What Are the Tax Slabs in 2024?
The income tax is a direct tax each individual must have to pay on certain things. Each individual’s tax to be paid depends on the money they earn in a particular financial year. The government has developed “tax slabs” that define the percentage of income tax an individual has to pay according to their annual earnings. Tax slabs are different for different ages of the taxpayer as well as their own options between the old tax regime and the new tax regime. The old regime allows different deductions and exemptions whereas the new regime offers lower tax rates without exemptions. In this blog, we will guide you through the different tax slabs in 2024.
What is a Tax Slab?
Tax slab is an income range that decides the rate of income tax that is to be paid. Thus, if the income is higher, the person moves into higher slabs and has to pay a higher percentage of taxes. India categorizes taxpayers differently depending on the age and the slab of income.
Presently, there are two types of tax regimes in India:
- Old Tax Regime: You can claim the deductions and exemptions like HRA, 80C that is investments and so on.
- New Tax Regime: This was introduced from January 1, 2020, and the new tax regime gives lesser tax rates, but you cannot claim most of the deductions and exemptions.
A taxpayer can choose whichever one that would be more beneficial to them.
Tax Slabs for Individuals Below 60 Years
(FY 2023-24)
1. Old Tax Regime (with deductions and exemptions)
Under the old tax regime, you can still claim the exemptions and deductions under Section 80C, 80D, etc., which means reduction of your taxable amount. Here are the tax slabs below:
- Up to ₹2.5 lakhs: No tax
- ₹2.5 lakhs to ₹5 lakhs: 5%
- ₹5 lakhs to ₹10 lakhs: 20%
- Above ₹10 lakhs: 30%
This means that, if you earn between ₹2.5 lakhs to ₹5 lakhs in a year, you would pay 5% of it as tax. Similarly, if you earn between ₹5 lakhs and ₹10 lakhs, you would pay 20% on the income above ₹5 lakhs. This goes on.
2. New Tax Regime (without deductions and exemptions)
The new tax regime has lesser tax rates but investments for PPF, ELSS, or HRA don’t even allow you to deduct. Here are the tax slabs for the new regime:
- Up to 2,50,000 : No tax
- 2,50,000-5,00,000: 5%
- 5,00,000-7,50,000: 10%
- 7,50,000-10,00,000: 15%
- 10,00,000-12,50,000: 20%
- 12,50,000-15,00,000: 25%
- More than 15 lakhs: 30%
In this regime, tax rates steadily increase with increases in the various income levels. Consider the following example: assume your annual income is ₹8 lakhs. Then, you pay 5% on ₹2.5 lakhs-₹5 lakhs; 10% on ₹5 lakhs-₹7.5 lakhs; and so on.
2. New Tax Regime (without deductions and exemptions) The new tax regime has lesser tax rates but investments for PPF, ELSS, or HRA don’t even allow you to deduct. Here are the tax slabs for the new regime:
- Up to 2,50,000 : No tax
- 2,50,000-5,00,000: 5%
- 5,00,000-7,50,000: 10%
- 7,50,000-10,00,000: 15%
- 10,00,000-12,50,000: 20%
- 12,50,000-15,00,000: 25%
- More than 15 lakhs: 30%
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Tax Slabs for Senior Citizens
(Between 60 and 80 Years)
1. Old Tax Regime (with deductions and exemptions)
- Up to ₹5 lakhs: No tax
- ₹5 lakhs to ₹10 lakhs: 20%
- Above ₹10 lakhs: 30%
Super senior citizens are free from tax on income up to ₹5 lakhs under the old regime. This is one of the beneficial features for retirees who may have limited income sources.
2. New Tax Regime (without deductions and exemptions)
- Up to ₹2.5 lakhs: No tax
- ₹2.5 lakhs to ₹5 lakhs: 5%
- ₹5 lakhs to ₹7.5 lakhs: 10%
- ₹7.5 lakhs to ₹10 lakhs: 15%
- ₹10 lakhs to ₹12.5 lakhs: 20%
- ₹12.5 lakhs to ₹15 lakhs: 25%
- Above ₹15 lakhs: 30%
In the new tax regime, there are no special benefits for super senior citizens which we saw in old regimes that makes the old regime more beneficial for super senior citizens.
2. New Tax Regime (without deductions and exemptions)
- Up to ₹2.5 lakhs: No tax
- ₹2.5 lakhs to ₹5 lakhs: 5%
- ₹5 lakhs to ₹7.5 lakhs: 10%
- ₹7.5 lakhs to ₹10 lakhs: 15%
- ₹10 lakhs to ₹12.5 lakhs: 20%
- ₹12.5 lakhs to ₹15 lakhs: 25%
- Above ₹15 lakhs: 30%
Tax Rebates and Surcharges
1. Rebate Under Section 87A
According to the rules if your total income is less than 5 Lakhs then you are eligible for a tax rebate under Section 87A which is available under both regimes i.e. old regime and new regime. The rebate amount limit is up to 12,500 Rs, which means you won’t have to pay for any taxes if you earn less than 5 lakhs.
2. Surcharge
In case your income exceeds ₹50 lakhs you will have to pay a surcharge over and above the normal tax:
- Income between ₹50 lakhs and ₹1 crore: 10% surcharge
- Income between ₹1 crore and ₹2 crores: 15% surcharge
- Income between ₹2 crores and ₹5 crores: 25% surcharge
- Income above ₹5 crores: 37% surcharge
This surcharge is applicable both in old and new tax regimes.
3. Health and Education Cess
Under both the above regimes, another 4% Health and Education Cess is deducted from the total income tax, including surcharge. This cess collected by the government is used to finance health and education schemes only.
2. Surcharge In case your income exceeds ₹50 lakhs you will have to pay a surcharge over and above the normal tax:
- Income between ₹50 lakhs and ₹1 crore: 10% surcharge
- Income between ₹1 crore and ₹2 crores: 15% surcharge
- Income between ₹2 crores and ₹5 crores: 25% surcharge
- Income above ₹5 crores: 37% surcharge
3. Health and Education Cess
Under both the above regimes, another 4% Health and Education Cess is deducted from the total income tax, including surcharge. This cess collected by the government is used to finance health and education schemes only.
Which Tax Regime Should You Choose?
Confused about which tax regime you should go with? Selecting one from the old regime and new regime entirely depends on your income and age. For example, if you come under the category of super senior citizen you should choose the old regime as it provides more benefits as compared to the new regime. Moreover if you don’t have many deductions you can go with the new tax regime that has lower tax rates which can help you save money. Calculate your tax liability under both regimes accurately before making an informed decision.
Conclusion
In 2024, for taxpayers there are multiple options to choose from, for example, they can select one based on their income, it can be the old tax regime or new tax regime. Both come with several benefits and few disadvantages. The tax slab will be depending on the taxpayers age. By understanding the tax slabs and rebates, you can select the one that benefits you and can maximize your savings.
