New Income Tax Slabs: India’s income tax system is always a point of interest for taxpayers, and every year, with the announcement of the Union Budget, many eagerly await changes to income tax slabs. For FY 2024-25, there have been some significant updates in the tax structure that could benefit individual taxpayers. Here’s an overview of the revised income tax slabs and what they mean for you.
The New Income Tax Slabs for FY 2024-25 (Under the New Regime)
Finance Minister Nirmala Sitharaman introduced new amendments aimed at simplifying the tax structure and providing relief to taxpayers. Under the new regime, which was first introduced in FY 2020-21, there are no deductions or exemptions (like HRA, 80C, etc.), but the tax rates are lower.
Here are the revised tax slabs for individuals and Hindu Undivided Families (HUFs):
| Income Range (INR) | Tax Rate |
|---|---|
| Up to 3 lakh | Nil |
| 3,00,001 to 6,00,000 | 5% |
| 6,00,001 to 9,00,000 | 10% |
| 9,00,001 to 12,00,000 | 15% |
| 12,00,001 to 15,00,000 | 20% |
| Above 15,00,000 | 30% |
This revised tax structure eliminates the surcharge for those earning less than Rs. 15 lakh, making it more attractive for the average taxpayer.
New Income Tax Slabs Under the Old Regime
The old tax regime still exists for those who wish to claim exemptions and deductions under sections like 80C, 80D, HRA, and others. However, it continues with the same basic tax structure as before:
| Income Range (INR) | Tax Rate |
|---|---|
| Up to 2.5 lakh | Nil |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
A notable change here is the extension of the tax rebate under section 87A, which is now available for taxpayers earning up to Rs 7 lakh per annum. This means that taxpayers in this bracket will not have to pay any income tax.
Key Changes in Tax Deductions and Benefits
- Tax Rebate Under Section 87A: For those opting for the new tax regime, the tax rebate limit has been increased to Rs 7 lakh, which means individuals earning up to Rs 7 lakh per year can enjoy a full rebate and end up with zero tax liability.
- No Changes to Tax Rates for Senior Citizens: The tax slabs for senior citizens remain the same as in previous years, which is important for individuals aged 60 or above.
- Exemptions: The new regime removes various exemptions (like HRA, standard deduction, etc.), but the old regime still allows for the flexibility of claiming these exemptions and deductions. Taxpayers can choose the regime that benefits them more.
Which Tax Regime Should You Choose?
The choice between the new tax regime and the old regime depends largely on your individual financial situation:
- If you don’t have many exemptions and deductions to claim, the new tax regime might work out better, especially since the tax slabs are lower and the rebate under section 87A makes it attractive for lower-income earners.
- If you have significant exemptions and deductions to claim (such as investments under section 80C, housing loan interest under section 24, etc.), the old tax regime could provide more savings.
- For example, an individual earning Rs 12 lakh per annum with significant tax-saving investments might still benefit more from the old tax regime. On the other hand, someone with no deductions and an income of Rs 5 lakh may prefer the new regime for its simplicity.
Impact on Salaried Individuals
The new tax slabs bring substantial relief to middle-income earners, especially those earning up to Rs 6 lakh, who will no longer need to pay any tax. This is a great move for salaried individuals as they will see a more simplified and transparent tax calculation process.
Conclusion
The introduction of the new income tax slabs is a progressive move by the government to ease the tax burden for lower and middle-income taxpayers. While the new regime might benefit many, it’s important to carefully evaluate your finances and consider whether the old regime offers more advantages in terms of exemptions and deductions.
Important Links
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