The Government of India levies tax upon the income of salaried and self-employed citizens of all age groups. Once you figure out which tax slab you fall into per your tax regime, it becomes easier to calculate and file taxes, evade charges, and avail of deductions or exemptions accordingly.
The Interim Union Budget 2024-25 did not make critical changes to the income tax rules. This means that the income tax rules will remain the same for taxpayers to choose. While the old tax regime allows taxpayers to avail of exemptions under close to 70 income tax deductions available under various sections of the Income Tax rules, the rates on the new tax regime are fixed but offer lower tax rates than the former.
Forbes Advisor India has put in place the applicable rates chargeable upon the net income (or after deductions) under both old and new tax regimes for taxpayers. Remembering that taxation rules under the new tax regime are the same for all age groups is essential; the rates under the old tax regime are different for individuals below 60 years, senior citizens above 60 to 80 years, and super senior citizens above 80 years.
New Tax Regime: Income Tax Slab For All Individuals FY 2024-25 (Default)
The Union Budget 2023 has made the new tax regime a default one, with the option to choose the old one. Individual taxpayers (irrespective of their age) earning an annual income of up to INR 3 lakh are exempt from paying taxes under the new tax regime. Currently, taxpayers earning up to INR 7 lakh per annum are entitled to a rebate of up to INR 25,000 under Section 87A of the Income-Tax Act.
Old Tax Regime: Income Tax Slab For Individuals FY 2024-25
Individual taxpayers (below 60 years) earning an annual income of up to INR 2.5 lakh are exempt from paying taxes under the old tax regime. Currently, taxpayers earning up to INR 5 lakh per annum are entitled to a rebate of up to INR 12,500 under Section 87A of the Income-Tax Act.
Old Tax Regime: Income Tax Slab For Senior Citizens FY 2024-25
Senior citizens (60 to 80 years) earning an annual income up to INR 3 lakh are exempted from paying tax under the old tax regime.
Old Tax Regime: Income Tax Slab For Super Senior Citizens FY 2024-25
Super senior citizens (80 years and above) earning an annual income up to INR 5 lakh are exempted from paying tax under the old tax regime.
Surcharge Rate: Old Tax Regime Vs. New Tax Regime FY 2024-25
The Government of India levies additional charges on individual taxpayers (irrespective of age) whose annual income exceeds INR 50 lakh. The highest surcharge limit for individuals earning above INR 5 crore under the new tax regime is 25% and 37% under the old tax regime.
BOTTOM LINE
During the Union Budget, the government of India announces any amendments to the income tax slabs for the financial year. The Interim Union Budget 2024-25, ahead of the general election, did not change the personal income tax slabs and rates, and eligible taxpayers have to continue to pay the same rate of tax depending on the tax regime they opt for. The new or re-elected government will present the full detailed Budget in the parliament, which will likely be tabled in July 2024.
Frequently Asked Questions (FAQs)
Were there any income tax changes in the Interim Union Budget 2024-25?
The Interim Union Budget 2024-25 did not change the income tax slabs. The two income tax slabs, new and old tax regimes, will continue for taxpayers to choose from.
What are old and new tax regimes?
Effective from the financial year 2020-21, the Government of India announced an alternative method of levying taxes. While the old tax regime allows taxpayers to avail of tax exemptions under close to 70 income tax deductions available under various sections of the income tax rules, the new rates offer an option to opt for a fixed rate and lower tax rates than the former.
However, in 2023, the government made the new income tax regime a default regime for taxpayers, with the option to choose the old regime.
What are the ways to save your income tax?
The Income Tax Act of 1961 provides taxpayers various deductions for specific investments or expenditures based on annual income. Read more to get an overview of income tax deductions that individual taxpayers can avail themselves of in India.
What is the maximum permissible limit for deductions under the Income-Tax Act?
A taxpayer can only reduce tax outflow within the maximum permissible limit available under the various I-T sections. For instance, Section 80C permits a maximum deduction in investments up to INR 1.5 lakh per annum, to cite an example.