Income Tax Slab for FY 2023-24

Introduction

The income tax slabs for the financial year 2023-24 (Assessment Year 2024-25) have not been announced yet. The Union Budget for the financial year 2023-24 is scheduled to be presented on July 5, 2023. After the budget, the Central Board of Direct Taxes (CBDT) will issue a notification regarding the income tax slabs for the new financial year. We will update you as soon as the new income tax slabs are announced.

Types of taxable income in India

Taxable income is the income that is subject to tax by the government. In India, there are five heads of income tax that cover different types of taxable income. They are:

Income from salary: This includes the income received by an employee from an employer, such as wages, allowances, bonuses, commissions, etc.
Income from house property: This includes the income derived from owning or renting a house property, such as rent, municipal taxes, interest on loan, etc.
Income from profits and gains from business or profession: This includes the income earned from carrying on a business or profession, such as sales, expenses, depreciation, etc.
Income from capital gains: This includes the income arising from the transfer of a capital asset, such as shares, property, bonds, etc.
Income from other sources: This includes the income that is not covered by any of the above heads, such as interest, dividends, winnings, gifts, etc.

Each head of income has its own rules and deductions for computing the taxable income. The total taxable income is the sum of the income from all the five heads, after deducting the applicable deductions and exemptions. The tax rates vary depending on the income slab and the residential status of the taxpayer.

Income tax slab rates for FY 2023–24

The income tax slab rates for FY 2023–24 (AY 2024–25) depend on whether you opt for the old or the new tax regime. Under the old tax regime, the slab rates vary based on your age group and residential status. Under the new tax regime, the slab rates are the same for all taxpayers, but you have to forego certain deductions and exemptions. Here is a summary of the income tax slab rates for FY 2023–24 under both regimes:

Income Range	Old Tax Regime	New Tax Regime
Up to Rs. 2.5 lakh	NIL	NIL
Rs. 2.5 lakh to Rs. 3 lakh	5% (for individuals below 60 years)	NIL
Rs. 3 lakh to Rs. 5 lakh	5% (for individuals below 60 years and senior citizens)	5%
Rs. 5 lakh to Rs. 6 lakh	20%	10%
Rs. 6 lakh to Rs. 7.5 lakh	20%	10%
Rs. 7.5 lakh to Rs. 10 lakh	20%	15%
Rs. 10 lakh to Rs. 12.5 lakh	30%	20%
Rs. 12.5 lakh to Rs. 15 lakh	30%	25%
Above Rs. 15 lakh	30%	30%

In addition to the above rates, you may also have to pay a surcharge and a health and education cess on your tax liability, depending on your income level and source of income. The surcharge rates range from 10% to 37% for incomes above Rs. 50 lakh, and the cess is 4% of the tax plus surcharge. However, the surcharge rate for incomes above Rs. 5 crore has been reduced from 37% to 25% for FY 2023–24. The cess remains unchanged.

Important points to consider

Here are some important points to consider regarding income tax in India:

1. TDS (Tax Deducted at Source): If you earn income from sources such as salary, rent, interest, or capital gains, the payer is required to deduct a certain percentage of tax at source (TDS) before paying you. The current TDS rates can be found on the official website of the Income Tax Department.

2. Form 16: If you are an employee, your employer is required to issue a Form 16 at the end of the financial year. This form contains details of the TDS deducted, your salary details, and other relevant information that you will need while filing your income tax returns.

3. Form 26AS: This is an annual consolidated statement of TDS deducted and paid by various sources such as banks, employers, and mutual funds. You can access this statement through your PAN (Permanent Account Number) on the official website of the Income Tax Department.

4. Filing Income Tax Returns: It’s mandatory to file your income tax returns (ITR) every year by July 31 (for paper filing) or October 31 (for e-filing) of the assessment year following the financial year. Failure to do so may result in penalties and interest charges.

5. Deductions and Exemptions: There are various deductions and exemptions available under the Income Tax Act that can help reduce your taxable income. Some common deductions include professional tax, medical insurance premiums, tuition fees for children, and interest on housing loans.

6. Capital Gains: If you earn capital gains from selling assets such as stocks, mutual funds, or property, you may be liable to pay capital gains tax. The rate and method of calculating capital gains tax depend on whether the gain is short-term or long-term.

7. GST (Goods and Services Tax): While GST is not directly related to income tax, it’s essential to understand how it works as it affects various aspects of business and investment activities. GST is a consumption-based indirect tax levied on goods and services at different rates depending on their nature and usage.

Things to Remember Before Opting for the New Tax Slab

The new tax slab for FY 2023–24 (AY 2024–25) offers lower tax rates for higher incomes than the old tax regime, but it also removes many deductions and exemptions that can reduce your tax liability. Here are some things to remember before opting for the new tax slab:

You can only opt for the new tax slab if you are an individual or a member of a Hindu Undivided Family (HUF) and do not have any business income. Once you opt for the new tax slab, you cannot switch back to the old regime during the year.
You have to forego certain deductions and exemptions that are available under the old tax regime, such as Section 80C, Section 80D, Section 80G, Section 80TTA, Section 80TTB, Section 24, etc. You can only claim a few deductions, such as standard deduction, interest on home loan for let-out property, employer’s contribution to NPS, and donations to Agniveer Corpus Fund.
You have to compare the tax liability under both the regimes and choose the one that is more beneficial for you. This may depend on your income level, age group, source of income, and investment choices. You can use a tax calculator to compare the tax liability under both the regimes.
You have to communicate your choice of tax regime to your employer or deductor at the beginning of the financial year or at the time of filing your income tax return. If you do not communicate your choice, you will be taxed as per the old tax regime by default.