Taxation

Simplifying the New Income Tax Slabs FY 2023-24 & AY 2024-25

calendar26 Dec, 2023
timeReading Time: 13 Minutes
Income Tax Slabs 2023-24

The income tax slab is one of the most important considerations when filing our income tax returns. Every year, the Income Tax Department issues new income tax slabs that determine how much an individual or entity has to pay. Yet, with the last few years’ changes in income tax slabs (for FY 2023-24 and AY 2024-25), taxpayers have been confused, particularly across age groups. In this post, we try to simplify income tax slabs for different age groups and explain the options which will be available under the new regime. Thus, we will jump in and try to understand the nuances of income tax slabs for the general category: people between 60-80 years old, people above 80 years old, domestic companies and partnership firms/LLPs.

Income Tax Slabs Overview

Knowing the income tax slabs is very important when we have to file our returns. These slabs determine how much tax we have to pay, and they are different from one year to the next. Now that the income tax slabs have shifted for FY 2023-24 & AY 2024-25 uncertain, you must know exactly what is going on under this new regime.

The income tax slabs are according to different age groups and types of entities. In the general category, income tax slabs for individuals remain as in the previous financial year. But there are a few exceptions for those between 60 and 80 years old and people who are eighty or older. These changes have been made to give tax breaks for the elderly.

The income tax slabs have been adjusted to provide higher exemptions for those 60-80 years old. Thus, the taxable income for this age group will be smaller, and so their annual income tax liability will be lower. Also, those 80 years of age and over have been given even greater exemptions in order to reduce their tax burden.

For domestic firms, the income tax rate is still that of last year. However, according to government policy, there may be changes in the exemptions and deductions applicable to such entities.

There are also separate income tax rates for partnership firms and LLPs. These rates may be different from those for individuals and companies. Firms and LLPs need to be aware of these rates to correctly compute their income tax liability.

In short, the income tax slabs for different age groups and entities should be clear to one. If one knows the income tax rate, then when calculating their own income tax obligation, they will be able to conform with regulations laid down by the Income Tax Department. It is also necessary to stay up-to-date on changes in the income tax regime so that you don’t miss any relevant exemptions or deductions. The income tax slabs can help people and companies determine their future financial situation.

The table for the new tax regime slabs:-

Tax SlabRates
Up to Rs. 3,00,000NIL
Rs. 300,000 – Rs. 6,00,0005% on income which exceeds Rs 3,00,000
Rs. 6,00,000 to Rs. 900,000Rs 15,000 + 10% on income more than Rs 6,00,000
Rs. 9,00,000 to Rs. 12,00,000Rs 45,000 + 15% on income more than Rs9,00,000
Rs. 12,00,000 to Rs. 1500,000Rs 90,000 + 20% on income more than Rs 12,00,000
Above Rs. 15,00,000Rs 150,000 + 30% on income more than Rs 15,00,000

Note:-All taxpayers with annual income below Rs. 7,00,000/- are eligible for tax rebate u/s 87A.

Tax Slabs for People Between 60 and 80 Years Old

Their income tax liabilities are revised as individuals reach retirement age. That’s why it is also important for people who are between the ages of 60 and 80 to understand what income tax slabs apply in their case. These slabs determine the taxes they pay and can have a big effect on financial planning.

People between the ages of 60 and 80 have been given higher exemptions under Income Tax Slabs for FY23-24 & AY24-25 to reduce their taxable income. In short, their tax burden will be less than in the previous financial year. Thus, people of this age can effectively use these expanded exemptions to manage their taxes and optimize their finances.

A higher income tax exemption limit is a major advantage for people of 60-80 years of age. Thus, a part of their income isn’t subject to taxation, leaving them with more disposable income. The exemption limit can also differ depending on gender and residence. People in this age bracket must stay current with the latest income tax regulations to get the most out of them.

Besides the higher level of exemption, people between the ages of 60 and 80 are also eligible for various deductions and rebates. These deductions are allowed for medical treatments, health insurance premiums and contributions to charitable organizations. These deductions are effective in reducing taxable income and lowering the overall burden of your taxes.

The income tax slabs for people aged 60 to 80, however, may differ from those in the general category. People in this age bracket should know these particular slabs to properly calculate tax liability:-

Tax SlabsRates
Rs. 3 lakhsNIL
Rs. 3 lakhs – Rs. 5 lakhs5.00%
Rs. 5 lakhs – Rs. 10 lakhs20.00%
Rs. 10 lakhs and more30.00%

Tax Slabs for Those Over 80

As for those 80 and above, the revenue slabs have been structured to give them large exemptions and benefits. This is designed to let senior citizens in this age bracket shoulder a lower tax burden and stay financially afloat during their golden years.

All individuals aged 80 years and above get higher income tax exemptions under the new Income Tax Slabs for FY 23-24 & AY 24-25. In other words, some of their income goes untaxed. They can, therefore, keep more to spend on consumption and save as a nest egg for retirement. This acknowledgement of their service to society and need for financial security reflects the higher level of income tax exemption accorded individuals in this age group.

For people 80 or older, these increased exemptions should be understood and used. In this way, they can better plan their financial affairs and minimize their tax burden. This can save them significant assets in their overall financial planning and allow people to enjoy a comfortable, stress-free retirement.

Besides the income tax exemption, people aged 80 and over can also take advantage of other deductions or benefits. Deductions for medical expenses, health insurance premiums and charitable contributions may also be provided. These deductions allow senior citizens to reduce their taxable income and thus leave more funds for themselves.

Worth remembering is that income tax slabs applicable to persons of 80 years and above differ from the other age groups. Seniors must ask a tax professional or check with the official Income Tax Department guidelines to determine what brackets apply to them.

Basically, the income tax structure for 80-year-olds and older is arranged to help relieve their financial burdens in old age. Therefore, by making use of the raised exemptions and deductions afforded senior citizens, they can comfortably manage their taxes. The Senior citizen tax slab in detail is written below:-

Tax SlabsRates
Rs. 0 –  5 lakhsNIL
Rs. 5 lakhs –  10 lakhs20.00%
Above Rs. 10 lakhs30.00%

Taxation for Domestic Companies

The income tax rate is the same as in the previous financial year for domestic companies. However, changes in the exemptions and deductions offered for these entities are subject to policy considerations. For domestic companies, the important thing is to understand all these rules and regulations in order not to run into trouble with the Income Tax Department.

Domestic companies are taxed on their profits for the financial year. The tax rate for domestic companies is fixed for the financial year 2023-24 & assessment year 2024-25, as per the table below. But other surcharges and cess also may have to be paid, as determined by the company’s turnover or type of business.

Besides the tax rate, many other provisions under the Income Tax Act require domestic companies to do things like submit their income tax returns & maintain books of accounts with properly reflective items, as well as pay taxes on time. Moreover, they have to make sure that advance tax is calculated and paid accurately. Otherwise, there will be penalties or even legal consequences.

Domestic companies should investigate the different deductions and exemptions available to them in order to plan their tax planning. These can include such things as deductions for R & D, employee welfare or export incentives and investment in certain sectors. Moreover, companies can take advantage of the tax benefits offered under government schemes and incentives aimed at promoting economic growth and development.

Suppose you want to get your bearings in this intricate maze of income tax for domestic companies. In that case, there is no better way than asking the experts, tax consultants, or chartered accountants specializing in matters affecting taxes. The latter can help companies grasp the detailed stipulations and find suitable tax planning approaches.

If domestic companies stay up to speed with the newest changes in taxation rules and regulations, they can ensure compliance as well as minimize their tax burden. Companies must also understand the income tax slabs and regulations that apply to them in order to make decisions on their own behalf, knowing full well how much they will have to pay.

ParticularsExisting or Old Regime Tax RatesNew Regime Tax Rates
The company opts for section 115BAB (not covered in sections 115BA and 115BAA) & is registered on/after October 1, 2019, and has started manufacturing on/before March 31 202315%
The company opts for Section 115BAA, where the total income of a company has been computed without claiming specified deductions, exemptions, incentives, and ancillary depreciation.22%
The company chooses section 115BA registered on/after March 1, 2016, is in the production of any article or thing, and does not claim a deduction as mentioned in the section.25%
Turnover/gross receipt of the company is not more than Rs. 400 crores in the previous year25%25%
Other Domestic Company30%30%
  • Surcharge applicable for companies-

7% of Income tax where net income is more than Rs 1 crore

12% of Income tax where net income is more than Rs.10 crores

10% of income tax where inbound company opted Section 115BAA and 115BAB

  • Additional Health & Education Cess Rate – 4%

Tax Rate for Partnership Firms and LLPs

Many entrepreneurs and professionals choose the business structure of partnership firms or Limited Liability Partnerships (LLPs). Income tax, however, is not so simple. For these entities, it can be difficult to grasp the relevant rates and rules of income taxation. Let us simplify the income tax rates for partnership firms and LLPs and then outline their respective taxes.

Income tax rates for partnership firms vary according to their total income. Partnership firms pay a flat 30 % tax on their total income as per the Income Tax Slabs for FY2023-24 & AY 2024-25. Thirty per cent of the firm’s profits will thus be payable as income tax. However, partnership firms also have to pay an additional surcharge and cess based on their levels of income.

LLPs, however, do have a slightly different income tax rate structure. LLPs are taxed on their total income at a flat rate of 30 %, like partnership firms. But LLPs, as well, have surcharges and cess levied on them based upon their income level. The surcharge and cess may be determined based on the total income of the LLP.

Also, partnership firms and LLPs must observe the provisions of the Income Tax Act. They need to file their income tax returns properly; meanwhile, they have to keep proper books of accounts. These entities must also ensure that they correctly calculate and pay their advance tax, or else face the penalties of non-compliance.

Partnership firms and LLPs may be able to improve tax planning strategies by taking advantage of deductions and exemptions that are available. Deductions might be for expenses of business operations, employees ‘benefits and investments. Thus, through these deductions, such entities can lower their taxable income and decrease the amount of taxes owed.

Note:-A Surcharge of 12% is applicable on incomes above Rs 1 crore, along with a Health and Education Cess Rate – of 4 %

Significance of The New Income Tax Regime

The new Income Tax Regime introduced for Assessment Year (AY) 2024-25 has made some significant changes to the income tax slabs. Knowing these changes is key to planning your taxes and managing your money properly. So, on to learning about the new income tax system.

With the new regime, taxpayers can choose between old and new income slabs. The old regime uses the traditional system with different tax slabs and deductions, whereas under the new regime, one gets lower rates but fewer exemptions and deductions. You need to systematically analyze your financial situation, taking income sources and investments into account as well.

Selecting the right regime can save you a lot in taxes. If you already have large deductions and exemptions under the past regime, however, then it could be better to stay right where you are. But if your income is comparatively high and you have few deductions, then the new system with low rates could be a better choice.

Furthermore, getting a handle on the new income tax regime means staying current with developments from the Income Tax Department. Tax laws and regulations change from year to year, so it’s essential for people to keep up-to-date in order to be able to make intelligent financial choices.

For a clearer picture of the new income tax regime, one might wish to turn for advice to a professional or chartered accountant well-versed in taxes. Because they are familiar with the situation of each individual investor, and since many factors must be taken into consideration for those investing under the new regime to succeed in achieving their optimum rewards (in short), these organizations provide personalized advice based on your financial status.

With knowledge of the new taxation regime, you could plan your taxes more effectively, consequently complying with regulations set by the Income Tax Department. Mutual tax planning can also help you achieve your financial aspirations and bring peace of mind. So, keep in touch, look up the experts, and take advantage of this new income tax regime.

The HUF and Individual tax slab that are applicable-

SlabNew Tax Regime (Before Budget 2023 – until March 31 2023)New Tax Regime (After Budget 2023 – From April 1 2023)
Rs. 0 to Rs. 2,50,000NILNIL
Rs. 2,50,000 to Rs. 3,00,0005%NIL
Rs. 3,00,000 to Rs. 5,00,0005%5%
Rs. 5,00,000 to Rs. 6,00,00010%5%
Rs. 6,00,000 to Rs. 7,50,00010%10%
Rs. 7,50,000 to Rs. 9,00,00015%10%
Rs. 9,00,000 to Rs. 10,00,00015%15%
Rs. 10,00,000 to Rs. 12,00,00020%15%
Rs. 12,00,000 to Rs. 12,50,00020%20%
Rs. 12,50,000 to Rs. 15,00,00025%20%
More than Rs. 15,00,00030%30%

Tips for Optimal Tax Planning

Tax planning is an important aspect of money management. Tax strategies: It is possible to reduce your tax burden by using innovative tactics. Here are some tips for optimal tax planning:

1. Understand the income tax slabs: You must be clear on the income tax slabs applicable to your age group or entity. This way, you will know the rates of effective taxes, deductions and exemptions from which tax liability can be calculated objectively.

2. Take advantage of exemptions and deductions: The Income Tax Department has numerous exemptions and deductions available for reducing your taxable income. It may include deductions for investment, medical expenses and donations to charity organizations. Take advantage and explore all the options to minimize your tax burden.

3. Plan your investments wisely: These include investments in tax-saving vehicles such as the Public Provident Fund (PPF), National Savings Certificates (NSC) and Equity Linked Saving Schemes. They can help you save for your future, but they also have attractive tax features. To optimize tax savings, diversify your investments and keep a balanced portfolio.

4. Keep track of deadlines: Keep your paperwork in order. File and pay income taxes on time. Missing the deadlines can lead to penalties and even legal proceedings. Technology keeps us on track. To avoid that last-minute rush, use the technology tools or call a tax professional to check whether any of these crucial dates matter.

5. Seek professional advice: However, if the income tax laws and regulations are too complex for you to handle yourself, seek advice from a specialist in that field of work, such as a tax professional or chartered accountant. They can give you tailored financial advice according to your current situation and guide you through the maze of tax planning.

6. Stay updated with changes: The income tax laws and regulations vary from year to year. You must keep up with the latest developments and amendments. Subscribe to news sources you can trust, be aware of official announcements from the Income Tax Department and attend seminars or webinars on tax issues, making sure not to miss anything.

Implementing these suggestions will help you refine your tax planning plans and follow Income Tax Department regulations. Effective tax planning saves you money and gives you a sense of security. Okay, now get your finances in order, plan well and maximize the effects of tax planning.

Frequently Asked Questions (FAQs)

1. What is the new income tax slab for 2023?

The new income tax slabs are much simplified than the previous tax slabs with its six slabs only, now, i.e., 0% for income below Rs. 3 Lakhs, 5% for income between Rs. 3 Lakhs and Rs. 6 Lakhs, Rs. 10% for income between Rs. 6 Lakhs and Rs. 9 Lakhs, 15% for income between Rs. 9 Lakhs and Rs. 12 Lakhs, 20% for income between Rs. 12 Lakhs and Rs. 15 Lakhs and 30% for income above Rs. 15 Lakhs.

2. What is the income tax rule for 2023-24?

As the New Tax Regime is optional, the taxpayer opting for concessional rates in the New Tax Regime will not be allowed several Exemptions and Deductions (likeHRA, 80C, 80D, 80TTB) available in the Old Tax Regime. Nonetheless, the deductions under sections 80CCD(2), 80CCH(2) and 80JJAA will be available in the New Tax Regime.

3. How to calculate income tax for FY 2023-24?

Step 1- Identify your slab in the Tax Regime, new or old, as per your choice.
Step 2- Disclose any eligible investments and deductions
Step 3- Specify exemption, if any

4. What is the tax slab for the old regime 2023-24?

The old income tax slabs are much more complex than the new tax slabs with their seven slabs, i.e., 0% for income below Rs. 2.5 Lakhs, 5% for income between Rs. 2.5 Lakhs and Rs. 5 Lakhs, 10% for income between Rs. 5 Lakhs and 7.5 Lakhs, 15% for income between Rs. 7.5 Lakhs and Rs. 10 Lakhs, 20% for income between Rs. 10 Lakhs and Rs. 12.5 Lakhs, 25% for income between Rs. 12.5 Lakhs and Rs. 15 Lakhs and 30% for income above Rs. 15 Lakhs.

5. How much income is tax-free?

As per the new Tax Regime, Income up to Rs. 3 Lakhs directly attracts 0% tax, while income up to Rs. 7 Lakhs attracts tax rebate u/s 87A, which effectively makes it tax-free.

6. What is the exemption limit for income tax slab 2023?

Income up to Rs. 3 Lakhs

7. How to calculate income tax on salary with example for 2023 24?

1. For the 1stRs. 3 Lakhs of your income, no tax is required to be paid.
2. For the next Rs. 3 Lakhs of your income, i.e., from Rs. 3,00,001 to Rs. 6,00,000, 5% of 3,00,000 is to be paid as tax.
3. For the next Rs. 3 Lakhs of your income i.e., from Rs. 6,00,001 to Rs. 9,00,000, 10 % of the 3,00,000 is paid as tax.
4. For the next Rs. 3 Lakhs of your income i.e., from Rs. 9,00,001 to Rs. 12,00,000, 15 % of the 3,00,000 is paid as tax.
5. For the next Rs. 3 Lakhs of your income i.e., from Rs. 12,00,001 to Rs. 15,00,000, 20 % of the 3,00,000 is paid as tax.
6. For the remaining part of your income, i.e., aboveRs. 15,00,001, 30 % of the remaining amount is paid as tax.

8. How much tax do I pay on 7.5 lakhs?

As per the New Tax Regime,
1. For the 1stRs. 3 Lakhs of your income, no tax is required to be paid.
2. For the next Rs. 3 Lakhs of your income, i.e., from Rs. 3,00,001 to Rs. 6,00,000, 5% of 3,00,000 is to be paid as tax.
3. For the next Rs. 1.5 Lakhs of your income i.e., from Rs. 6,00,001 to Rs. 7,50,000, 10 % of the 1,50,000 is paid as tax.

9. Is a standard deduction of 50000 applicable in the new tax regime?

Yes, under the new tax regime, salaried taxpayers are now eligible for a standard deduction of Rs. 50,000/-.

10. How do I pay zero tax on a salary of 15 lakhs?

By making best-suited investments into term insurance plans, life insurance plans, long-term goals and retirement, investment in a child’s future, and wealth from inflation and market trends, among many other methods.

11. How do I calculate my taxable income?

Add the different salary components to arrive at gross salaryby adding all the allowances to basic pay
Now, deduct the non-taxable portion of partially taxable allowances, such as HRA and LTA. Follow the formula prescribed by the Income Tax Departmentto calculate the HRA exemption. The formula says that the exemption should be the lowest of the following amounts:
HRA received
rent per month minus 10% of the basic monthly salary or
50% of basic salary, 40% in case of non-metro residents
Also, you must deduct professional tax and standard deduction on salary at this stage. Salaried individuals are entitled to a standard deduction of ₹ 52,500.
If you have another income stream other than your salary, add it to the total amount. This includes interest, fees, commission, rental income, capital gains, etc.
The amount you arrive at is called gross total income. To understand your tax liability, you now have to calculate your net taxable income. This is done by deducting the tax deductions from the gross taxable income.

12. Is HRA exempted from income tax?

If the taxpayer lives in rented accommodation and has received HRA as part of his/her CTC, then the taxpayer shall be eligible for HRA exemption upon submitting valid rent receipts and proof of rent payment.

13. How much tax do I pay on nine lakhs?

As per the New Tax Regime,
1. For the 1stRs. 3 Lakhs of your income, no tax is required to be paid.
2. For the next Rs. 3 Lakhs of your income, i.e., from Rs. 3,00,001 to Rs. 6,00,000, 5% of 3,00,000 is to be paid as tax.
3. For the next Rs. 3 Lakhs of your income i.e., from Rs. 6,00,001 to Rs. 9,00,000, 10 % of the 3,00,000 is paid as tax.

14. How do I pay zero tax?

Claiming the standard deductions
If any interest is paid on your housing loan, that can be deducted.
Deductions u/s 80C.
If any premium is paid on your health insurance, that can be deducted.
Rebate u/s 87A.

15. How can I save tax on an 8.5 lakh salary?

By making best-suited investments into term insurance plans, life insurance plans, long-term goals and retirement, investment in a child’s future, and wealth from inflation and market trends, among many other methods.

Read Our Article: Tax Audit Limit For AY 2023-24

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