In the interim budget presented on February 1 this year ahead of the Lok Sabha elections 2024, Union Finance Minister Nirmala Sitharaman did not make any changes to the income tax slabs or rates, meaning that the new or old tax regime will be for the financial year 2024-25 (FY2024-25), or assessment. There is no difference in tax slabs or rates even in the year (AY2025-26). Now let us talk about the financial year 2023-24 (FY2023-24), which begins on April 1, 2023 and ends on March 31, 2024, or the assessment year 2024-25 (AY2024-25), which The time for filing Income Tax Return (ITR) is very near, therefore, any taxpayer should think very carefully and calculate which regime will reduce his tax liability, i.e. it will be more beneficial to choose it.
Union Finance Minister Nirmala Sitharaman announced changes to the tax structure in February 2023, making the new tax regime the default regime. Earlier, the new tax system introduced in the year 2020 was optional. So, now people who want to file ITR under old tax system have to select old tax system manually. In the new tax regime, the exemption limit under Section 87A of the Income Tax Act was also changed to ₹7,00,000, and due to this, ITR filers under the new tax regime will not have to pay any income tax, unless their taxable income exceeds ₹7,00,000. not have Under the new tax regime, standard deduction was also introduced for employees and pensioners, and apart from this, now in the new tax regime, contribution made by the employer to NPS can also be exempted under section 80CCD (2). And yes, the maximum rate of surcharge imposed on high income taxpayers was also reduced from 37 percent to 25 percent.
No change of any kind was made in the old tax system, therefore, exemption under Section 87A of the Income Tax Act will still be available only to those taxpayers whose taxable income is less than ₹5,00,000.
So, now let’s see which slabs are applicable in which tax system and at which rate of tax, cess and surcharge to be paid on it. First, let’s look at the old tax system. In the old tax system, the tax-free income limit varied based on age, so it has not been changed now. The basic tax-free income limit for taxpayers below 60 years of age is ₹2,50,000. After this, 5% tax is levied on taxable income between ₹2,50,001 to ₹5,00,000, 20% tax on income between ₹5,00,001 and ₹10,00,000 and income above ₹10,00,000. They have to pay. 30 percent tax on income.
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Tax Slabs and Rates for Senior Citizens…
The basic tax-free income limit for senior citizens above 60 years and below 80 years is ₹3,00,000. After this, they will also have to pay 5 percent tax on taxable income between ₹3,00,001 to ₹5,00,000, ₹5,00,001 to ₹10,00,000 and 20 percent tax on income above ₹10. 00,000 to pay 30 percent tax on income.
Tax Slabs and Rates for Very Senior Citizens…
The basic tax-free income limit for super senior citizens above 80 years is ₹ 5,00,000, and thereafter they have to pay 20% tax on income between ₹ 5,00,001 to ₹ 10,00,000, and they have to pay 20% tax on income above ₹ 10,00,000. Pay 30 percent tax.
What is Health and Education Cess?
Now let’s know about health and education cess. This cess is levied on all taxpayers, and is applied on the amount of income tax payable. At present, the government levies a cess of 4 percent from each taxpayer, which is levied on the income tax payable by them.
What is the difference in surcharge…?
A distinction has also been made in the surcharge between the new and old tax systems. As announced in the Budget 2023, the maximum rate of surcharge has been reduced from 37 per cent to 25 per cent in the new tax system, but old rates will apply in the old tax system.
File ITR only after checking profit and loss
So, compare the slabs and tax rates under the old and new tax regimes currently in force, calculate them according to your income and then choose the regime in which your tax liability is lower.
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