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Income Tax Rates for AY 2024-25 for Individual / HUF & Understanding New & Old Tax Regime

Understanding income tax rates is crucial for every taxpayer to navigate the financial landscape effectively. As we step into the Assessment Year 2024-25, let's delve into the current income tax rates in India and explore key aspects that every taxpayer should be aware of.


Basics:

1.AY.2024-25: Assessment Year 2024-25 represents the period where you earned the income being taxed, corresponding to the Financial Year (FY) 2023-24.


2. The Income Tax Slab

Individual taxpayers are required to pay income tax according to the slab system that applies to them. A person's income can determine which tax bracket they are in. Higher earners will therefore be required to pay more taxes.


To maintain the equity of the nation's tax structure, the slab system was put in place. With every budget announcement, the slabs are altered.


3. Taxable Income: This is your total income after factoring in eligible exemptions and deductions.


Exploring the Income Tax Slabs for FY 2023-24 (AY 2024-25):

A. Old Tax Regime for Individual & HUF

Income Slab (Rs.)

Less than 60 Yrs

​6o to 80 Yrs

​More 80 Than Yrs

Up to 2,50,000


​Nil


​Nil


Nil


2,50,001 - 3,00,000

5%

Nil

Nil

3,00,000 - 5,00,000

5%

5%

Nil

5,00,000 - 10,00,000

20%

20%

20%

Above 10 Lakhs

30%

30%

30%

· If the total taxable income is less than Rs 5 Lakhs then for individuals than Zero Tax is Payable because he/she gets Rebate u/s 87A up to Rs.12500 tax.

  • Surcharge: Brace yourself for an additional tax depending on your income bracket:

    • 10% for income exceeding Rs. 50 lakh.

    • 15% for income exceeding Rs. 1 crore.

    • 25% for income exceeding Rs. 2 crore.

    • 37% for income exceeding Rs. 5 crore.

Surcharge rates of 25% or 37%, will not be applicable to the income which is taxable under sections 111A (Short Term Capital Gain on Shares), 112A (Long Term Capital Gain on Shares), and 115AD (Tax on income of Foreign Institutional Investors)


  • Health & Education Cess: A 4% levy applies on the total income tax and surcharge.

· New Tax Regime for Individual & HUF

Income Slab (Rs.)

​Less than 60 Yrs.

Up to 3,00,000

​Nil

​3,00,001 – 6,00,000


​5%


6,00,000 – 9,00,000


10%


9,00,000 – 12,00,000


15%


12,00,000 – 15,00,000


​20%


Greater than 15 Lakh

30%

· If the total taxable income is less than Rs 7 Lakhs than for individuals then Zero Tax is Payable because he/she gets Rebate u/s 87A.

  • Surcharge: Brace yourself for an additional tax depending on your income bracket:

    • 10% for income exceeding Rs. 50 lakh.

    • 15% for income exceeding Rs. 1 crore.

    • 25% for income exceeding Rs. 2 crore.

Surcharge rates of 25% or 37%, will not be applicable to the income which is taxable under sections 111A (Short Term Capital Gain on Shares), 112A (Long Term Capital Gain on Shares), and 115AD (Tax on income of Foreign Institutional Investors)

  • Health & Education Cess: A 4% levy applies on the total income tax and surcharge.

Old Income Tax Regime V/s New Income Tax Regime

Both the Old and New Tax Regimes have their own pros and cons. Here's a breakdown to help you choose:

Old Tax Regime:


· Benefits:

Offers more deductions and exemptions for various expenses like House Rent Allowance, Medical Insurance, Housing Loan interest, Education, etc.

Suitable for individuals with significant investments in tax-saving instruments and expenditure in rentals.

· Drawbacks:

Higher tax rates for higher income brackets.

Complex calculations due to numerous deductions and exemptions.


New Tax Regime:


· Benefits:

Lower tax rates compared to the old regime.

Simpler tax calculations due to fewer deductions and exemptions.


· Drawbacks:

Limited deductions and exemptions.

May not be beneficial for individuals with significant investments in tax-saving instruments.


Understanding Deductions and Benefits You Get in Old Regime & Not in New Regime

Particulars


Old Tax Regime

New Tax Regime

​Income level for rebate eligibility


₹ 5 lakhs


​₹ 7 lakhs


​Standard Deduction


₹ 50,000


₹ 50,000


​Effective Tax-Free Salary income


​₹ 5.5 lakhs


₹ 7.5 lakhs


​Rebate u/s 87A



​12,500


25,000


​HRA Exemption


Yes

No

​Leave Travel Allowance (LTA)

Yes

No

Other allowances including food allowance of Rs 50/meal subject to 2 meals a day




Yes

No

Standard Deduction (Rs 50,000)

Yes

Yes

Entertainment Allowance Deduction and Professional Tax

Yes

No

Perquisites for official purposes


Yes

Yes

Interest on Home Loan u/s 24b on slef-occupied or vacant property



Yes

No

Interest on Home Loan u/s 24b on let-out property

Yes

Yes

Deduction u/s 80C (Insurance , ULIPS , Schood Fees , etc…) of Rs 1.5 Lakhs


Yes

No

Employee’s (own) contribution to NPS


Yes

No

Employer’s contribution to NPS


Yes

Yes

Medical insurance premium – 80D


Yes

No

​Disabled Individual – 80U


Yes

No

Interest on education loan – 80E


Yes

No

Interest on Electric vehicle loan – 80EEB


Yes

No

Donation to Political party/trust etc – 80G


Yes

No

Savings Bank Interest u/s 80TTA and 80TTB




Yes

No

Other Chapter VI-A deductions

Yes

No

All contributions to Agniveer Corpus Fund – 80CCH

Yes

Yes

Exemption on voluntary retirement 10(10C)


Yes

Yes

Exemption on gratuity u/s 10(10)


Yes

Yes

Exemption on Leave encashment u/s 10(10AA)


Yes

Yes

Daily Allowance


Yes

Yes

​Transport Allowance for a specially-abled person

Conveyance Allowance

Yes

Yes

Conveyance Allowance

Yes

Yes

Tax Planning Strategies:


To minimize your tax burden, consider these strategies:


● Maximize eligible deductions and exemptions: Utilize the available deductions for investments, medical expenses, donations, etc., to reduce your taxable income.

● Invest in tax-saving instruments: Explore options like PPF, NPS, ELSS funds to benefit from deductions and grow your wealth simultaneously.

● Claim tax benefits on health insurance premiums: Deduct premiums paid for health insurance for yourself and your dependents.

● Claim tax benefits on home loan interest: Deduct interest paid on your home loan up to a specified limit.

● Claim tax benefits on children's education: Deduct tuition fees paid for your children's education up to a specified limit.


Staying Updated on Tax Regulations:


Tax rules and regulations are subject to change. Stay informed about any updates through official government websites and tax-related publications.


Seeking Professional Help:


For complex tax situations, consulting a qualified tax professional is crucial. They can provide personalized advice, ensure accurate calculations, and help you navigate the tax maze smoothly.



For other interesting conceptual topics please visit our other contents:

GST on Personal Guarantee:

Why does RBI Not Print More Money and Eliminate Poverty?

What is a Startup?

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