Crore.
5. When the net Income is higher than INR 5 crore, marginal relief shall be available (from surcharge) in a manner that the Income Tax amount and surcharge amount shall not exceed the total payable amount as income-tax on the gross income of INR 5 crore by more the amount higher than INR 5 Crore.

Health and Education Cess :

1. Health and Education Cess are levied at 4% on the amount of income tax (plus surcharge).
2. The Health and Education Cess is 0 if the gross income of a ‘specified fund’ (section 10(4D)) involves any income as securities (as per section 115AD(1)(a)). (For the assessment year 2024-25)

Alternate Minimum Tax (AMT):

1. For a non-corporate taxpayer on which the provisions of Alternate Minimum Tax (AMT) are applicable, the tax payable amount should not be less than 18.5% (+HEC) of “adjusted total income” calculated according to section 115JC.
2. For a unit built in an IFSC which generates its Income only in convertible foreign exchange, the AMT rate should be at 9% rather than the current rate of 18.50%.
3. The rate of AMT should be 15% in place of the current rate of 18.5% for a co-operative society.
4. Any resident individual whose gross Income is less than INR 5,00,000 is eligible to avail rebate (section 87A). This is deductible from income tax but before computing education cess.

Hindu Undivided Family (Including AOP, BOI, and Artificial Juridical Person)

Net Income Range	Rate of Income Tax
	Assessment Year (2023-2024)	Assessment Year (2024-2025)
Up to Rs. 2,50,000	–	–
Rs. 2,50,000 to Rs. 5,00,000	5%	5%
Rs. 5,00,000 to Rs. 10,00,000	20%	20%
Above Rs. 10,00,000	30%	30%

Surcharge rates

Surcharge rates are applicable on the sum of Income tax if the gross Income of an assessee crosses the following limit:

Net Income Range (INR)	Rate of Income Tax
	Assessment Year (2023-2024)	Assessment Year (2024-2025)
50 lacs to 1 crore	10%	10%
1 Crore to 2 Crore	15%	15%
2 Crore to 5 Crore	25%	25%
Above 5 crores	37%	37%

Marginal Relief:

1. In the case of gross Income falling between INR 50 lakhs and INR 1 Crore, the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 50 Lakh by the amount higher than INR 50 Lakhs.
2. In a case of gross Income falling between INR 1 Crores and INR 2 Crores, the available marginal relief should be calculated in such a way that the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 1 Crore by the amount higher than INR 1 Crore.
3. In a case of gross Income falling between INR 2 Crores and INR 5 Crores, the available marginal relief should be calculated in such a way that the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 2 Crore by the amount higher than INR 2 Crore.
4. In the case of gross Income higher than INR 5 Crore, the available marginal relief should be calculated in such a way that the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 5 Crore by the amount higher than INR 5 Crore.

Health and Education Cess:

1. Health and Education Cess are levied at 4% on the amount of income tax (plus surcharge).

Alternate Minimum Tax (AMT):

1. For a non-corporate taxpayer on whom the provisions of Alternate Minimum Tax (AMT) are applicable, Tax payable should be a minimum of 18.5% (+HEC) of “adjusted gross income” calculated as per section 115JC.
2. For a unit built in an IFSC which generates its Income only in convertible foreign exchange, the AMT rate should be at 9% rather than the current rate of 18.50%.
3. The rate of AMT should be 15% in place of the current rate of 18.5% for a co-operative society.

New Tax Regime [FY 2023-24 and AY 2024-25]

A new tax regime or alternative tax regime is optional for the taxpayers for the Assessment Year 2023-24. However, this new tax regime is the default tax regime for both the Individuals and HUF for the AY 2024-25. Furthermore, the advantages of this new tax regime have also been extended to the Association of Persons, Body of Individuals (BOI), and Artificial Juridical Person (AJP) effective from Assessment Year 2024-25. In order to opt out of the default new tax regime, one has to exercise the options under section 115BAC(6). The respective tax rates under this new tax regime are as follows under

Hindu Undivided Family (Including AOP, BOI, and Artificial Juridical Person)

Net Income range (INR)	Rate of Income Tax
Up to Rs. 3,00,000	0
Rs. 3,00,001 to Rs. 6,00,000	5%
Rs. 6,00,001 to Rs. 9,00,000	10%
Rs. 9,00,001 to Rs. 12,00,000	15%
Rs. 12,00,001 to Rs. 15,00,000	20%
Rs. 12,50,001 to Rs. 15,00,000	30%

Surcharges

Net Income range (INR)	Rate of Income Tax
50 Lacs to 1 Crore	10%
1 Crore to 2 Crore	15%
Above 2 crores	25%

The marginal relief and Health and education cess in the new tax regime are as that of the old tax regime. No significant changes have been made to any of them.

However, the Alternate Minimum Limit (AMT) has been modified in the new tax regime, which is as follows:

1. Whosoever opts out of the new regime is outside the Alternate Minimum Tax (AMT) scope. Moreover, any provision applicable to computation set off or carry forward of AMT credit will not be applicable for an assessment.
2. Assessment Year 2023-24: A resident individual (with gross Income lesser than INR 5,00,000) is eligible for a rebate under section 87A, which is deductible from income tax but before computing education cess.
3. From Assessment Year 2024-25: A maximum rebate limit has been extended to Rs. 25,000 as per section 87A if the gross Income of an individual (opting for the new regime) under Section 115BAC(1A), is lesser than INR 7,00,000. Moreover, if the total gross Income of an individual (opting section 115BAC(1A) is higher than INR 7,00,000 and the payable Tax on his Income is higher than the difference between the gross Income and INR 7,00,000, a rebate with marginal relief to the extent of the respective difference can be claimed.

Mandatory Conditions (to be satisfied):

The option for lower tax rates should only be available if the gross Income of the assessee is calculated without any following exemptions or deductions:

1. Leave Travel concession [Section 10(5)]
2. House Rent Allowance [Section 10(13A)]
3. Official and personal allowances (other than those as may be prescribed) [Section10(14)]
4. Allowances to MPs/MLAs [Section 10(17)]
5. Allowances for Income of Minors [Section 10(32)]
6. Deduction for units established in Special Economic Zones (SEZ) [Section 10AA];
7. Standard Deduction [Section 16(ia)] [Allowable for Assessment Year 2024-25]
8. Entertainment Allowance [Section 16((ii)]
9. Professional Tax [Section 16(iii)]
10. Interest on housing loan [Section 24(b)]
11. Additional depreciation in respect of new plant and machinery [Section 32(1) (iia)];
12. Deduction for investment in new plant and machinery in notified backward areas [Section 32AD];
13. Deduction in respect of tea, coffee, or rubber business [Section 33AB];
14. Deduction in respect of business consisting of prospecting or extraction or production of petroleum or natural gas in India [Section 33ABA];
15. Deduction for donations made to approved scientific research associations, university colleges, or other institutes for doing scientific research which may or may not be related to business [Section 35(1)(ii)];
16. Deduction for payment made to an Indian company for doing scientific research which may or may not be related to business [Section 35(1)(iia)];
17. Deduction for donations made to universities, colleges, or other institutions for doing research in social science or statistical research [Section 35(1)(iii)];
18. Deduction for donation made for or expenditure on scientific research [Section35(2AA)];
19. Deduction in respect of capital expenditure incurred in respect of certain specified businesses, i.e., cold chain facility, warehousing facility, etc. [Section 35AD]
20. Deduction for expenditure on agriculture extension project [Section 35CCC];
21. Deduction for family Pension [Section 57(iia)] [Allowable for Assessment Year 2024-25]
22. Deduction in respect of certain incomes other than specified under Section 80JJAA, 80CCD(2),80CCH(2) for the contribution made by the central government to the Agniveer Corpus Fund (Allowable for Assessment Year 2024-25) and deduction under section 80LA for Unit located in IFSC [Part C of Chapter VI-A].

Company/firm

• Firm
• 30% is the flat rate tax on a firm.
• Apart from this tax rate of 30%, Health and Education Cess is subject to levy at the rate of 4% of income tax.
• The surcharge is imposed at the rate of 12% on the income-tax amount when the gross Income is more than INR 1 crore.
• If a surcharge is levied, health and education cess (4%) will be levied on the income-tax plus surcharge amount. The Health and Education Cess comes to zero if the gross Income includes any income as securities (section 115AD(1)(a)) under the head of ‘specified fund’ (referred to section 10(4D)) [For the assessment year 2024-25]
• In case of gross Income exceeds INR 1 Crores, then the available marginal relief should be calculated in such a way that the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 1 Crore by the amount higher than INR 1 Crore.
• Minimum Tax (AMT) applies; tax payable cannot be less than 18.5% (+SC+HEC) of “adjusted total income” computed as per section 115JC.

Net Income range (INR)	Normal Rates
– Where its total turnover or gross receipt during the previous year 2020-21 does not exceed Rs. 400 crore	0
Where its total turnover or gross receipt during the previous year 2021-22 does not exceed Rs. 400 crore	25%
Any other domestic company	30%

1. In addition to the aforementioned tax rate, the surcharge levied on the income tax is 7% if gross Income is higher than INR 1 crore but less than INR 10 crore and 12% on the income-tax amount if gross Income is higher than INR 10 crore.
2. Health and Education Cess are levied at 4% on the amount of income tax (plus surcharge, if surcharge is levied).
3. In a case of gross Income exceeds INR 1 Crores but is less than INR 10 Crore, then the available marginal relief should be calculated in such a way that the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 1 Crore by the amount higher than INR 1 Crore.
4. In case of gross Income exceeds INR 10 Crores, then the available marginal relief should be calculated in such a way that the income tax payable and surcharge amount should not exceed the gross amount of income tax on the total income of INR 10 Crore by the amount higher than INR 10 Crore.
5. In the case of taxpayers on whom the provisions of Minimum Alternate Tax (MAT) are applicable, payable Tax should be more than 15% (+HEC) of “Book profit” (calculated under section 115JB). On the contrary, if a company is a unit of an International Financial Services Centre and its Income is driven only by convertible foreign exchange, then the MAT levied is at the rate of 9%.

• Domestic Company: Special Rates

Net Income range (INR)	Special Rates
– Where it opted for Section 115BA	25%
Where it opted for Section 115BAA	22%
Where it opted for Section 115BAB	15%

1. If a company opts for taxability under Section 115BAA or Section 115BAB, then the surcharge rate shall be 10%, irrespective of the total income amount.
2. The sum of income tax and the applied surcharge shall further be increased by health and education cess, which is to be calculated at the rate of 4 per cent of respective income tax and surcharge.
3. The Health and Education Cess is zero if the gross Income includes any income with respect to securities as mentioned under section 115AD(1)(a), which is labelled under the head of a ‘specified fund’ as referred to in section 10(4D).
4. Domestic companies are exempted from a provision of MAT that has opted for a special taxation regime mentioned under section 115BAA &. However, in the case where section 115BA has been opted for, no exemption can be availed.

Foreign Company

1. A foreign company is taxed at a rate of 40%. Apart from the Tax levied at the rate of 40%, Health and Education Cess is applicable at the rate of 4% of income tax
2. Moreover, the surcharge is applicable at the rate of 2% on the income tax sum if the gross Income is higher than INR 1 crore but less than INR 10 crore and at the rate of 5% on the sum of income-tax if gross Income exceeds INR 10 crore.
3. When a surcharge is levied, a health and education cess at the rate of 4% will be levied on the income-tax amount inclusive of the surcharge. However, marginal relief can be availed from surcharge in a way that in case of a foreign company whose gross Income is higher than INR 1 crore but is lesser than INR 10 crore, then the payable amount as income-tax and surcharge should not exceed the total amount payable as income-tax on gross Income of INR 1 crore by more than the amount of Income that is more than INR 1 crore.
4. For a matter of a foreign Company whose gross Income is higher than INR 10 crore, the marginal relief can be availed from surcharge in a way that the payable amount as income tax and surcharge should not exceed the total amount payable as income tax and surcharge on total Income of Rs. 10 crore by more than the amount of Income more than Rs. 10 crore.
5. In the case of a corporate taxpayer on whom the provisions of Minimum Alternate Tax (MAT) are applicable, payable Tax should be higher than 15% (+HEC) of “Book profit” (as per section 115JB).

Conclusion

The new tax regimes have eliminated very prominent factors which had a varied impact in framing the former tax slabs, i.e., age. The proposed regime is merely based on the incomes of Individuals irrespective of age. The default regime is still applicable if the taxpayer intends to opt for the same. However, opting for the new regime will bring an individual outside the scope of the AMT. Moreover, opting for a new regime will also deprive the taxpayer of any common tax deductions or tax exemptions from the former one. Bringing both regimes in one picture by leveraging the taxpayer for a choice between two is an act of bringing flexibility in the taxation arena stretched for the trading practices.

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