Income Tax Slabs in India are announced by the finance minister every year. This year, finance minister Nirmala Sitharaman announced the Union Budget 2023-24 on 1 February 2023. The latest budget has introduced certain changes to the existing income tax slab.
Currently, there are two different Income Tax regimes. Under both the new regime and the old regime, taxpayers can avail of tax benefits.
The finance minister announced that under the new tax regime, the rebate for income tax had been increased to Rs.7 lakh from the earlier limit of up to Rs.5 lakh. Apart from that, the surcharge rate on Income of Rs.5 crore and above has decreased from 37% to 25%.
Revised Income Tax Slabs for the New Tax Regime (default) FY 2023–24:
1. Up to Rs.3 lakh – 0% (Nil)
2. Rs. 3 lakh to Rs. 6 lakh – 5%
3. Rs. 6 lakh to Rs. 9 lakh – 10%
4. Rs. 9 lakh to Rs. 12 lakh – 15%
5. Rs. 12 lakh to Rs. 15 lakh – 20%
6. Above Rs. 15 lakh – 30%
What is Income Tax Slab?
Income Tax Slab is defined as the Individual taxpayers who will need to pay the income tax based on the slab system they fall under.
Depending on the individual’s Income, he/she may fall under a different tax slab. The slabs tend to change at every budget announcement.
Comparison between FY 2023-24 & 2022-23 for New Tax Regime
| Income Tax Rates | FY 2022-23 Income Tax Slab | FY 2023-24 Income Tax Slab |
|---|---|---|
| NIL | Rs.0 – Rs.2.5 lakh | Rs.0 – Rs.3 lakh |
| 5% | Rs.2.5 lakh – Rs.5 lakh | Rs.3 lakh – Rs.6 lakh |
| 10% | Rs.5 lakh – Rs.7.5 lakh | Rs.6 lakh – Rs.9 lakh |
| 15% | Rs.7.5 lakh – Rs.10 lakh | Rs.9 lakh – Rs.12 lakh |
| 20% | Rs.10 lakh – Rs.12.5 lakh | Rs.12 lakh – Rs.15 lakh |
| 25% | Rs.12.5 lakh – Rs.15 lakh | —– |
| 30% | Above Rs. 15 lakhs | Above Rs. 15 lakh |
FAQs on Income Tax Slab :
1. Who should prefer new tax regime?
– If your tax deductions total less than Rs.3.75 lakh and you earn Rs.20 lakh, the new system will benefit you. Otherwise, choose the previous tax system.
2. How Rs.7 lakh income is tax free?
From FY 2023–2024, the Section 87A tax rebate cap has been raised. You will be qualified for a tax rebate of Rs.25,000 on income up to Rs.7 lakh if you pick the new tax system. Previously, this was set at Rs.12,500 for income up to Rs.5 lakh.
3. Who makes changes to the income tax slabs in India?
The changes to the income tax slabs in India are proposed by the Finance Ministry of India.
4. Who should prefer new tax regime?
If your tax deductions total less than Rs.3.75 lakh and you earn Rs.20 lakh, the new system will benefit you. Otherwise, choose the previous tax system.
5. How Rs.7 lakh income is tax free?
From FY 2023–2024, the Section 87A tax rebate cap has been raised. You will be qualified for a tax rebate of Rs.25,000 on income up to Rs.7 lakh if you pick the new tax system. Previously, this was set at Rs.12,500 for income up to Rs.5 lakh.
6. Which tax regime is better for Rs.12 lakh p.a.?
Under the old tax regime, the tax deduction is 30% while for the new tax regime it is 15%. However, based on your investments and other tax saving procedures take a call to see which of the two regimes are suitable for you. If you don’t have any investments, then opt for the new tax regime, otherwise choose the old tax regime.
7. Which tax regime is better for Rs.15 lakh?
The standard deduction is 30% for both tax regimes. However, if you have investments through which you would like to enjoy tax exemptions then opt for the old tax regime otherwise the new tax regime will work.
16. Which tax regime is better for Rs.12 lakh p.a.?
Under the old tax regime, the tax deduction is 30% while for the new tax regime it is 15%. However, based on your investments and other tax saving procedures take a call to see which of the two regimes are suitable for you. If you don’t have any investments, then opt for the new tax regime, otherwise choose the old tax regime.
