SLAB RATES- INDIVIDUALS
In India, the Income Tax applies to Individuals based on a slab system, where different tax rates are assigned to different income ranges and different ages. As the person’s income increases, the tax rate also increases. This type of system is known as progressive tax system.
The budget 2024 has introduced significant changes to the tax rates under new regime, which will be applicable from A.Y 2025-26. Taxpayers can now avail higher standard deduction, family pension deductions and so on. The new slab rate under new regime is as follows: –
| Tax Slab | Tax rate |
| Upto Rs. 3,00,000 | Nil |
| Rs. 3,00,000 to Rs. 7,00,000 | 5% |
| Rs. 7,00,000 to Rs. 10,00,000 | 10% |
| Rs. 10,00,000 to Rs. 12,00,000 | 15% |
| Rs. 12,00,000 to Rs. 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
NOTE: –
Tax rebate upto Rs. 25,000 is applicable if the total income does not exceed Rs. 7,00,000. However, this rebate is not applicable to NRI.
Under old regime there were no changes in the 2024 budget. The slab rate under old regime is as follows.
Individuals below 60 Years.
| Tax slab | Rate |
| Upto Rs. 2,50,000 | Nil |
| Rs. 2,50,000 – Rs. 5,00,000 | 5% |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Individuals aged 60 to 80 years.
| Tax slab | Rate |
| Upto Rs. 3,00,000 | Nil |
| Rs. 3,00,000 – Rs. 5,00,000 | 5% |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Individual Above 80 Years
| Tax Slab | Rate |
| Upto Rs. 5,00,000 | Nil |
| Rs. 5,00,000 – Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
The additional charge levied on higher income earning individuals over and above tax is known as surcharges. It is levied on tax payable, not on income generated. Basically, it is tax on tax. The Surcharge under new & old regime is as follows: –
| Annual Taxable Income | Surcharge under Old Regime | Surcharges under New Regime |
| Upto Rs. 50 lakhs | Nil | Nil |
| Over 50 lakhs and upto Rs. 1 crore. | 10% | 10% |
| Over Rs. 1 crore and upto Rs. 2 crores | 15% | 15% |
| Over Rs. 2 crores and upto Rs. 5 crores | 25% | 25% |
| Over Rs. 5 crores | 37% | 25% |
NOTE: –
From A.Y 2025-26 the surcharge under new regime is capped at 25% as compared to 37% under old regime.
For Dividends and Capital Gain taxable under 111A, 112A and 115D highest rate of surcharge will be 15%.
A 4% Health & Education cess is applicable on the total tax payable after including surcharge.
The following are some major deduction & exemptions you cannot claim under new regime: –
The new tax regime is beneficial for middle class taxpayers who have a taxable income up to Rs. 15 lakhs. The old regime is better of high-income earners.
The new income tax regime is beneficial for those people who make low investment. As the new regime offer six income tax slabs, anyone paying taxes without claiming tax deductions can benefit from paying a lower rate of tax under the new tax regime.
EXAMPLE: –
Mr. Anil Kumar aged 30 years has Income from Salary Rs. 15 lakhs, income from short term capital gain Rs. 1 lakhs and interest from savings bank Rs. 12,000. He invested Rs. 1,50,000 in 80C and Rs. 50,000 in NPS (employee contribution same as employee contribution). What is his tax liability under new regime as well as old regime?
Tax liability under old regime
| Particulars | Rate | Amount |
| Income From Salary 15,00,000
Less: Standard Deduction (50,000) |
14,50,000 | |
| Income From Capital Gains | 1,00,000 | |
| Income From other Sources Saving bank Interest |
12,000 | |
| Total Income | 15,62,000 | |
| Less: Deduction – VIA
80C 1,50,000 80CCD(1B) 50,000 80CCD(2) 50,000 80TTA 10,000 |
(2,60,000) | |
| Taxable Income | 13,02,000 | |
| Tax on short term capital gain | 15% | 15,000 |
| Tax on other income at slab rate
0-2,50,000 2,50,000-5,00,000 5,00,000-10,00,000 Above 10,00,000 |
–
5% 20% 30% |
12,500
1,00,000 60,600 |
| Total tax liability (before cess) | 1,88,100 | |
| HEC@4% | 7,524 | |
| Total Tax Payable (rounded off) | 1,95,620 |
Tax liability under new scheme
| Particulars | Rate | Amount |
| Income from salary 15,00,000
Less: Standard Deduction 75,000 |
14,25,000 | |
| Income from Capital gains | 1,00,000 | |
| Income From other Sources
Saving bank Interest |
12,000 | |
| Total Income | 15,37,000 | |
| Less: Deduction -VIA
80CCD(2) |
(50,000) | |
| Taxable Income | 14,87,000 | |
| Tax on short term capital gain | 15% | 15,000 |
| Tax on remaining income at slab rate
0-3,00,000 3,00,000-7,00,000 7,00,000-10,00,000 10,00,000-12,00,000 12,00,000 & above remaining |
–
5% 10% 15% 20% |
20,000
30,000 30,000 37,400 |
| Total Tax liability( before cess) | 1,32,400 | |
| HEC@4% | 5,296 | |
| Total Tax Payable (rounded off) | 1,37,700 |
CONCLUSION: –
Since his tax liability is less in new regime so he should for tax under new regime as it would lead to saving in Rs. 57,920.
| Nature of Income | Time of selection |
| Income from Salary or any other head of income except business income | At the start of the Financial Year, an employee has the choice to select the tax regime and inform their employer, whereas the default tax regime shall be the new tax regime. It cannot be modified during the year. However, the option can be modified while filing the Income Tax Return. |
| Income from business of profession | In case you have business or professional income, the choice between both the regimes can only be made once in a lifetime. |
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