New Income Tax Slabs – Direct and Indirect Tax after Interim Budget 2024

Introduction

In the interim budget for 2024, Finance Minister Shrimati Nirmala Sitharaman has announced that there will be no changes to the income tax slabs for the upcoming financial year, which spans from April 1, 2024, to March 31, 2025. As a result, individuals will continue to calculate their income tax payable using the same slabs as in the current financial year, 2023-24.

It's worth noting that under the income tax laws, individuals who do not have any business income are required to choose between the new and old tax regimes each year. This means that an individual can opt for the new tax regime one year and switch back to the old tax regime the following year, depending on their preference and circumstances.

Income Tax Slabs in New Regime

Here are the income tax slabs applicable for FY 2023-24 (AY 2024-25) under the new tax regime, which will remain unchanged for FY 2024-25 according to the interim Budget 2024 proposals:

About New Tax Slabs

Here's what salaried individuals can expect in the new tax regime as per the Budget 2023 changes, applicable for FY 2023-24 and FY 2024-25:

1) Reduction of income tax slabs from six to five.

2) Increase in basic exemption limit to Rs 3 lakh from Rs 2.5 lakh, providing an additional Rs 50,000 benefit in the new tax regime.

3) Zero tax payable for incomes not exceeding Rs 7 lakh, thanks to the hike in rebate under Section 87A.

4) Introduction of standard deduction for salaried, pensioners, and family pensioners.

5) The new tax regime becomes the default tax regime.

6) Reduction of surcharge on incomes exceeding Rs 5 crore to 25% from 37%.

7) Provision of marginal tax relief for small taxpayers with incomes surpassing Rs 7 lakh.

These changes aim to streamline the tax structure and provide relief to salaried individuals.

Income Tax Slabs in Old Regime

In the old tax regime, the basic exemption limits vary based on the age of the individual. For individuals below 60 years, the basic exemption limit is Rs 2.5 lakh. Senior citizens, aged above 60 years but below 80 years, enjoy a higher basic exemption limit of Rs 3 lakh, while super senior citizens aged 80 years and above have a basic exemption limit of Rs 5 lakh.

Here are the income tax slabs for FY 2023-24 (AY 2024-25) in the old tax regime, applicable for individuals below 60 years of age, senior citizens, and super senior citizens. These income tax slabs will remain applicable for FY 2024-25 (AY 2025-26) as well.

Current Tax Slabs for Below 60 Individuals as per Old Regime:

Old Income Tax Slabs for Senior Citizens as per Old Regime:

Old Income Tax Slabs for Super Senior Citizens as per Old Regime:

Update on Direct Tax:

In a significant move aimed at benefiting approximately a crore taxpayer, the Finance Minister proposed the withdrawal of outstanding direct tax demands. Under this proposal, tax demands of up to Rs 25,000 for the period up to the financial year 2009-10 will be withdrawn and demands of up to Rs 10,000 for the financial years 2010-11 to 2014-15 will also be waived.

(Internal Research)