The Union Budget 2024 introduced significant tax reforms, bringing relief to millions of taxpayers in India. The Finance Minister announced that incomes up to ₹1 lakh per annum will be completely tax-free, ensuring financial relief to low-income individuals. However, there is confusion regarding the tax slabs from ₹4 lakh to ₹24 lakh and the applicable tax rates. In this article, we will break down the tax structure and explain how taxation works under the new regime.
New Income Tax Slabs for 2024
The government has introduced a structured tax slab system that ensures lower taxes for middle-income earners. Here’s a detailed breakdown of the new income tax rates:
| Annual Income Range | Tax Rate (%) |
|---|---|
| ₹0 – ₹1,00,000 | 0% (No tax) |
| ₹1,00,000 – ₹4,00,000 | 0% (No tax) |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
No Tax Up to ₹12 Lakh: What Does This Mean?
The Finance Minister clearly stated that taxpayers earning up to ₹12 lakh per annum will not be required to pay any tax. This has led to some confusion regarding the tax slabs for incomes between ₹4 lakh and ₹12 lakh. To clarify, the tax is applied slab-wise, meaning the tax rate applies only to the income within that specific slab. Let’s analyze this with an example.
Example: Tax Calculation for ₹13 Lakh Annual Income
If an individual earns ₹13 lakh per year, the tax calculation under the new regime would be as follows:
- ₹0 – ₹4,00,000 → 0% tax = ₹0
- ₹4,00,001 – ₹8,00,000 → 5% tax on ₹4,00,000 = ₹20,000
- ₹8,00,001 – ₹12,00,000 → 10% tax on ₹4,00,000 = ₹40,000
- ₹12,00,001 – ₹13,00,000 → 15% tax on ₹1,00,000 = ₹15,000
Total Tax Payable = ₹75,000
Additionally, salaried individuals receive a standard deduction of ₹75,000, reducing their taxable income further.
Comparison with Old Tax Regime
Under the previous tax regime, the tax calculation for ₹13 lakh income would have been different:
- ₹0 – ₹3,00,000 → 0% tax = ₹0
- ₹3,00,001 – ₹6,00,000 → 5% tax on ₹3,00,000 = ₹15,000
- ₹6,00,001 – ₹9,00,000 → 10% tax on ₹3,00,000 = ₹30,000
- ₹9,00,001 – ₹12,00,000 → 15% tax on ₹3,00,000 = ₹45,000
- ₹12,00,001 – ₹13,00,000 → 20% tax on ₹1,00,000 = ₹20,000
Total Tax Payable (Old Regime) = ₹1,10,000
Clearly, under the new tax system, individuals earning ₹13 lakh will pay ₹35,000 less in taxes.
Who Benefits from the New Tax Slabs?
- Salaried Employees: The standard deduction of ₹75,000 helps in further reducing taxable income.
- Middle-Income Earners: Individuals earning up to ₹12 lakh enjoy zero tax liability.
- Business Owners & Freelancers: The structured tax rates ensure that self-employed individuals also benefit.
Should You Switch to the New Tax Regime?
The new tax regime eliminates many deductions but provides lower tax rates. If you claim multiple exemptions like HRA, 80C, 80D, etc., you might prefer the old tax regime. However, if you have minimal deductions, the new regime can save you money.
Conclusion: Understanding Your Tax Liability
The 2024 income tax slabs have introduced significant relief, especially for middle-income earners. With zero tax up to ₹12 lakh and reduced tax rates beyond that, taxpayers can now retain more of their hard-earned money. Understanding the slab-wise taxation system is crucial to ensuring you maximize your savings.
Income Tax Slabs for FY 2024-25 and FY 2025-26: A Comprehensive Guide
The Indian government has proposed changes to the income tax slabs under the new tax regime for FY 2025-26 while retaining the old tax regime without modifications. Taxpayers, including Individuals, Hindu Undivided Families (HUFs), Association of Persons (AOPs), and Body of Individuals (BOIs), have the flexibility to choose between the old and new tax regimes based on their financial planning and tax-saving objectives.
New Tax Regime – Proposed (FY 2025-26)
| Income Slabs (Rs.) | Proposed Tax Rates |
|---|---|
| 0 – 4,00,000 | Nil |
| 4,00,001 – 8,00,000* | Nil (after rebate under Section 87A)* |
| 8,00,001 – 12,00,000* | Nil (after rebate under Section 87A)* |
| 12,00,001 – 16,00,000 | Rs. 62,400 + 15.60% of income exceeding Rs. 12,00,000 |
| 16,00,001 – 20,00,000 | Rs. 1,24,800 + 20.80% of income exceeding Rs. 16,00,000 |
| 20,00,001 – 24,00,000 | Rs. 2,08,000 + 26.00% of income exceeding Rs. 20,00,000 |
| 24,00,001 – 50,00,000 | Rs. 3,12,000 + 31.20% of income exceeding Rs. 24,00,000 |
| 50,00,001 – 1,00,00,000 | Rs.12,35,520 + 34.32% of income exceeding Rs. 50,00,000 |
| 1,00,00,001 – 2,00,00,000 | Rs. 30,85,680 + 35.88% of income exceeding Rs. 1,00,00,000 |
| 2,00,00,001 – 5,00,00,000 | Rs. 72,54,000 + 39% of income exceeding Rs. 2,00,00,000 |
| 5,00,00,001 and above | Rs.1,89,54,000 + 39% of income exceeding Rs. 5,00,00,000 |
New Tax Regime – Present (FY 2024-25)
| Income Slabs (Rs.) | Tax Rates |
| 0 – 3,00,000 | Nil |
| 3,00,001 – 6,00,000* | Nil (after rebate under Section 87A)* |
| 6,00,001 – 7,00,000* | Nil (after rebate under Section 87A)* |
| 7,00,001 – 10,00,000 | Rs. 20,800 + 10.40% of income exceeding Rs. 7,00,000 |
| 10,00,001 – 12,00,000 | Rs. 52,000 + 15.60% of income exceeding Rs. 10,00,000 |
| 12,00,001 – 15,00,000 | Rs. 83,200 + 20.80% of income exceeding Rs. 12,00,000 |
| 15,00,001 – 50,00,000 | Rs. 1,45,600 + 31.20% of income exceeding Rs. 15,00,000 |
| 50,00,001 – 1,00,00,000 | Rs.13,61,360 + 34.32% of income exceeding Rs. 50,00,000 |
| 1,00,00,001 – 2,00,00,000 | Rs.32,17,240 + 35.88% of income exceeding Rs. 1,00,00,000 |
| 2,00,00,001 – 5,00,00,000 | Rs. 73,97,000 + 39% of income exceeding Rs. 2,00,00,000 |
| 5,00,00,001 and above | Rs.1,90,97,000 + 39% of income exceeding Rs. 5,00,00,000 |
Old Tax Regime – Unchanged (FY 2024-25 and FY 2025-26)
| Income Slabs (Rs.) | Tax Rates |
| 0 – 2,50,000 | Nil |
| 2,50,001 – 5,00,000* | Nil (after rebate under Section 87A)* |
| 5,00,001 – 10,00,000 | Rs. 13,000 + 20.80% of income exceeding Rs. 5,00,000 |
| 10,00,001 – 50,00,000 | Rs. 1,17,000 + 31.20% of income exceeding Rs. 10,00,000 |
| 50,00,001 – 1,00,00,000 | Rs.15,01,500 + 34.32% of income exceeding Rs. 50,00,000 |
| 1,00,00,001 – 2,00,00,000 | Rs. 33,63,750 + 35.88% of income exceeding Rs. 1,00,00,000 |
| 2,00,00,001 – 5,00,00,000 | Rs.75,56,250 + 39% of income exceeding Rs. 2,00,00,000 |
| 5,00,00,001 and above | Rs.2,11,04,850 + 42.744% of income exceeding Rs. 5,00,00,000 |
Comparison of New Tax Regime – Current vs Proposed
| Income (Rs.) | Tax on Income (FY 2024-25) | Tax on Income (FY 2025-26) | Benefit of New Regime Proposed |
| 8,00,000 | 30,000 | 20,000 | 10,000 |
| 9,00,000 | 40,000 | 30,000 | 10,000 |
| 10,00,000 | 50,000 | 40,000 | 10,000 |
| 11,00,000 | 65,000 | 50,000 | 15,000 |
| 12,00,000 | 80,000 | 60,000 | 20,000 |
| 16,00,000 | 1,70,000 | 1,20,000 | 50,000 |
| 20,00,000 | 2,90,000 | 2,00,000 | 90,000 |
| 24,00,000 | 4,10,000 | 3,00,000 | 1,10,000 |
| 50,00,000 | 11,90,000 | 10,80,000 | 1,10,000 |
Conclusion
The revised new tax regime offers increased rebate benefits, especially for individuals earning up to Rs. 12,00,000. Taxpayers should analyze their deductions and financial goals before choosing between the old and new regimes to maximize savings.
