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The income tax in India applies to individuals and businesses based on a slab system. India follows a progressive tax system that enables high-income people to pay high taxes. So, as the income level rises, the tax rates in tax slabs also increase. The tax rates are applicable for different income brackets. Specific surcharges and income tax rates apply to businesses and high-income persons. The new tax regime will be the default tax regime for taxpayers. Intending to benefit the working middle class of the country, the government increased rebates and basic exemptions, provided an extension in the standard deduction, and reduced surcharge rates.
Though the old tax regime remains indifferent, specific changes have been made in the new tax regime. Following are some significant changes in the income tax in India that you should know:
- For FY 2024-25, the new tax regime has been made a default option. So, unless a person chooses explicitly old income slabs, he will be taxed at new tax regime slabs.
- Rebate under section 87A is increased to taxable income of RS 7 lakh. Earlier, this rebate was for income taxable in India of RS 5 lakh. According to this, if you have a taxable income of RS 7 lakh and opt for a new tax regime, you will get a tax rebate of 25000.
- Furthermore, the basic tax exemption limit is increased to RS 3 lakh from RS 2.5 lakh under the new tax regime.
- The standard deduction of RS 50,000 is introduced for pensioners and common salaried persons.
- Under the new tax regime, family pensioners can also claim RS 15000 as a standard reduction.
- The number of income tax slabs in India under the new regime is reduced to 5 from 6.
- The surcharge has been reduced to 25% from 37% under the new tax regime.
- Tax-saving investment options have been removed from the new tax regime. If you invest in any of the best health insurance plans, you won't be able to claim its tax benefits.
In the interim budget of 2024 under the old tax regime, no change is made to calculate income taxable in India. However, if you are a woman, divert some of your investment in women's health insurance to get tax benefits under the old tax regime.
Income taxable in India (Rs) | Tax rates under the new tax regime (%) |
Up to Rs. 3,00,000 | - |
Rs. 300,000 to 6,00,000 | 5% |
Rs. 6,00,000 to 900,000 | 10% |
Rs. 9,00,000 to 12,00,000 | 15% |
Rs. 12,00,000 to 1500,000 | 20% |
Above Rs. 15,00,000 | 30% |
To know income tax in India slabs for senior citizens, check out the following table.
Tax Slabs | Income tax rates (%) |
Rs. 3 lakhs | - |
Rs. 3 lakhs - Rs. 5 lakhs | 5% |
Rs. 5 lakhs - Rs. 10 lakhs | 20% |
Rs. 10 lakhs and more | 30% |
The tax slabs in India for super senior citizens are as follows:
Tax slabs | Income tax rates (%) |
Rs. 0 - Rs. 5 lakhs | - |
Rs. 5 lakhs - Rs. 10 lakhs | 20% |
Above Rs. 10 lakhs | 30% |
The surcharge is levied on income taxable in India if it exceeds the specific annual income limit. Know the applicable surcharges on income tax in India here:
Income taxable in India (Rs) | Old tax regime | New tax regime |
Less than Rs 50 lakh | - | - |
Rs 50 lakh – 1 crore | 10% | 10% |
Rs 1 crore – 2 crore | 15% | 15% |
Rs 2 crore – 5 crore | 25% | 25% |
Rs 5 crore – 10 crore | 37% | 25% |
Above Rs 10 crore | 37% | 25% |
To understand income tax in India slabs and which regime is better suited for you, check the following table:
Benefits | limitations |
Old tax regime | |
Can avail 70 exemptions and deductions. | Only some specified investment options are allowed to claim tax benefits. |
It is suited for those who have already invested in tax-saving investments. | Higher tax rates. |
New tax regime | |
Reduced tax rates. | No major tax-saving investments like health insurance benefits are allowed. |
Not suited for those who get binding premiums from investments. |
|
- In AY 2024-25, there is no change in the tax slabs in India for middle-class employees or salaried taxpayers under the old tax regime.
- Some significant changes have been made in the new tax regime like the basic exemption limit being increased to RS 3 lakh from RS 2.5 lakh.
- A new tax regime has been made a default option for taxpayers. But you can still opt for the old tax regime. For business and profession, choices can be made only once in a lifetime.
- Surcharge rates are also reduced from 37% to 25% in the new tax regime.
- In the new tax regime, tax-saving investments, like some of the best health insurance scheme benefits, cannot be claimed.
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