Income tax is a crucial part of financial planning for every Indian taxpayer. The Indian government offers two taxation regimes: the Old Tax Regime and the New Tax Regime, both with different tax slabs and benefits. As we step into the financial year 2024-25, it is important to understand the latest tax slabs and how they impact salaried employees, professionals, and businesses.
In this article, we’ll break down the income tax slabs for FY 2024-25, compare the two tax regimes, and help you decide which one is best for you.
Income Tax Slabs for FY 2024-25 (AY 2025-26)
The income tax slabs for individuals in India are categorized based on age and tax regime:
- Individuals below 60 years
- Senior Citizens (60-80 years)
- Super Senior Citizens (above 80 years)
New Tax Regime (Default for FY 2024-25)
The New Tax Regime, introduced in Budget 2020, simplifies taxation by lowering tax rates but removing exemptions and deductions like 80C, HRA, and LTA.
| Annual Income | New Tax Regime Tax Rate |
|---|---|
| Up to ₹3,00,000 | NIL |
| ₹3,00,001 – ₹6,00,000 | 5% |
| ₹6,00,001 – ₹9,00,000 | 10% |
| ₹9,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Key Highlights of the New Tax Regime:
- No exemptions/deductions under Sections 80C, 80D, HRA, LTA, etc.
- Rebate under Section 87A available for income up to ₹7,00,000, making it tax-free.
- Lower tax rates compared to the old regime.
Old Tax Regime (For Those Opting In)
The Old Tax Regime allows taxpayers to claim deductions like 80C, 80D, and HRA, reducing taxable income.
| Annual Income | Old Tax Regime Tax Rate |
|---|---|
| Up to ₹2,50,000 | NIL |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Key Highlights of the Old Tax Regime:
- Higher tax rates but eligible for multiple deductions and exemptions.
- Rebate under Section 87A for income up to ₹5,00,000.
- Best for individuals who claim 80C, 80D, HRA, and home loan deductions.
Old vs. New Tax Regime: Which One Should You Choose?
Choosing between the old and new tax regimes depends on income structure, deductions, and savings strategy.
Choose the New Tax Regime If:
You don’t have significant deductions under 80C, 80D, or HRA.
You want a simpler tax structure with lower tax rates.
Your annual income is below ₹7,00,000 (tax-free under 87A).
Choose the Old Tax Regime If:
You have high tax-saving investments under 80C (PPF, ELSS, NPS, LIC, etc.).
You pay rent and claim House Rent Allowance (HRA).
You have a home loan with interest deduction under Section 24(b).
Example Calculation:
Let’s assume Arjun earns ₹12,00,000 annually and claims deductions under 80C (₹1.5 lakh), 80D (₹25,000), and home loan interest (₹2 lakh).
- Old Regime Taxable Income: ₹12,00,000 – (₹1,50,000 + ₹25,000 + ₹2,00,000) = ₹8,25,000
- New Regime Taxable Income: ₹12,00,000 (No deductions allowed)
In this case, Arjun saves more tax in the Old Regime due to deductions.
Key Takeaways for Taxpayers in India
The New Tax Regime is now the default option, but taxpayers can still choose the Old Tax Regime.
Salaried individuals with high tax-saving investments should calculate and compare both regimes before filing.
The Rebate under Section 87A makes income up to ₹7,00,000 tax-free in the New Regime.
Taxpayers must declare their choice before filing their Income Tax Return (ITR).
Conclusion
The Income Tax Slabs for FY 2024-25 present two taxation choices: Old vs. New Tax Regime. While the New Regime offers simplicity and lower rates, the Old Regime benefits those with deductions and exemptions.
Before filing your ITR for AY 2025-26, it’s wise to calculate your tax liability under both regimes and choose the one that results in lower tax payments.
Need Help with Tax Filing? Consult us at taxnoteblog@gmail.com for expert tax advice and assistance.
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