Income Tax Slabs & Tax Rates FY 2024-25 & AY 2025-26: New Tax Regime

What is an Income Tax Slab?

Income tax slabs define the predetermined income range on which tax rates are applied. Individuals, Hindu Undivided Families (HUFs), and other taxpayers must pay their due income tax based on the tax slab into which they fall. Depending on their income, taxpayers may fall into different tax brackets. As a result, higher-income-generating taxpayers will need to pay more taxes. The income tax slabs are revised periodically, typically during every budget.

New Tax Regime

The new tax regime was introduced in the Union Budget of 20201. It presented a different tax slab than the then existing regime. The deductions and exemptions available in the existing tax regime were eliminated in the new regime¹.

Ever since the new tax regime was introduced, the Finance Ministry has made various changes to it. In the Union Budget of 2023, the new tax regime was made the default tax regime unless you choose otherwise1.

Old Vs New Tax Regime

Both the old and the new tax regimes are available for taxpayers to pay their taxes. You can choose either regime, depending on which gives you a lower tax liability. The income tax slabs under both Tax regimes are different and this is applicable for the individuals below 60 years of age. They are as follows² -

New vs Old Regime: Income Tax Slabs

Old Tax Regime	New Tax Regime
Up to ₹2.5 lakhs – Nil	Up to ₹3 lakhs – Nil
₹2.5 lakhs to ₹5 lakhs – 5%	₹3 lakhs to ₹7 lakhs – 5%
₹5 lakhs to ₹10 lakhs – 20%	₹7 lakhs to ₹10 lakhs – 10%
₹10 lakhs and above – 30%	₹10 lakhs to ₹12 lakhs – 15%
	₹12 lakhs to ₹15 lakhs– 20%
	Above ₹15 lakhs– 30%

Now, let’s understand the inclusions and exclusions under the old and new tax regimes –

Old tax regime

New tax regime

Inclusions
There are a several exemptions and deductions under the regime, some of which include the following¹ -

Deductions under Chapter VI – A of the Income Tax Act of 1961
House Rent Allowance
Leave Travel Allowance
Rebates for incomes up to ₹5 lakhs

Inclusions³ –

Standard deduction of ₹50,000 (increased to ₹75,000 in Union Budget 2024)
Employer’s contribution to NPS under Section 80CCD (2) (Increased to 14% from 10% in Union Budget 2024)
Transport allowance for specially-abled persons.
Travelling allowance to meet cost of travel on tour or transfer under Section 10(14).
Daily allowances incurred by employees if they are not at their normal place of business.
Conveyance allowance granted for performance of duties of office.

Exclusions

Chapter VI – A deductions1
Other deductions and exemptions available under the old regime¹

Income Tax Slabs for the below under both regimes

a) Income Tax Slabs for HUF and Individuals²

Old Tax Regime	New Tax Regime
Up to ₹2.5 lakhs – Nil	Up to ₹3 lakhs – Nil
₹2.5 lakhs to ₹5 lakhs – 5%	₹3 lakhs to ₹7 lakhs – 5%
₹5 lakhs to ₹10 lakhs – 20%	₹7 lakhs to ₹10 lakhs – 10%
₹10 lakhs and above – 30%	₹10 lakhs to ₹12 lakhs – 15%
	₹12 lakhs to ₹15 lakhs– 20%
	Above ₹15 lakhs– 30%

b) Income Tax Slabs & Rates for Senior Citizens²

Old Tax Regime	New Tax Regime
Up to ₹3 lakhs – Nil	Up to ₹3 lakhs – Nil
₹3 lakhs to ₹5 lakhs – 5%	₹3 lakhs to ₹6 lakhs – 5%
₹5 lakhs to ₹10 lakhs – 20%	₹6 lakhs to ₹9 lakhs – 10%
₹10 lakhs and above – 30%	₹9 lakhs to ₹12 lakhs – 15%
	₹12 lakhs to ₹15 lakhs– 20%
	Above ₹15 lakhs– 30%

c) Income Tax Slab for Super Senior Citizens²

Old Tax Regime	New Tax Regime
Up to ₹5 lakhs – Nil	Up to ₹3 lakhs – Nil
₹5 lakhs to ₹10 lakhs – 20%	₹3 lakhs to ₹7 lakhs – 5%
Above ₹10 lakhs – 30%	₹7 lakhs to ₹10 lakhs – 10%
	₹10 lakhs to ₹12 lakhs – 15%
	₹12 lakhs to ₹15 lakhs– 20%
	Above ₹15 lakhs– 30%

d) Income Tax Slab for AOP, BOI & AJP⁴

Taxpayers other than Individuals and registered HUFs, such as AOP, i.e. the Association of Persons; BOI, i.e. the Body of Individuals; and AJP, i.e. the Artificial Judicial Person have to choose the Old Tax Regime if they want, as their default tax regime is the New Tax Regime as per last Budget9.

Old Tax Regime	New Tax Regime
Up to ₹2.5 lakhs – Nil	Up to ₹3 lakhs – Nil
₹2.5 lakhs to ₹5 lakhs – 5%	₹3 lakhs to ₹6 lakhs – 5%
₹5 lakhs to ₹10 lakhs – 20%	₹6 lakhs to ₹9 lakhs – 10%
₹10 lakhs and above – 30%	₹9 lakhs to ₹12 lakhs – 15%
	₹12 lakhs to ₹15 lakhs– 20%
	Above ₹15 lakhs– 30%

What is Surcharge & Surcharge on Income Tax for FY 24-25:

A surcharge on income tax is an added tax that taxpayers who have a higher income need to pay during a particular financial year⁵. In the Budget 2023, the highest surcharge of 37% was reduced to 25% for new tax regime, which will be applicable from 1st April 2023 (FY 2023-24)⁵.

Which is better - The Old Tax Regime Vs the New Tax Regime?

Deciding on which is better, the old tax regime vs the new tax regime depends on your annual income level, tax-saving investments, and expenses that you have incurred. You can calculate your tax liability under both the old and the new regimes to see which regime offers the lower tax liability and maximum exemptions and deductions. Here are some of the tips for deciding whether to select the old or new tax regime:

● Check for deductions and exemptions.

If you are eligible for different types of deductions and exemptions which can lower your tax liability, you can go with the old tax regime as such deductions and exemptions can help in saving tax.

● Assess your tax liability.

Calculate your tax liability under both the regimes. Whichever regime gives the lowest tax outgo should be chosen for tax saving.

● The new tax regime is attractive for salaried employees through 2 key changes – Change in the tax slabs & increase of standard deduction from 50,000 to 75,000.

Changes in Tax Rules for FY 2024-25:

The changes in tax rules in budget 2024 are as follows⁶ -

Tax Rules	Changes
Short-Term Capital Gains (STCG)	STCG has been raised from 15% to 20%
Long-Term Capital Gains (LTCG)	LTCG raised from 10% to 12.5%. The tax rate for LTCG on all other assets has been reduced from 20% to 12.5%. Further, the exemption of ₹1 lakh on LTCG on STT paid listed securities and units of equity-oriented funds has been increased to ₹1.25 lakh. The indexation benefit for LTCG tax on real estate has been removed for properties bought after 23-Jul-24. For properties bought before 23-Jul-24, the tax-payer can choose the old rule (20% tax after indexation) or the new rule (12.5% tax without indexation) as per his convenience¹⁴. Period of holding has been rationalised with only two periods i.e. 12/ 24 months depending on class of asset.
New regime	Tax slabs under the new regime have been changed
Standard deduction	The limit of standard deduction has been increased to ₹75,000 under the new regime
Family pension	The deduction limit on family pension has been increased to ₹25,000

Benefits & Limitations of Budget 2024-25

Benefits	Limitations
Increase in standard deductions by ₹25,000 increasing it to ₹75,000 from ₹50,000.12	Initially the Indexation benefit for LTCG tax on real estate was completely removed, which created a higher burden on real estate transactions. So, there has been a change in the regulation now for properties bought before 23-July-24, who can choose to between the old and the new regulations. However, for properties bought after 23-July-24, indexation benefits do not apply^14.
Increase in the deduction on family pension for pensioners by ₹10,000 from ₹15,000 to ₹25,00012	Under the new tax regime, all individual taxpayers' rental income from residential properties must be shown under the head ‘income from house property’ and not as ‘income from business or profession’15.
The exemption of Rs 1 lakh on LTCG on STT paid listed securities and units of equity-oriented funds is now increased to Rs 1.25 lakh.¹²	The rate of tax for the long-term and the short-term capital gains on the STT paid for listed securities and also for the units of equity-oriented funds has gone up from the earlier limit of 10% and 15% to 12.5% and 20%, respectively¹¹.
The deduction limit for employers’ contributions to the National Pension System (NPS) has been increased to 14% from 10% of basic salary1³.	Income from the buyback of shares will now be chargeable as dividends in the hands of the investors, allowing the cost as capital loss from 1 October 2024¹⁶.
Abolition of Angel Tax under the New Tax Regime¹².	An increase in the STT, i.e. the Securities Transaction Tax rates for futures and options, could work as a deterrent in frequent trading¹⁷.

Conditions to Opt for New Tax Regime

There are no specific conditions to opt for the New Tax Regime. Though it is the default regime on the income tax portal, you can change the regime if you want to choose the old regime for filing your returns.

Calculate your tax liability under both the tax regimes and then make a decision as to which regime to choose.

How do you calculate income tax from income tax slabs?

Here’s a simple example to calculate your tax liability using the income tax slabs under both the old and the new tax regimes –

Annual income – ₹15 lakhs from salary
Section 80C contribution - ₹1.5 lakhs
Section 80D deduction available - ₹50,000

Tax liability calculation

Old tax regime	New tax regime(with proposed changes)
Gross taxable income - ₹15 lakhs	Gross taxable income - ₹15 lakhs
Less: Section 80C deduction - ₹1.5 lakhs	Less: Standard deduction - ₹75,000
Less: Section 80D deduction - ₹50,000	Net taxable income - ₹14.25 lakhs
Less: Standard deduction - ₹50,000	Tax liability on the first ₹3 lakhs – nil
Net taxable income - ₹12,50,000	Tax liability on the income between ₹3 lakhs and ₹7 lakhs – 5% of ₹4 lakhs = ₹20,000
Tax liability on the first ₹2.5 lakhs – nil	Tax liability on the income between ₹7 lakhs and ₹10 lakhs = 10% of ₹3 lakhs = ₹30,000
Tax liability on the income between ₹2.5 lakhs and ₹5 lakhs – 5% of ₹2.5 lakhs = ₹12,500	Tax liability on the income between ₹10 lakhs and ₹12 lakhs = 15% of ₹2 lakhs = ₹30,000
Tax liability on the income between ₹5 lakhs and ₹10 lakhs - 20% of ₹5 lakhs = ₹1 lakh	Tax liability on the income between ₹12 lakhs and ₹14.25 lakhs = 20% of ₹2.25 lakhs = ₹45,000
Tax liability on the income between ₹10 lakhs and ₹12.5 lakhs = 30% of ₹2.5 lakhs = ₹75,000	Total tax liability = ₹125,000 (excluding cess)
Total tax liability = ₹187,500 (excluding cess)

Income Tax Rate for domestic companies, foreign companies & Partnership Firms

The tax rates for domestic companies, foreign companies and partnership firms are as follows⁸ –

Domestic company	Foreign company	Partnership firm
Under Section 115BA – 25%	40% (reduced to 35% in Union Budget 2024)	30%
Under Section 115BAA – 22%
Under Section 115BAB The Company which is set up and registered on or after October 1, 2019-15% on Income from manufacturing and short-term capital gain from the depreciable asset. If the company commences the manufacturing process on or after October 1, 2019 but on or before March 31, 2024 - 22% on Income from non-manufacturing activities and short-term capital gain from non-depreciable asset.
Under the First Schedule to Finance Act 2010 wherein the gross receipt or turnover is less than ₹4 billion in the last year – 25%
Under the First Schedule to the Finance Act 2010 – any other domestic company – 30%

Conclusion

So, understand the changes in the tax regime and choose a suitable one when filing your returns. The proposed changes will be effective from this assessment year. To file your returns for the financial year 2023-24, you have to use the existing rules and calculate your tax liability.

Assess which regime gives the lowest tax liability and file your returns under that regime to save more.

What are the taxes on Capital Gains FY 24-25?

If you sell or transfer any financial or non-financial capital asset and incur a gain on the same, a capital gains tax is payable on such profit. The tax rate depends on the period of holding. From 23 July 2024, the short-term capital gain tax is 20%10, and the long-term capital gain tax is 12.5%¹¹.

What are the different types of taxable income?

The different types of taxable income are income from salary, income from business or profession, income from house property, income from capital gains and income from other sources.

How much income is tax-free in India?

Income up to the threshold limit is tax-free. Under the old tax regime, the threshold limit is ₹2.5 lakhs for individuals aged below 60, ₹3 lakhs exemption for senior citizens of India and ₹5 lakh exemption for super senior citizens. Under the new regime, the threshold limit is ₹3 lakhs.

What is the procedure to file an income tax return online?

You will have to visit the income tax department's e-filing portal and file your returns online.

What are Marginal Relief and Health & Education Cess?

If your income is more than ₹50 lakhs but less than ₹1 crore, you become liable to pay a 10% surcharge on your tax liability. In such cases, marginal relief is provided to taxpayers up to the excess tax payable on the income exceeding ₹50 lakhs and the actual income exceeding ₹50 lakhs⁵.

Health and education cess is an additional tax levied by the government to provide healthcare needs and to develop educational infrastructure to the economically weaker sections of the society7.

What are the income slabs on which I can get tax benefits?

You can get an income tax rebate if your income is up to ₹5 lakhs under the old regime and up to ₹7 lakhs under the new regime.

What are the changes in capital gains taxation under the new tax regime? ¹¹

The changes in capital gains tax under the new regime are as follows –

LTCG raised from 10% to 12.5%.
The tax rate for LTCG on all other assets has been reduced from 20% to 12.5%.
Further, the exemption of ₹1 lakh on LTCG on STT paid listed securities and units of equity-oriented funds has been increased to ₹1.25 lakh.
The indexation benefit for LTCG tax on real estate has been removed for properties bought after 23-July-24¹⁴.

Source:

1. https://cleartax.in/s/old-tax-regime-vs-new-tax-regime

2. https://cleartax.in/s/income-tax-slabs

3.https://www.businessinsider.in/personal-finance/news/opted-for-the-new-tax-regime-here-are-the-allowances-and-deductions-you-can-still-avail/articleshow/108704539.cms

4.https://www.indiafilings.com/learn/income-tax-slab-rates-for-f-y-2023-24-a-y-2024-25/

5.https://cleartax.in/s/marginal-relief-surcharge

6.https://timesofindia.indiatimes.com/business/india-business/income-tax-slabs-2024-25-live-updates-budget-2024-new-tax-regime-vs-old-regime-tax-rates-standard-deduction-section-80c-income-tax-slab-changes-tax-announcements/liveblog/111937312.cms

7.https://tax2win.in/guide/education-cess-on-income-tax

8.https://www.india-briefing.com/doing-business-guide/india/taxation-and-accounting/country-wise-tax-structure/corporate-income-tax

9.https://www.incometax.gov.in/iec/foportal/help/non-company/return-applicable-0

10.https://cleartax.in/s/short-term-capital-gains-stcg-tax

11.https://cleartax.in/s/long-term-capital-gains-ltcg-tax