New Income Tax Slab Rates introduced in the Budget 2023 for AY 2024-25 onwards is kept optional for the taxpayers, where, they are open to choose the tax slabs of old regime (FY 2023-24).
After ushering in new financial year from 1st April 2023, new income tax regime has become a by default tax regime for taxpayers. However, an earning individual will have the option to opt old income tax regime.
New Income Tax slabs FY 2023-2024: Taxpayers are allowed to claim three deductions under the New Income Tax regime. The New Income Tax regime will also be the default option, starting financial year 2023-24.
New Income Tax Slabs FY 2023-24 and Deductions:
Finance Minister Nirmala Sitharaman tweaked the New Income Tax regime slabs while presenting the Union Budget 2023 to make it more attractive. She also declared that the New Income Tax regime will be the default option for taxpayers, starting from the financial year 2023-24.
There is following Income Tax Rate under the New Tax Regime and Old tax Regime
New Income Tax Slabs FY 2023-24( as per budget 2023)
| Income Range | Income Tax Rates |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3.00,000 to Rs. 6,00,000` | 5% |
| Rs. 6,00,000 to Rs. 900,000 | 10% |
| Rs. 9,00,000 to Rs. 12,00,000 | 15% |
| Rs. 12,00,000 to Rs. 1500,000 | 20% |
| Above Rs. 15,00,000 | 30% |
4% Health and Education Cess is applicable on all the above taxes
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Rebate of Rs. 12,500 u/s 87A is applicable for tax slabs of old regimes, for taxes on annual income not exceeding Rs. 5.00 lakh.
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In Budget 2023, rebate under new regime has been increased upto 25000 and therefore, income upto Rs 7 lakh will be tax-free.
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In Budget 2023, the highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (applicable from 1st April 2023)
While opting for the new tax slab
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Option to be exercised on or before the due date (31 JULY 2023) of filing ITR for AY 2023-24
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Individuals/HUFs having no business income can choose between old and new regime tax slab every year.
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For those, who are having business income get one time chance to choose their option. Once done, they are to follow the rule every year, unless they cease this source of income.
Common tax deductions for salaried taxpayers allowed in Old Tax Slab Rates and New Tax Regime
| S.NO | |
|---|---|
| 1 | Standard Deduction (Rs 50,000) |
| 2 | Perquisites for official purposes |
| 3 | Interest on Home Loan u/s 24b on let-out property only |
| 4 | Employer’s contribution to NPS |
| 5 | All contributions to Agniveer Corpus Fund – 80CCH |
| 6 | Deduction on Family Pension Income |
| 7 | Conveyance Allowance |
| 8 | Exemption u/s 10(10), 10(10AA) AND 10(10C) |
We’re giving the easy scheme in which you can switch between Old and New Tax Slab Rates, when you wish to make an investment for tax deduction:
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The taxpayers earning up to upto INR 5 lakh come under the rebate of INR 12,500 available in Section 87A and have zero tax liability. So, they are not coming under any available tax deduction.
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For income of upto INR 7 lakh, if you have the investment amount of INR 2,00,000 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime, rebate of INR 25,000 available in Section 87A and have zero tax liability.
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 7,00,000 | 7,00,000 |
| Less Deduction Amount | (2,00,000) | - |
| Taxable Amount | 5,00,000 | 7,00,000 |
| Tax Calculation | 12,500 | 25,000 |
| Rebate u/s 87A | 12,500 | 25,000 |
| TAX PAYABLE | NIL | NIL |
"The calculation is shown excluding the CESS amount."
For income of INR 8 lakh, if you have the investment amount of INR 1,87,500 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime,
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 8,00,000 | 8,00,000 |
| Less Deduction Amount | (1,87,500) | - |
| Taxable Amount | 6,12,500 | 8,00,000 |
| Tax Calculation | 35,000 | 35,000 |
| Rebate u/s 87A | NIL | NIL |
| TAX PAYABLE | 35,000 | 35,000 |
"The calculation is shown excluding the CESS amount."
For income of INR 9 lakh, if you have the investment amount of INR 2,37,500 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime,
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 9,00,000 | 9,00,000 |
| Less Deduction Amount | (2,37,500) | - |
| Taxable Amount | 6,62,500 | 9,00,000 |
| Tax Calculation | 45,000 | 45,000 |
| Rebate u/s 87A | NIL | NIL |
| TAX PAYABLE | 45,000 | 45,000 |
For income of INR 10 lakh, if you have the investment amount of INR 2,62,500 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime,
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 10,00,000 | 10,00,000 |
| Less Deduction Amount | (2,62,500) | - |
| Taxable Amount | 7,37,500 | 10,00,000 |
| Tax Calculation | 60,000 | 60,000 |
| Rebate u/s 87A | NIL | NIL |
| TAX PAYABLE | 60,000 | 60,000 |
"The calculation is shown excluding the CESS amount."
For income of INR 11 lakh, if you have the investment amount of INR 2,87,500 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime,
Click here to check the update of Tax Regime AY 2022-22: "Old And New Tax Regime Rates For AY 2021-22".
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 11,00,000 | 11,00,000 |
| Less Deduction Amount | (2,87,500) | - |
| Taxable Amount | 8,12,500 | 11,00,000 |
| Tax Calculation | 75,000 | 75,000 |
| Rebate u/s 87A | NIL | NIL |
| TAX PAYABLE | 75,000 | 75,000 |
"The calculation is shown excluding the CESS amount."
For income of INR 12 lakh to upto15 lakh if you have the investment amount of INR 3,12,500 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime,
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 12,00,000 | 12,00,000 |
| Less Deduction Amount | (3,12,500) | - |
| Taxable Amount | 8,87,500 | 12,00,000 |
| Tax Calculation | 90,000 | 90,000 |
| Rebate u/s 87A | NIL | NIL |
| TAX PAYABLE | 90,000 | 90,000 |
For income of more than INR 15 lakh, if you have the investment amount of INR 3,75,000 or more eligible for tax deduction, opt for Old Tax Regime. But, if your investment is less than that, go for New Tax Regime,
| Particulars | Old Regime (In INR) | New Regime (In INR) |
| Taxable Income | 15,00,000 | 15,00,000 |
| Less Deduction Amount | (3,75,000) | - |
| Taxable Amount | 11,25,000 | 15,00,000 |
| Tax Calculation | 150,000 | 150,000 |
| Rebate u/s 87A | NIL | NIL |
| TAX PAYABLE | 150,000 | 150,000 |
Note :- Investment Amount
Let’s understand how to calculate taxes using both new and old tax regimes with the help of an example:-
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Income from Salary after HRA and LTA benefit - 9,20,000
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Income from Other Sources - 20,000
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Deduction u/s 80C - 1,50,000.
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Deduction u/s 80D - 25000
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Deduction u/s 80CCD(1B) - 50000.
So, total taxable income would be 6,65,000
Important Note :- The new tax system (effective for FY 2023–24) offers a tax rebate on an income of Rs 7 lakh. Refunds provided under Section 87A assist taxpayers in lowering their income tax obligations. You can submit a claim for the aforementioned rebate but not for your income tax refund.
Also, Read: "A Comparison Of Old And New Tax Regime Rates For AY 2021-22".
Resources from: https://www.myitronlinenews.com/in/benefit-in-old-and-new-tax-regime-rates-for-f-y-2023-2024-ay-2024-2025