Tax Slabs Under The New And Old Tax Regimes In FY 2023-24

A tax slab basically determines how much tax an individual or business will have to pay based on their income. Finance Minister Nirmala Sitharaman introduced a new tax regime with changed slabs in the Union Budget 2023-24. Increase in basic exemption limit and higher tax exemption are the salient features of the new regime. Taxpayers can now opt for either the old tax regime or the new tax regime.

Knowledge of tax slabs helps in understanding how much tax one has to pay based on their income level. This is essential for better planning of finances and taking steps to reduce tax liability. For example, a person may choose to invest in specific financial instruments to reduce his taxable income and tax liability.

Here are the income tax slabs under the new and old tax regimes:

• In the old tax regime, there are seven tax slabs, with the liability ranging from nil to 30 per cent of income.
• People with annual income up to Rs 2.5 lakh are exempted from paying income tax.
• Those earning between Rs 2.5 to Rs 5 lakh will have to follow the tax rate of 5 per cent.
• For those whose annual income falls between Rs 5 lakh and Rs 7.5 lakh, the income tax rate is 10 per cent of the total income.
• Individuals in this bracket have an annual income of Rs 7.5 to 10 lakhs. The tax rate for them is 15 percent.
• The tax rate is 20 per cent for income between Rs 10 to 12.5 lakh per annum.
• Those earning Rs 12.5 to 15 lakh will have to follow the tax rate of 25 per cent.
• For annual income above Rs 15 lakh, the tax rate is 30 per cent.

Under the new income tax regime, the number of slabs has been reduced.

• Those earning up to Rs 3 lakh per month will not have to pay any income tax.
• The tax rate on annual income between Rs 3 to 6 lakh will be 5 percent. However, the tax exemption is applicable on income up to Rs 7 lakh, making it tax-free as well.
• Those earning between Rs 6 lakh and Rs 9 lakh annually will have to follow a tax rate of 10 per cent.
• The tax rate has been fixed at 15 per cent for an annual income of Rs 9 lakh to Rs 12 lakh.
• For the next tax bracket, which includes annual income of Rs 12 lakh to Rs 15 lakh, the tax rate is 20 per cent.
• The final tax slab includes all those whose annual income is more than Rs 15 lakh. He has 30 per cent tax liability.

These rates will be applicable from April 1 starting the new financial year (2023-24).

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