As individual taxpayers prepare their finances for the Financial Year (FY) 2024-25 (Assessment Year 2025-26), understanding applicable income tax slabs and additional taxes like surcharges and cess is vital. Taxpayers can choose between the Old Tax Regime (with deductions and exemptions) and the New Tax Regime (with lower rates but minimal deductions). In addition to the tax slabs, it’s important to be aware of the surcharge and cess that may apply.
Tax Slab under New Tax Regime FY 2024-2025
The 2024 Budget introduced updated tax slabs in the New Tax Regime, allowing taxpayers to save an additional ₹17,500 in taxes. Furthermore, the standard deduction has been hiked to ₹75,000, and the family pension deduction has been enhanced to ₹25,000 from ₹15,000, effective for FY 2024-25. Here are the revised tax slabs:
| Tax Slab for FY 24-25 | Tax Rate |
| 0 to ₹ 300,000 | NIL |
| ₹ 300,001 – ₹ 700,000 | 5% |
| ₹ 700,001 – ₹10,00,000 | 10% |
| ₹ 10,00,001 – ₹ 12,00,000 | 15% |
| ₹ 12,00,001 – ₹ 15,00,000 | 20% |
| More than ₹ 15,00,000 | 30% |
Key Features of the New Tax Regime:
- No Deductions or Exemptions: Popular deductions under Section 80C, 80D, and HRA exemptions cannot be claimed.
- Standard Deduction: From FY 2023-24, the New Tax Regime allows a standard deduction of ₹50,000 (Increased to 75000 w.e.f FY 2024-25) for salaried individuals.
- Rebate under Section 87A: The rebate is available for income up to ₹7 lakh, making the effective tax liability zero for individuals earning up to ₹7 lakh. This Rebate is not available for NRI.
Old Tax Regime for FY 2024-25
The Old Tax Regime is suited for taxpayers who prefer to claim deductions and exemptions like Section 80C (investments), 80D (medical insurance), HRA (House Rent Allowance), and others.
Tax Slabs for Individuals (Below 60 Years of Age):
| Tax Slab for FY 24-25 | Tax Rate |
| 0 to ₹ 250,000 | NIL |
| ₹ 250,001 – ₹ 500,000 | 5% |
| ₹ 500,001 – ₹10,00,000 | 20% |
| Above ₹ 10,00,000 | 30% |
Note: A rebate under Section 87A is available for individuals with taxable income up to ₹5 lakh. Under this rebate, the entire tax liability is reduced to zero.
Tax Slabs for Senior Citizens (60 to 80 Years of Age):
| Tax Slab for FY 24-25 | Tax Rate |
| 0 to ₹ 300,000 | NIL |
| ₹ 300,001 – ₹ 500,000 | 5% |
| ₹ 500,001 – ₹10,00,000 | 20% |
| Above ₹ 10,00,000 | 30% |
Tax Slabs for Super Senior Citizens (Above 80 Years of Age):
| Tax Slab for FY 24-25 | Tax Rate |
| 0 to ₹ 500,000 | NIL |
| ₹ 500,001 – ₹10,00,000 | 20% |
| Above ₹ 10,00,000 | 30% |
Deductions and Exemptions in the Old Tax Regime:
- Section 80C: Deduction up to ₹1.5 lakh for investments like PPF, ELSS, NSC, etc.
- Section 80D: Deduction for health insurance premiums.
- Section 24: Deduction on home loan interest up to ₹2 lakh.
- HRA Exemption: For salaried employees paying rent.
- Standard Deduction: ₹50,000 for salaried individuals.
- Section 80E: Deduction on interest paid on an education loan.
Thus, the Old Tax Regime benefits those with significant investments and expenses to claim under these sections.
Surcharge (Applicable to Both Regimes)
Surcharge:
Once income surpasses a designated level, extra taxes are imposed over the existing rates, targeting individuals with higher earnings. It is applicable as follows:
| Tax Slab for FY 24-25 | Tax Rate |
| Income exceeding ₹50 lakh up to ₹1 crore | 10% |
| Income exceeding ₹1 crore up to ₹2 crore | 15% |
| Income exceeding ₹2 crore up to ₹5 crore | 25% |
| Income exceeding ₹5 crore | 37% (Capped at 25% in New Regime) |
- In Budget 2023, the highest surcharge rate under the new tax regime was reduced from 37% to 25%, effective April 1, 2023.
- Income from dividends and capital gains under Sections 111A (Short-Term Capital Gains on shares), 112A (Long-Term Capital Gains on shares), and 115AD (Income of Foreign Institutional Investors) will not be subject to surcharge rates of 25% or 37%. Instead, the highest surcharge applicable on the tax payable for such income will be capped at 15%
