Introduction: Each fiscal year, the finance ministry of India announces new income tax slabs. Nirmala Sitharaman, the Finance Minister of India, made public the Union Budget for 2023 on February 1, 2023. The most recent budget included specific modifications to the current income tax slab. There are now two different income tax systems. Tax incentives are available to individuals under both the present and previous regimes.
According to the Ministry of Finance, the income tax rebate under the recently introduced tax system has been extended from the previous limitation of up to Rs. 5 lakhs to Rs. 7 lakhs. For the updated tax regime, there were also a few modifications to the income tax slab.
In addition, the surcharge rate on revenue beyond Rs. 5 crores has been lowered from 37% to 25%.
Financial Year 2023–24 Updated Income Tax Slabs under the New Tax Regime:
Taxable Income | Income Tax Rate |
Up to Rs. 3.00 Lakhs | 0% |
Rs 3.00 Lakhs – 6.00 Lakhs | 5% |
Rs. 6.00 Lakhs – 9.00 Lakhs | 10% |
Rs. 9.00 Lakhs – 12.00 Lakhs | 15% |
Rs. 12 Lakhs – 15.00 Lakhs | 20% |
Above Rs. 15.00 Lakhs | 30% |
What is a slab of income tax?
The income tax slab is described as the structure under which taxpayers on their own behalf are required to pay their income taxes. A person might fall into a different tax bracket depending on their income. As a result, people with higher incomes will be liable for higher taxes. To keep the nation’s tax system equitable, the slab plan was implemented. Every time a budget declaration is made, the slabs frequently vary.
A comparison of the New Tax Regime’s FY 2023–24 and FY 2022–23
Fiscal Year 2022-2023 | Fiscal Year 2023- 2024 | Income Tax Rates |
Rs. 0 – 2.5 Lakhs | Rs. 0 – 3.0 Lakhs | NIL |
Rs. 2.5 Lakhs – 5.0 Lakhs | Rs. 3.0 – 6.0 Lakhs | 5% |
Rs. 5.0 Lakhs – 7.5 Lakhs | Rs. 6.0 – 9.0 Lakhs | 15% |
Rs. 10.0 Lakhs – 12.5 Lakhs | Rs. 12.0 – 15.0 Lakhs | 20% |
Rs. 12.5 Lakhs – 15.0 Lakhs | — | 25% |
Above Rs. 15.00 Lakhs | Above Rs. 15.00 Lakhs | 30% |
The New Tax Regime’s Benefits and Deductions
Several perks and deductions that were available under the former tax system will no longer be permitted under the new tax legislation. There won’t be any of the roughly 70 exemptions and deductions that were accessible under the old tax structure. Some common deductions that are both allowed and prohibited under the new tax legislation are listed below:
Allowed Deductions
- Travel reimbursement in the event of a transfer or job
- Other deductions under Section 32 in addition to further depreciation
- Section 80JJAA deduction for newly hired workers (employment)
- Investments placed in the Notified Pension Scheme are tax deductible (Section 80CCD(2)).
- Any transportation reimbursement for business trips
- Specially-abled people will get a transportation allowance.
Senior Citizen Income Tax Slab (60 to 80 Years)
Taxable Amount | Tax Rate |
Up to Rs. 3 Lakhs | NIL |
Rs. 0 Lakhs – 5.0 Lakhs | 5% on amounts above Rs.3 Lakhs + 4% Cess |
Rs. 5.0 Lakhs – 10.0 Lakhs | 20% on amounts above Rs. 5 Lakhs + 10,500 + 4% Cess |
Above Rs. 10.0 Lakhs | 30% on amounts above Rs. 10 Lakhs + 1,10,000 + 4% |
Slabs of Income Tax for Persons Over 80 (Super Senior Citizen)
Income Tax Slabs | Tax Rate |
Up to Rs. 5.0 Lakhs | NIL |
Rs. 5.0 Lakhs – 10.0 Lakhs | 20% on amounts above Rs. 5 Lakhs + 4% Cess |
Above Rs. 10 Lakhs | 30% on amounts above Rs. 10 Lakhs + 1,00,000 + 4% Cess |
The Tax Slabs for Domestic Companies Based on Turnover
Turnover | Tax Rate |
Gross Maximum Income – 250 Crores for Previous Year | 25% |
Gross Turnover is more than 250 Crores for the Previous Year | 30% |
In addition to the tax rate listed above, a surcharge and cess are also charged. The details on the surcharge and cess that are to be imposed are provided below:
- Cess is 4% of the company’s tax.
- Surcharge: A 7% surcharge will be applied if the amount subject to tax is greater than Rs. 1 crore but does not exceed Rs. 10 crore. If the income subject to tax exceeds Rs. 10 crores, a 12% surcharge would be applied.
- Non-resident Indians: The exemption allowance for non-resident Indians is up to Rs. 2.5 lakh, regardless of their age.
Surcharge rates for specific taxpayers
Surcharge Rates on Financial Year 2023 – 2024
Income Range | Applicable Surcharge Rate |
Less than Rs. 50 Lakhs | NIL |
Rs. 50 Lakhs – 1 Crore | 10% |
Rs. 1 Crore – 2 Crore | 15% |
Rs. 2.00 Crore – 5.00 Crore | 25% |
More than Rs. 5.00 Crore | 37% |
The time to decide and choose between the new and old regimes
Income Type | When to select the new regime over the old one |
Income from a salary or any other source that bears TDS | At the start of the fiscal year, someone working has the option of choosing the new tax system. They can only alter the choice of tax regime at the start of a new fiscal year, however, after having chosen one and being unable to return to the previous one. |
Occupational and revenue from businesses | There is just one opportunity to select a tax system for income from a profession or business. |
Under the current system, if your yearly income is less than Rs. 3 lakhs, you are not required to submit an ITR. However, you should still file a “Nil Return” only for the record since there are numerous situations in which you may use it as evidence of your job. As an example, while requesting a financial loan or passport, you may present your ITR.
The taxpayer’s earnings have been divided into five categories according to Section 14 of the Act on Income Tax, including salaries for persons, gains in capital, gains or profits from a business or profession, income from real estate, and income from additional sources.
No, family pensions are taxed as “income coming from different sources,” rather than salary income.
According to the new system, every resident Indian with a total yearly income up to Rs. 7 lakhs is eligible to receive a rebate according to Section 87A.
Agriculture and its related industries do not subject any revenue to taxation. But it will be taken into account for determining your tax rate for any other sources of income that you might have.
No, earnings up to Rs. 5 lakhs are not exempt from tax. However, under the new system, people who earn up to Rs. 3 lakh are exempt from paying taxes.
Yes, depending on your preferences, you can opt to submit your tax returns for income according to either the old regime or the new regime.
Yes, there may be modifications to India’s income tax rates.
The Finance Ministry of India has put out adjustments to the income tax brackets in India.
The Indian finance minister makes announcements on modifications to the income tax brackets. This suggestion is often made each year in February when the yearly budget is released.
Yes, the standard deduction is set to be Rs. 50,000 for the fiscal year 2023-2024.
The tax bracket a person falls into will change with respect to their income as well as their age.