New tax regime becomes the default option for taxpayers. However, they have the option to opt for the Old tax regime. Income tax slabs have been revised under the New tax regime. Standard deduction of Rs 50,000 was introduced for salaried and pensioners under the new tax regime. Rebate under Section 87A increased under the new tax regime for taxable incomes not exceeding Rs 7 lakh. Thus, individuals whose taxable income does not exceed Rs 7 lakh will not have to pay any taxes if they opt for the new tax regime in FY 2023-24. Highest surcharge rate was reduced to 25% from 37% under the new tax regime.

Revised Income Tax Slab Rate FY 2023-24 (AY 2024-25) – For New Regime

The income tax slabs are different under the old and the new tax regimes. Further, the slab rates under the old tax regime are divided into three categories:

• Indian Residents aged < 60 years + All the non-residents 
• 60 to 80 years of age: Resident Senior citizens
• More than 80 years: Resident Super senior citizens.

No changes have been made under the old tax regime for FY 2023-24. The income tax slab and rates under the old tax regime remain unchanged for FY 2023-24. Also, no changes have been announced in the deductions and exemptions that are available under the old tax regime. A rebate under Section 87A is available under the old tax regime if taxable income does not exceed Rs 5 lakh.

Comparison of tax rates under New tax regime & Old tax regime for FY 2022-23 (AY 2023-24).

 When can I opt for Old or New regime?

 Important points to note if you select the new tax regime:

• Please note that the tax rates in the New tax regime is the same for all categories of Individuals, i.e. Individuals, Senior citizens and Super senior citizens.
• Individuals with Net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A i.e. tax liability will be NIL in both – New and old/existing tax regimes.
  *In Budget 2023, rebate under new regime has been increased and therefore, income upto Rs 7 lakh will be tax-free from FY 2023-24.
• Surcharge: In case the income exceeds a certain threshold, surcharge will be
  •  10% of Income tax if total income > Rs.50 lakh
  • 15% of Income tax if total income > Rs.1 crore
  • 25% of Income tax if total income > Rs.2 crore
  • 37% of Income tax if total income > Rs.5 crore

*In Budget 2023, the highest surcharge rate of 37% has been reduced to 25% under the new tax regime. (applicable from 1st April 2023)

• Surcharge rates of 25% or 37%, will not be applicable to the income which is taxable under sections 111A (Short Term Capital Gain on shares), 112A (Long Term Capital Gain on shares), and 115AD (Tax on income of Foreign Institutional Investors). Therefore, the highest surcharge rate on the tax payable for such incomes will be 15%.
• From Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain mentioned in Section 112 will be 15%. The surcharge rate for an Association of Persons (AOP) consisting entirely of companies will also be limited to 15%.
• Additional Health and Education Cess at the rate of 4% will be added to the income tax liability + surcharge in all cases.

Conditions for opting new tax regime:

The taxpayer opting for concessional rates in the New Tax regime will have to forgo certain exemptions and deductions available in the existing old tax regime. In all there are 70 deductions & exemptions that are not allowed, out of which the most commonly used are listed below: