Income tax is one of the most important elements of personal and financial planning for working professionals, business owners, and retirees. In India, every financial year brings updated tax slabs and policy adjustments, which directly affect how much an individual or entity pays. The Financial Year (FY) 2023-24 introduced important updates to income tax slabs under both the old and new tax regimes. Understanding these slabs is essential for accurate tax filing, efficient planning, and compliance with government norms.
Understanding Income Tax Slabs
What Are Tax Slabs?
Income tax in India follows a progressive system, which means the tax rate increases with an increase in income. The income tax slab defines the range of income levels and the corresponding tax rate applied to that income. Taxpayers are categorized based on their age and residential status, and they can choose between two regimes: the old tax regime and the new tax regime introduced in Budget 2020.
Types of Taxpayers
For the purpose of applying income tax slabs, taxpayers are classified into:
- Individuals below 60 years of age
- Senior citizens aged between 60 and 80 years
- Super senior citizens aged above 80 years
- Hindu Undivided Families (HUF)
- Companies and Firms (different slab structure)
Income Tax Slabs for FY 2023-24 Under the New Regime
The new tax regime continues to offer concessional tax rates but without most deductions and exemptions. This regime is now the default unless the taxpayer opts for the old regime.
Individual & HUF Below 60 Years (New Regime)
The following income tax slabs apply for individuals and HUFs opting for the new regime:
- 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 structure offers simplified rates. However, many exemptions like House Rent Allowance (HRA), Leave Travel Allowance (LTA), and deductions under Section 80C are not available under this regime.
Income Tax Slabs for FY 2023-24 Under the Old Regime
In contrast, the old tax regime continues to allow a variety of deductions and exemptions. It is preferred by those who benefit from investments and tax-saving instruments like insurance, mutual funds, housing loans, and more.
For Individuals Below 60 Years
- 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%
For Senior Citizens (60 to 80 Years)
- Income up to â¹3,00,000 Nil
- â¹3,00,001 to â¹5,00,000 5%
- â¹5,00,001 to â¹10,00,000 20%
- Above â¹10,00,000 30%
For Super Senior Citizens (Above 80 Years)
- Income up to â¹5,00,000 Nil
- â¹5,00,001 to â¹10,00,000 20%
- Above â¹10,00,000 30%
Rebate Under Section 87A
Both old and new regimes allow a rebate under Section 87A for resident individuals whose total income does not exceed â¹5 lakh under the old regime and â¹7 lakh under the new regime. The rebate amount equals the entire tax payable, making the net tax liability zero in these cases.
Comparison Between Old and New Tax Regimes
Advantages of the New Tax Regime
- Lower tax rates across multiple slabs
- Simplified tax structure
- No need to maintain complex investment proofs
- Suitable for those with no major tax-saving investments
Advantages of the Old Tax Regime
- Offers deductions under Section 80C (up to â¹1.5 lakh), 80D (health insurance), and more
- Allows exemptions like HRA, LTA, and interest on housing loans
- May result in lower tax for those who strategically invest
Which Regime Should You Choose?
There is no one-size-fits-all answer. Choosing between the old and new tax regime depends on your salary structure, eligible deductions, and investment habits. If you have high deductions and structured tax-saving plans, the old regime may be more beneficial. If your salary structure is simple and deductions are minimal, the new regime offers relief through lower rates.
Additional Surcharge and Cess
Surcharge on High-Income Earners
A surcharge is applicable on income tax based on the total income:
- 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% of income tax if income exceeds â¹5 crore (not applicable in new regime; capped at 25%)
Health and Education Cess
An additional 4% health and education cess is levied on the income tax amount (including surcharge, if applicable) under both regimes.
Filing Requirements for FY 2023-24
Taxpayers must file their Income Tax Returns (ITR) based on the income earned during FY 2023-24 (Assessment Year 2024-25). Filing can be done online through the official income tax portal. It’s important to gather all necessary documents like Form 16, bank statements, investment proofs, and loan certificates before proceeding with ITR filing. Timely and accurate filing helps avoid penalties and scrutiny.
How to Plan for Income Tax Effectively
Steps for Efficient Tax Planning
- Compare old vs new tax regimes before choosing
- Utilize tax-saving investments if opting for the old regime
- Calculate expected income and liabilities early in the financial year
- Maintain necessary documentation for deductions and exemptions
- Stay updated with latest budget announcements and notifications
Seek Professional Guidance If Needed
If your financial structure is complex or includes multiple income sources such as rental income, capital gains, or foreign earnings, consulting a tax expert or chartered accountant can help you choose the correct regime and ensure compliance.
The income tax slabs for FY 2023-24 present a dual approach for taxpayers offering flexibility to choose the old or new regime based on individual financial situations. While the new regime simplifies tax calculations with reduced rates, the old regime still holds value for those who use deductions efficiently. It is crucial for every taxpayer to understand the slabs, assess the impact on their net income, and file returns accordingly. Whether you are a salaried employee or self-employed professional, informed planning can lead to significant savings and ensure a stress-free tax season.