Income Tax Slabs & Rates in India for FY 2023-24 (AY-2024-25)

The accurate payment of taxes is important as it is the pivotal source of revenue for the Government. This amount collected as tax is used for different public development projects and welfare activities. 

Moreover, tax rates are mostly variable in nature and are subject to change based on the new proposition passed by the Government of India. In other words, this means that in every financial year, some changes will be incorporated that taxpayers must be aware of.

Since FY 2023-24 will begin soon, it is important to know the new tax slabs to successfully file income tax. Moreover, knowing the new tax regime will allow taxpayers to know their tax dues before the return filing date. 

For FY 2022-23, the taxpayers liable to pay taxes will have to pay the amount in the Assessment Year 2023-24, and so on. So, for the accurate computation of the tax rates for FY 2022-23 and also for the coming FY 2023-24, let's understand the new tax rates for individuals. So, without further adieu, let’s begin!

The Union Budget 2023, presented on February 1, 2023, proposed the following changes in the new tax regime that would be effective from April 1, 2023. 

1. The New Income Tax Regime is now the default tax regime, starting April 1, 2023. So, individuals will be taxed at the new tax regime's slabs and rates unless they opt for the old tax regime. 
2. There are now five tax slabs under the new tax regime; earlier, there were six.  
3. The tax rates in the New Tax Regime for FY 2023-24 are the same for all categories of individuals, i.e., up to 60 years of age, between 60 and 80 years of age, and above 80 years and HUF.  
4. Under the new tax regime, the government has increased the basic tax exemption limit from Rs 2.5 lakh to Rs 3 lakh. 
5. The rebate under Section 87A has been increased from Rs 5 lakh to Rs 7 lakh taxable income, doubling the tax rebate to Rs 25,000 from Rs 12,500.  
6. Standard deduction of Rs 50,000 will be applicable under the new tax regime for salaried people and pensioners. 
7. Highest surcharge rate of 37% has been reduced to 25% on an income of more than Rs 5 crores. However, the surcharge rate remains unchanged if an individual opts for the old tax regime. 

Standard deduction of Rs 15,000 is allowed for family pensioners under the new tax regime. 

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With the FY 2022-23 almost coming to an end, it is your duty as a tax-payer to learn about the applicable income tax slab for this particular year, pay your income taxes and file return before the stipulated date – around July 31st, 2023.

Now that we have discussed at length about tax-slabs and the limit for income tax exemptions in India, let us summarise the key points under it.

• Everyone earning income in India is liable to pay income tax. The income tax department has fixed five heads under which taxable income is calculated. These are:

Salary

Income from House property

Capital gains

Income generated from businesses and other professions

Other income sources include interest earned on fixed deposits and savings accounts, lottery, etc.

With such information at your disposal, the process of evaluating your income tax liabilities can become extremely simple.

So, make sure you look through the tax slabs, determine the one applicable to you, and compute your total tax payable well before this financial year is over to avoid the risks of missing the income tax filing deadline!

If you are a salaried employee, there are several legitimate ways through which you can save tax payment under the Income Tax Act, 1961. Some of the more comprehensive ways to do so include investing in the likes of National Pension Scheme, tax-saving mutual funds, insurance policy premiums, health insurance policies, etc.

Following is an elaboration on a few ways through which you can reduce your income tax liabilities if you are a salaried employee:

Income Tax Deductions under Section 80C

Under this section of the Income Tax Act, you can claim various deductions from your total income and reduce your tax payment liability by bringing down your total taxable income. 

This section allows a deduction of up to ₹1.5 Lakh of your total taxable income and can be availed by individuals and HUF. Following are a few investment options and schemes for which Section 80C is applicable:

Income Tax Deductions Under Section 80D

Under Section 80D of the Income Tax Act, 1961, you can avail of a deduction of up to ₹25,000 on your Health Insurance premium payments for self or family. Further, for premium paid for senior citizens, the deduction limit is extended to ₹50,000. For health check-ups, amounting up to ₹5,000 are also allowed for deduction.

Again, if you are paying premiums for both yourself and your senior citizen parents, you can avail of a deduction of up to ₹75,000 on your premiums per annum.

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Know more about

Health Insurance tax benefit  

Income tax benefit for Senior Citizens

Deductions of Charitable Donations Under Section 80G

There is no upper limit on the deductions that can be claimed for charitable donations. However, there are specific rules that you must adhere to. For instance, in the case of most NGOs, you can avail of a deduction of up to 50% or 100% of the donated amount and up to 10% of your total adjusted income.

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Deductions for Loan for Higher Studies Under Section 80E

Under this section, deductions are available on the interest paid on the EMI of education loans paid for pursuing higher studies. In order to claim this deduction, the loan must be taken from a nationalised or private bank or any financial institution by the individual for himself, his spouse, or children.

Apart from these, you can also consider contributing to the National Pension Scheme, avail deductions on your home rent, deposit in a savings account, etc., to save on your tax payments.

However, don’t forget to look through the details of each of these schemes and investment options before you decide to avail their benefits!

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