Every year, the finance minister in India announces the Income Tax Slabs, and for the fiscal year 2023-24, the finance minister, Nirmala Sitharaman, presented the Union Budget on February 1, 2023. The latest budget introduced some changes to the existing income tax slab. Currently, there are two tax regimes available, and taxpayers can benefit from both.
Under the new tax regime, the income tax rebate has been increased to Rs. 7 lakh from the previous limit of Rs. 5 lakh. Additionally, there have been changes in the tax slab for the new tax regime. Moreover, the surcharge rate on income of Rs. 5 crore and above has been reduced from 37% to 25%.
Here are the revised income tax slabs for the new tax regime (default) for FY 2023-24:
- Up to Rs. 3 lakh: 0% (No tax)
- Rs. 3 lakh to 6 lakh: 5%
- Rs. 6 lakh to 9 lakh: 10%
- Rs. 9 lakh to Rs. 12 lakh: 15%
- Rs. 12 lakh to Rs. 15 lakh: 20%
- Above Rs. 15 lakh: 30%
Please note that you can now file your taxes through the new income tax portal, which offers various features designed to simplify the tax filing process.
Definition of Income Tax Slab:
Income Tax Slab refers to the different tax rates applicable to individual taxpayers based on their income level. Depending on their income, individuals fall under different tax slabs, with higher-income earners being subject to higher tax rates. The slab system was introduced to ensure a fair taxation system in the country, and the slabs tend to change with each budget announcement.
New Income Tax Slab for FY 2023-2024:
Below are the tables showing the revised income tax slabs and rates for FY 2023-2024:
|Income Tax Slab||Income Tax Rate|
|Up to Rs.3 lakh||Nil|
|Rs.3 lakh – Rs.6 lakh||5%|
|Rs.6 lakh – Rs.9 lakh||10%|
|Rs.9 lakh – Rs.12 lakh||15%|
|Rs.12 lakh – Rs.15 lakh||20%|
|Above Rs.15 lakh||30%|
Comparison between FY 2023-24 & 2022-23 for New Tax Regime
|Income Tax Rates||FY 2022-23 Income Tax Slab||FY 2023-24 Income Tax Slab|
|NIL||Rs.0 – Rs.2.5 lakh||Rs.0 – Rs.3 lakh|
|5%||Rs.2.5 lakh – Rs.5 lakh||Rs.3 lakh – Rs.6 lakh|
|10%||Rs.5 lakh – Rs.7.5 lakh||Rs.6 lakh – Rs.9 lakh|
|15%||Rs.7.5 lakh – Rs.10 lakh||Rs.9 lakh – Rs.12 lakh|
|20%||Rs.10 lakh – Rs.12.5 lakh||Rs.12 lakh – Rs.15 lakh|
|25%||Rs.12.5 lakh – Rs.15 lakh||–|
|30%||Above Rs. 15 lakhs||Above Rs. 15 lakh|
Deductions and Exemptions under the New Tax Regime:
Under the new tax regime, certain deductions and exemptions available in the old regime do not apply. Approximately 70 deductions and exemptions from the old tax regime are not applicable in the new tax regime. Some common deductions allowed and not allowed in the new tax regime are listed below:
Deductions that are Allowed:
- Traveling allowance for transfer or employment purposes.
- Deductions under Section 32, excluding additional depreciation.
- Deduction under Section 80JJAA for new employees.
- Investments in the Notified Pension Scheme (Section 80CCD(2)).
- Conveyance allowance for work-related travel.
- Transport allowance for specially abled individuals.
Deductions that are Not Allowed:
- Housing Loan interest under Section 24.
- Professional tax.
- Standard deduction on salary.
- Special allowances under Section 10(14).
- Children education allowance.
- Helper allowance.
- Relocation allowance.
- Conveyance allowance.
- House Rent Allowance.
- Leave Travel Allowance.
Additionally, an example of how income tax is calculated for FY 2023-24 under the new regime is provided (optional).
|Total Income (Gross)||Rs.12 lakh|
|Deductions (80C, 80CCD)||–|
|Travel and Medical Allowance||–|
|Income that is Taxable||Rs.12 lakh|
|Up to Rs.3 lakh||–|
|Above Rs.3 lakh – Rs.6 lakh||Rs.15,000|
|Above Rs.6 lakh – Rs.9 lakh||Rs.30,000|
|Above Rs.9 lakh – Rs.12 lakh||Rs.45,000|
|Above Rs.12 lakh – Rs.15 lakh||–|
|Total Tax that must be Paid||Rs.90,000|
Income Tax Slabs & Rates under the Old Regime for FY 2023-2024: Three tables showing the alternative income tax slabs under the old regime are presented.
Income Tax Slab for Individual who are below 60 years
|Income Tax slab||Tax Rate|
|Up to Rs.2.5 lakh||Nil|
|Above Rs.2.50 lakh – Rs.5.00 lakh||5% of the total income that is more than Rs.2.5 lakh + 4% cess|
|Above Rs.5 lakh – Rs.10 lakh||20% of the total income that is more than Rs.5 lakh + Rs.12,500 + 4% cess|
|Above Rs.10 lakh||30% of the total income that is more than Rs.10 lakh + Rs.1,12,500 + 4% cess|
Individuals who have an income of less than Rs.5 lakh are eligible for tax deductions under Section 87A
Example of How Income Tax is Calculated under Old Regime for 3 individuals (A, B, and C)
|Annual Salary (Rs.)||5,00,000||10,00,000||15,00,000|
|Standard Deduction (Rs.)||50,000||50,000||50,000|
|Tax deductions under Section 80C of the Income Tax Act (Rs.)||70,000||1,50,000||1,50,000|
|House Rent Allowance deductions||82,000||90,000||1,40,000|
|Gross total income after deductions (Rs.)||2,88,000||7,00,000||11,50,000|
|Up to Rs.2.5 lakh (Rs.)||Nil||Nil||Nil|
|From Rs.2,50,001 to Rs.5 lakh (Rs.)||1,900||12,500||12,500|
|From Rs,5,00,001 to Rs.10 lakh (Rs.)||NIL||40,000||1,00,000|
|Above Rs.10 lakh (Rs.)||NIL||NIL||45,000|
|Total Tax (Rs.)||1,900||52,500||1,57,500|
|Deductions under Section 87A (Rs.)||1,900||Nil||Nil|
|Additions of cess (Rs.)||Nil||2,100||6,300|
|Total tax that is payable (Rs.) (Total Tax + cess – Deductions under Section 87A)||Nil||54,600||1,63,800|
|Income Tax slabs||Tax Rate|
|Up to Rs.3 lakh||Nil|
|Above Rs.3.00 lakh – Rs.5.00 lakh||5% of the total income that is more than Rs.3 lakh + 4% cess|
|Above Rs.5.00 lakh – Rs.10 lakh||20% of the total income that is more than Rs.5 lakh + Rs.10,500 + 4% cess|
|Above Rs.10 lakh||30% of the total income that is more than Rs.10 lakh + Rs.1,10,000 + 4% cess|
Income Tax Slabs for Individuals above 80 years (Super Senior Citizen): The income tax slabs for individuals above 80 years under both the new and old regimes are mentioned.
For Domestic Companies, the Tax Slabs Depend on Turnover as Follows: The tax slabs for domestic companies are based on their turnover, as indicated.
Furthermore, there are additional surcharges and cess levied, and the details are mentioned below:
- Cess: 4% of corporate tax.
- Surcharge: If the taxable income is between Rs. 1 crore and Rs. 10 crore, a surcharge of 7% is levied. If the taxable income exceeds Rs. 10 crore, a surcharge of 12% is levied.
Non-resident Indians (NRIs) have an exemption limit of up to Rs. 2.5 lakh, regardless of age.
- If your net income is between Rs. 50 lakh and Rs. 1 crore, a 10% surcharge, in addition to a 4% cess, is levied. For net income exceeding Rs. 1 crore, a 15% surcharge is applied.
- The cess has increased from 3% to 4% compared to the previous year’s budget.
Comparison of Old Tax Regime and New Tax Regime with an Example: The old tax regime offers more benefits to individuals who make significant investments and earn high incomes. On the other hand, the new tax regime benefits individuals who make fewer investments in tax-saving schemes. It is essential to analyze both tax schemes before deciding on one, as the benefits vary for each individual. An example of the net tax payable under both regimes is provided.