Income Tax Slabs in India: A Comprehensive Guide (AY 2024-25)

In India, the Progressive Tax System is followed which means, the more you earn, the more tax you have to pay. This is where income tax slabs come in which refer to the different income tax rates applicable to different levels of income. In the Indian Taxation System, the income tax rate increases as the income of the taxpayer increases. The people who are earning higher income fall under the higher tax bracket and these income tax slabs are subjected to changes.  

Usually, any changes in the tax slabs are announced with the Budget, however, it is at the discretion of the government to alter the tax slabs. For instance, in the Interim Budget announced by the Finance Minister on 1 February 2024, the income tax slabs for ay 2024-25 remain unaltered. If you are eligible for paying taxes, then it is important to be aware of the latest income tax slabs and the tax regime. This will help you in effective tax planning and tax savings as well. 

Income Tax Slabs in India (AY 2024-25)

Before 2020, there was only one tax regime, which every taxpayer has to abide by. Then in the budget of 2020, a new tax regime was introduced. At present, this new regime has been made the default regime for every taxpayer, unless and until, the taxpayer opts for the old regime. 

Old vs. New Tax Regime

1. Old Tax Regime: Under the old tax regime a taxpayer can avail more than 70 different deductions and exemptions available in the Income Tax Act. This includes the deductions such as HRA, mediclaim policy premium, LIC, and other similar investments and more. These deductions help reduce the taxable income of the taxpayer and in turn the tax liability reduces. Under this regime, anyone earning up to ₹ 5 lakhs in a year, ends up paying zero tax due to the section 87a benefit which offers a rebate of ₹ 12500 for taxpayers with income under ₹ 5 lakhs. 
2. New Tax Regime: The new tax regime came into play in 2020, in which concessional tax rates are offered compared to the old tax regime. This new regime has been made the default one since the Budget of 2023. However, one can choose the old regime if they want to claim deductions. This is where the new regime differs from the old one, and that is the availability of deductions and exemptions. Under this new regime, one cannot avail of the benefits of available exemptions not even HRA, LTA, exemptions under section 80 C, and others except a few such as exemptions against family pension, leave encashment, and now standard deduction is also available in this regime. While the deductions are not available, this regime has lower tax rates and higher tax rebates. Under this regime for AY 2024-25, income up to ₹ 7 lakhs is tax-free, compared to the threshold of ₹ 5 lakhs in the old regime. The surcharges are also lower in this regime, which will be discussed in the later segment of the article. 

You may also want to know the New vs Old Tax Regime

Tax Slabs

Old Regime Tax Slabs

Tax Slab (₹)	Old Tax Rates	Surcharge	Health and Education Cess	Effective Tax Rate	Tax on the highest Income Level under the Slab (Rs.)
0 – 2.5 lakh	0%	Nil	4%	0%	–
2.5 lakh – 5 lakh	5%	Nil	4%	5.20%	–
5 lakh – 10 lakh	20%	Nil	4%	20.80%	117000
10 lakh – 50 lakh	30%	Nil	4%	31.20%	1365000
50 lakh – 1 crore	30%	10%	4%	34.32%	3217500
1 crore – 2 crore	30%	15%	4%	35.88%	6951750
2 crore – 5 crore	30%	25%	4%	39%	19256250
5 crore and above	30%	37%	4%	42.74%	19256250 + (42.74% of income above Rs. 5 crores)

As you can see in the above table, these are the old regime tax slabs which have primarily three tax rates which are 5% for income up to ₹ 5 lakhs, then 20% for income up to ₹ 10 lakhs, and 30% for any income above ₹ 10 lakhs in a year. The surcharge under this regime starts from income above ₹ 50 lakhs and the highest surcharge is ₹ 37% which is on income above ₹ 5 crores. The Health and education cess is 4% irrespective of the level of income. 

New Regime Tax Slabs

Tax Slab (₹)	New Tax Rates	Surcharge	Health and Education Cess	Effective Tax Rate	Tax on the highest Income Level under the Slab (Rs.)
0-3 lakh	0%	Nil	4%	0%	–
3 lakh – 6 lakh	5%	Nil	4%	5.20%	–
6 lakh-9 lakh	10%	Nil	4%	10.40%	46800
9 lakh-12 lakh	15%	Nil	4%	15.60%	93600
12 lakh-15 lakh	20%	Nil	4%	20.80%	156000
15 lakh -50 lakh	30%	Nil	4%	31.20%	1248000
50 lakh -1 crore	30%	10%	4%	34%	3088800
1 crore -2 crore	30%	15%	4%	35.88%	6817200
2 crore -5 crore	30%	25%	4%	39%	19110000
5 crore and above	30%	25%	4%	39%	19110000 + (39% of income above Rs. 5 crore)

In the new tax regime, there are more new tax regime slabs or more tax rates for different income brackets. Here the minimum tax rate is 5%, but it starts from an income above ₹ 7 lakhs. In addition, the maximum surcharge under this regime is only 25% compared to 37% of the old regime and that is applicable above ₹ 2 crores of income for the FY24. The health and education cess remains the same under both regimes that is 4% irrespective of income level. 

Importance of Age

If you are opting for the old tax regime slabs, then age will play an important role in deciding the tax slab you would fall into. Under the new tax regime, there are differences in the tax slabs according to age. 

Income tax slabs for different age groups

Individuals below 60 years

Tax Slab (₹)	Old Regime Tax Rates
0 – 2.5 lakh	0%
2.5 lakh – 5 lakh	5%
5 lakh – 10 lakh	20%
10 lakh & above	30%

Senior citizens (60-80 years)

Tax Slab (₹)	Old Tax Rates
0 – 3 lakh	0%
3 lakh – 5 lakh	5%
5 lakh – 10 lakh	20%
10 lakh & above	30%

Super senior citizens (above 80 years)

Tax Slab (₹)	Old Tax Rates
0 – 5 lakh	0%
5 lakh – 10 lakh	20%
10 lakh & above	30%

Taxable Income

Now as you are aware of the income tax slabs under both the tax regimes, to find out under which tax slab you fall into for AY 24-25, you need to calculate your taxable income. 

There are primarily five heads of income under the Income Tax Act, which constitute the taxable income. 

1. Income from Salary: As per section 15 of the Income Tax Act, income from salary includes any income that one receives under the employment contract for offering services. Usually, the incomes include –
   1. Wages
   2. Gratuity
   3. Annuity or pension income
   4. Advance salary
   5. Commission, fees, profits, or any perquisites instead of salary or over the regular salary as an addition
   6. The amount received against leaves which aren’t used (leave encashment)
   7. Transferred balance or annual accretion in recognized PF account up to the amount chargeable as tax
   8. The amount transferred by the central government or any employer under the pension scheme under section 80CCD or Agniveer Corpus fund under section 80 CCH. 
2. Income From House Property: If you have rental income from house property, then it is included in your taxable income. There are three broad categories in which house properties are classified, namely self-occupied properties, let-out properties, and deemed to be let out. If you have more than two self-occupied house properties, then only two will be considered as self-occupied, while the others will be classified as deemed to be let out. The income from house property includes income from both commercial and residential properties. 
3. Income From Profits and Gains of Business and Profession: The third head of income is profits generated from business or profession. Profits and gains means the total income generated from the business or profession minus the expenses incurred for running the same.  
4. Income From Capital Gains: Under this head of income, profits earned by selling capital assets are included. For instance, if you sell gold, shares, properties, mutual funds, or another capital asset, and make a profit out of the deal, then it will be classified as capital gains. Now, capital gains are further classified into two categories based on the nature of the asset and holding period. 

Nature of Asset	Holding Period	Short-term tax rate	Long-term tax rate
Immovable Property	24 months	Slab Rates	20% after Indexation
Unlisted equity shares	24 months	Slab Rates	20% after Indexation
Listed Equity shares or Equity oriented mutual funds	12 months	15%	10%
Other Capital assets	36 months	Slabs rate	20% after indexation
Non-equity mutual funds (Debt funds) Purchased after 1st April 2023	Not Applicable	Slab rates	Slab rates

In the table above, the assets are considered for short-term capital gains, if they are redeemed before the end of the holding period, and if held beyond the holding period and then sold, then they are considered for long-term capital gains. 

5. Income From Other Sources: This includes incomes that do not form a part of the other four heads of income mentioned above as per Section 52 (2) of the Income Tax Act. Some of the most significant incomes that fall under this head are interest received, dividends earned, lottery income, income from speculative events, rent from plant and machinery, and different rewards. 

How to calculate your taxable income?

To pick the right tax slab for your ITR filing, you need to compute the taxable income. The taxable income as mentioned above will include any income falling under the five heads given above. 

Let us understand this with an example. 

Suppose you are working in an MNC which pays you yearly ₹ 10 lakhs. Now, you have a house property, from which you get a monthly rent of ₹ 10000. On your bank account FD, you earned ₹ 15000 in FY24. 

So, your total income would be – 

Income from Salary – ₹ 1000000

Income from House Property – ( ₹ 10000*12 months) ₹    120000

Income from other sources – ₹      15000

Total Income ₹ 1135000

So, this is the total income you earned during FY24, now to derive the taxable income, you need to calculate the deductions that you can avail, of if you are opting for the old tax regime, otherwise, only certain deductions are available for the new tax regime will be applicable. 

So, before we learn how to calculate taxable income, let’s learn about the deductions and exemptions available, and then we can figure out the taxable income under both tax regimes wisely. 

Deductions and Exemptions

Under the old tax regime, more than 70 deductions and exemptions are available while under the old tax regime, a handful of deductions are available which include – 

• A standard Deduction of ₹ 50000, was introduced in this new tax regime during the Budget 2023. 
• Deduction available for family pension received. The amount lower between ₹ 15000 or 1/3^rd of the actual pension amount will be available for exemption. 
• Employer’s contribution to the NPS
• Interest on Home loan on let-out property
• In the case of a specially-abled person, one can claim a transport allowance as an exemption as well. 
• Leave encashment, conveyance allowance, cost of travel for transfer, or work travel. 
• You can also claim a deduction on Gifts received up to ₹ 50000 under this new regime. 

Popular Deductions and Exemptions 

Section 80C

Deductions and exemptions available under section 80C are the most commonly availed ones. This includes some of the significant investment options such as – 

• National Pension Scheme
• Equity Linked Savings Scheme
• Public Provident Fund
• Senior Citizen Savings Scheme
• National Savings Certificate
• ULIP
• Sukanya Samriddhi Yojana
• Fixed Deposits 

The cumulative limit under section 80C is ₹ 1.5 lakh. This means the maximum deduction you can claim under this section is ₹ 1.5 lakh. For instance, you have invested ₹ 10000 every month in an ELSS fund, which makes it ₹ 120000 in a year and ₹ 100000 in the Sukanya Samriddhi Yojana, and then your total investment under section 80 C is ₹ 220000. However, you can claim a deduction only up to ₹ 1.5 lakh. 

Additionally, you can claim a deduction of ₹ 50000 under section 80CCD (1B) for contribution to the NPS account. This is over and above the limit of ₹ 1.5 lakhs mentioned above. 

HRA Exemption

The next most availed exemption availed mainly by salaried taxpayers is the HRA or exemption on House Rest Allowance. The HRA exemption is determined as follows – 

The lowest amount amongst the following values – 

• Actual HRA Received
• 50% of the basic salary for people living in a metro city, or 40% for them living in a non-metro city
• 10% of the basic salary deducted from actual rent paid 

Suppose, you live in Mumbai for your job, and your rented apartment costs you ₹ 30000 in a month. You receive a CTC of ₹ 15 lakhs, out of which Rs. 50000 is the basic salary in a month. The HRA amount you receive from your employer is ₹ 5 lakhs in a year. 

Therefore your HRA exemption will be – 

Actual HRA Received ₹ 500000

50% of the basic salary ( 50%*50000*12) ₹ 300000

10% of the basic salary deducted from actual rent paid 

(₹30000*12) – 10%(₹ 50000*12) ₹ 300000

HRA Exemption ₹ 300000

Section 80 D

You can also claim deductions for the premiums you pay for your mediclaim policies. You can claim a maximum deduction of ₹ 1 lakh in this AY 24-25. This can include – 

• Deduction on mediclaim bought for self, children, and spouse who are below the age of 60 – the maximum deduction that you can claim here is ₹ 25000 in a year. 
• Another ₹ 25000 for parents who are aged below 60 years. 
• If the age of the insurance holder is above 60 years, or the age of the parents is above 60 years, then the exemption limit is ₹ 50000 each making it a maximum deduction of ₹ 1 lakh. 

Section 24 B

Under this section, you can avail deception of ₹ 2 lakh in a year against interest paid on a loan taken for construction or purchase of a house. 

Section 80 TTB

Under this section, senior citizens can claim deductions up to ₹ 50000 in a year on any interest income earned on bank FDs, or savings schemes with post office and similar savings instruments. This is over and above the exemption available under section 80C. 

Standard Deduction

Now, coming to the standard deduction that was earlier available for the salaried people opting for the old tax regime is available for the people opting for the new tax regime as well. This is a flat deduction of ₹ 50000 available for people who have a salary or pension income. 

Tax Calculation

Now, let’s focus on calculating the tax payable by a taxpayer, and to do that, let’s refer to the above examples. 

Your total income was ₹ 1135000, and the HRA deduction available was ₹ 300000, The deduction under section 80C, you can claim is ₹ 1.5 lakhs. Suppose, you have a mediclaim policy, where you pay ₹ 30000 yearly as a premium, and your age is 40. So, the deduction you can claim under section 80 D is ₹ 25000. 

Now let’s calculate the taxable income under both tax regimes. 

Particulars	Old Tax Regime (₹)	New Tax Regime (₹)
Total Income	1135000	1135000
Standard Deduction	50000	50000
Deduction under section 80 C	150000	0
Deduction under section 80 D	25000	0
HRA Deduction	300000	0
Taxable Income	610000	1085000

Now, if you opt for the old tax regime, then your tax liability would be as follows – 

Tax Slab (₹)	Old Tax Rates	Tax Amount
0 – 2.5 lakh	0%	0
2.5 lakh – 5 lakh	5%	12500
5 lakh – 10 lakh	20%	22000
10 lakh & above	30%	–
Tax Amount		34500
Health & Education Cess	4%	1380
Total tax Payable		35880

Under the New regime, the tax liability will be 

Tax Slab (₹)	New Tax Rates	Tax Amount
0-3 lakh	0%	0
3 lakh – 6 lakh	5%	15000
6 lakh-9 lakh	10%	30000
9 lakh-12 lakh	15%	27750
Tax Amount		72750
Health & Education Cess	4%	2910
Total tax Payable		75660

Therefore, as you can see, the old regime, in this case, is more effective in tax savings, because, of the multiple deductions one can avail.

Moreover, the new tax regime is more effective for the higher income groups as the proportion of deductions becomes limited and thus, when the income increases, the new tax regime slabs help in more tax savings. 

Additional Resources

If you want to know about other deductions, and sections of the Income Tax Act, or to remain updated about changes in the income tax slabs then you can visit the website of the Income Tax Department.

• For all the tax slabs, important exemptions, ITR forms, and other details visit – https://www.incometax.gov.in/iec/foportal/help/individual/return-applicable-1
• For the entire list of deductions and exemptions, you can follow this link – https://incometaxindia.gov.in/Charts%20%20Tables/Deductions.htm

Tax Filing Process

On the E-filing site of the Income Tax department, firstly you have to register yourself as a taxpayer. 

Then you need to fill in the income and now you can get a pre-filled form as well. 

Then you have to enter the deductions if you are opting for the old regime. 

Then you have to upload documents supporting the income such as bank statements, payslips, and investment account statements. Once, you are done with these steps, you can proceed with verification and make the payment if you have any tax liability. It takes around a few weeks to months for the verification to be done by the IT department, once the same is done, you can see your return. 

For easily calculating your income tax payable amount to choose the right income tax slab for ay 2024-25 you can also use the Income Tax calculator present on the government’s website. 

Conclusion

The date for filing the ITR for the AY24-25 is nearing so, if this is the first time you are filing your return, and if you are not sure of how to do it, or how to showcase your income and expenses, then you can opt for professional services. They can help you with your tax filing process. 

However, to save taxes, the tax planning should start at the beginning of the financial year, so that you can make use of your investments wisely. Moreover, filing your tax return has become crucial, as it is one of the most important documents you would need when and if applying for any loan. Even for traveling to certain countries, you would need to provide your ITR details. 

If you think your income does not fall under tax payable slabs, then also filing the ITR can be useful for the future. 

FAQs

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