As the financial year 2024-25 approaches, understanding the income tax slab structure is essential for both salaried individuals and self-employed professionals in India. Taxpayers need to be aware of how their income will be taxed under the latest regime, and whether they should opt for the old or new tax regime. The Indian government has introduced specific changes to tax rates and slabs, offering flexibility to individuals based on their income levels and deductions. By understanding the tax slab for FY 2024-25, individuals can plan their finances more effectively and avoid surprises during filing season.
Overview of Income Tax Slabs in India
What Are Income Tax Slabs?
India follows a progressive income tax system, where the tax rate increases with higher income. The government classifies taxpayers into different brackets or ‘slabs,’ each with its own applicable tax rate. These slabs are periodically revised based on inflation, fiscal priorities, and economic conditions. The primary categories include individuals below 60 years, senior citizens (60 to 80 years), and super senior citizens (above 80 years).
Old vs New Tax Regime
From FY 2020-21 onwards, the government introduced an optional new tax regime that offers lower tax rates with no deductions or exemptions. Taxpayers can choose between:
- The Old Regime allows deductions such as under Section 80C, HRA, and standard deductions.
- The New Regime offers lower slab rates but removes most exemptions and deductions.
Tax Slab for FY 2024-25 Under New Regime
New Regime Slab Rates (for Individuals Below 60 Years)
In the Union Budget, the government retained the structure of the new regime with some adjustments. The new regime is now the default option, although individuals can still opt for the old regime if they prefer.
- Income up to â¹3,00,000 Nil
- â¹3,00,001 to â¹6,00,000 5%
- â¹6,00,001 to â¹9,00,000 10%
- â¹9,00,001 to â¹12,00,000 15%
- â¹12,00,001 to â¹15,00,000 20%
- Above â¹15,00,000 30%
This regime does not allow most traditional exemptions like house rent allowance (HRA), leave travel allowance (LTA), and deductions under Section 80C, 80D, and others. However, a standard deduction of â¹50,000 is allowed for salaried and pensioned individuals in FY 2024-25 under the new regime.
Rebate Under Section 87A
Under the new regime, taxpayers with total income up to â¹7,00,000 are eligible for a rebate under Section 87A, effectively making their tax liability zero. This provision aims to provide relief to middle-income individuals and encourage the adoption of the new tax regime.
Old Regime Tax Slab for FY 2024-25
Slab Rates for Individuals Below 60 Years
Under the old regime, individuals can continue to claim deductions and exemptions. The applicable slab rates for FY 2024-25 are:
- Income up to â¹2,50,000 Nil
- â¹2,50,001 to â¹5,00,000 5%
- â¹5,00,001 to â¹10,00,000 20%
- Above â¹10,00,000 30%
Senior and Super Senior Citizens
For resident individuals aged 60 years and above but less than 80 years, the basic exemption limit is â¹3,00,000. For those above 80 years, the limit is â¹5,00,000. The remaining slab rates are the same as for other individuals under the old regime.
Available Deductions Under the Old Regime
- Section 80C up to â¹1,50,000 (Investments in LIC, PPF, ELSS, etc.)
- Section 80D Health insurance premiums
- Section 24(b) Interest on home loan up to â¹2,00,000
- Standard Deduction â¹50,000 for salaried individuals
- HRA, LTA, Education Loan interest, and many more
Taxpayers who can avail themselves of multiple deductions and exemptions may find the old regime more beneficial, especially if their income falls into a higher slab.
Choosing Between Old and New Regimes
Key Factors to Consider
Taxpayers should evaluate which regime is better suited to their income and financial planning strategy. Here are a few points to consider:
- If you claim substantial deductions (such as home loan interest, 80C, health insurance), the old regime may be more beneficial.
- If you have minimal deductions and prefer a simpler filing process, the new regime might result in lower tax liability.
- The new regime offers lower tax rates but removes most deductions and exemptions, so a direct comparison is essential.
Tools to Compare
To make an informed choice, taxpayers can use online tax calculators that allow side-by-side comparisons of both regimes. Some employers also offer employees the option to declare their chosen regime for TDS (Tax Deducted at Source) calculation purposes.
Surcharge and Cess in FY 2024-25
Surcharge Rates
- 10% of income tax if income exceeds â¹50 lakh
- 15% of income tax if income exceeds â¹1 crore
- 25% of income tax if income exceeds â¹2 crore
- 37% surcharge is now capped under the new regime to promote its adoption
Health and Education Cess
All taxpayers, regardless of the regime selected, must pay an additional 4% on the total tax payable as Health and Education Cess.
Filing Tips for FY 2024-25
Stay Updated on Rules
Tax laws and slab rates are subject to change with each annual Union Budget. It’s important to verify updated details from the official income tax website or financial news reports at the start of the financial year.
Maintain Financial Records
- Track all investment proofs for 80C and 80D claims (if using the old regime).
- Ensure timely submission of Form 12BB to employers for TDS accuracy.
- Use Form 26AS and AIS to confirm TDS details before filing.
Choose Regime Before Filing
While salaried employees can switch between old and new regimes every financial year, individuals with business or professional income can switch only once. Hence, the choice must be made thoughtfully based on overall financial plans and tax-saving potential.
The tax slab for FY 2024-25 offers Indian taxpayers flexibility through the continued coexistence of the old and new regimes. With new income thresholds and rebates in the new regime and continued benefits in the old system, taxpayers must analyze their financial landscape to select the most efficient tax option. Understanding the updated tax structure, available deductions, and applicable surcharges is vital for effective tax planning and compliance. Staying informed and proactive will help you optimize your tax liability and make smarter financial decisions throughout the financial year.