Understanding Income Tax Slabs in India for the Financial Year 2024-25
- ashlinj52
- Dec 31, 2024
- 4 min read
In India, income tax is levied based on income earned by individuals, Hindu Undivided Families (HUFs), and other taxpayers, including companies and firms. The tax structure for individuals is progressive, meaning the tax rate increases as the income rises. The income tax slabs determine how much tax an individual has to pay on different portions of their income.
For the Financial Year 2024-25 (Assessment Year 2025-26), the tax slabs for individuals under both the old tax regime (with deductions) and the new tax regime (without deductions) are different. Let’s break down the tax slabs for both regimes.
Income Tax Slabs under the Old Tax Regime (2024-25)
Under the old tax regime, taxpayers can claim various exemptions, deductions, and rebates, such as those under Section 80C (for investments), Section 10(14) (house rent allowance), and Section 24(b) (home loan interest).
Tax Slabs for Individuals below 60 years of Age:
Income Range | Tax Rate |
Up to ₹2.5 Lakhs | Nil (No Tax) |
₹2,50,001 to ₹5,00,000 | 5% |
₹5,00,001 to ₹10,00,000 | 20% |
Above ₹10,00,000 | 30% |
Tax Slabs for Senior Citizens (60 years to 80 years):
Senior citizens enjoy a higher exemption limit. For them, the basic exemption limit is ₹3 lakhs instead of ₹2.5 lakhs.
Income Range | Tax Rate |
Up to ₹3 Lakhs | Nil (No Tax) |
₹3,00,001 to ₹5,00,000 | 5% |
₹5,00,001 to ₹10,00,000 | 20% |
Above ₹10,00,000 | 30% |
Tax Slabs for Super Senior Citizens (80 years and above):
For individuals above 80 years of age, the basic exemption limit is increased to ₹5 lakhs.
Income Range | Tax Rate |
Up to ₹5 Lakhs | Nil (No Tax) |
₹5,00,001 to ₹10,00,000 | 20% |
Above ₹10,00,000 | 30% |
Income Tax Slabs under the New Tax Regime (2024-25)
Introduced in Budget 2020, the new tax regime does not allow exemptions and deductions, but it offers lower tax rates. Taxpayers must choose between the old and new regimes at the time of filing their returns. If you opt for the new tax regime, you won’t be able to claim most deductions, such as those under Section 80C or Section 10(14).
Tax Slabs for Individuals (Below 60 years of age):
Income Range | Tax Rate |
Up to ₹2.5 Lakhs | Nil (No Tax) |
₹2,50,001 to ₹5,00,000 | 5% |
₹5,00,001 to ₹7,50,000 | 10% |
₹7,50,001 to ₹10,00,000 | 15% |
₹10,00,001 to ₹12,50,000 | 20% |
₹12,50,001 to ₹15,00,000 | 25% |
Above ₹15,00,000 | 30% |
Tax Slabs for Senior Citizens (60 years to 80 years):
The senior citizens' tax slabs in the new tax regime are the same as those for individuals under 60 years of age.
Income Range | Tax Rate |
Up to ₹3 Lakhs | Nil (No Tax) |
₹3,00,001 to ₹5,00,000 | 5% |
₹5,00,001 to ₹7,50,000 | 10% |
₹7,50,001 to ₹10,00,000 | 15% |
₹10,00,001 to ₹12,50,000 | 20% |
₹12,50,001 to ₹15,00,000 | 25% |
Above ₹15,00,000 | 30% |
Tax Slabs for Super Senior Citizens (80 years and above):
Income Range | Tax Rate |
Up to ₹5 Lakhs | Nil (No Tax) |
₹5,00,001 to ₹7,50,000 | 10% |
₹7,50,001 to ₹10,00,000 | 15% |
₹10,00,001 to ₹12,50,000 | 20% |
₹12,50,001 to ₹15,00,000 | 25% |
Above ₹15,00,000 | 30% |
Key Features of the New Tax Regime:
Lower Tax Rates: The new tax regime offers reduced tax rates compared to the old regime but does not allow any deductions or exemptions.
No Deductions/Exemptions: You cannot claim deductions like 80C, 80D (insurance premiums), or exemptions like House Rent Allowance (HRA) under the new tax regime.
Flexibility: Taxpayers can choose between the old or new regime every financial year. However, once the taxpayer opts for the new tax regime, they cannot change their choice mid-year.
Which Tax Regime Should You Choose?
The choice between the old and new tax regimes depends on your income and the exemptions/deductions you can claim.
Old Tax Regime: If you have a significant amount of deductions (e.g., home loan interest, PPF, ELSS investments, HRA, etc.), then the old tax regime may be more beneficial.
New Tax Regime: If you do not have substantial deductions to claim, the new tax regime could be advantageous due to its lower tax rates.
Example Comparison:
Let’s consider an individual with an annual income of ₹12 lakh:
Under the Old Tax Regime:
Income up to ₹2.5 lakh: No tax
₹2.5 lakh to ₹5 lakh: 5% → ₹12,500
₹5 lakh to ₹10 lakh: 20% → ₹1,00,000
₹10 lakh to ₹12 lakh: 30% → ₹60,000
Total Tax Liability = ₹12,500 + ₹1,00,000 + ₹60,000 = ₹1,72,500
Under the New Tax Regime:
Income up to ₹2.5 lakh: No tax
₹2.5 lakh to ₹5 lakh: 5% → ₹12,500
₹5 lakh to ₹7.5 lakh: 10% → ₹25,000
₹7.5 lakh to ₹10 lakh: 15% → ₹37,500
₹10 lakh to ₹12 lakh: 20% → ₹40,000
Total Tax Liability = ₹12,500 + ₹25,000 + ₹37,500 + ₹40,000 = ₹1,15,000
As you can see, the new tax regime results in a lower tax liability of ₹1,15,000 compared to ₹1,72,500 under the old regime.
Conclusion
Income tax slabs are an important aspect of personal taxation, and understanding which regime works best for you can lead to significant tax savings. For the Financial Year 2024-25, you have the option to choose between the old tax regime with various exemptions and deductions, or the new tax regime with lower tax rates but no deductions.
Make sure to assess your income, deductions, and exemptions carefully before deciding which tax regime to choose. Always consult with a tax expert or advisor to ensure you’re optimizing your tax liabilities.
Comments