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Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings

Tax Slabs in 2023-24: Plan Ahead for Next Year Tax Savings
rohit
Rohit5 January 2024

India taxes individuals based on a system of income slabs. Different tax rates are assigned to different ranges of income. 

Understanding tax slabs is crucial for several reasons.

  • It empowers individuals to manage their finances strategically
  • Helps in making informed decisions about tax-efficient investments
  • Avoid unforeseen tax liabilities

As a person earns more, the tax liability also increases, creating a fair and progressive tax system in the country. To achieve this, the government regularly updates and announces changes to tax slabs in the Union Budget.

The income tax slabs differ between the old and new tax regimes. Let's explore the specific slab rates applicable to Individuals for FY 2022-23 (AY 2023-24) and FY 2023-24 (AY 2024-25).

Income Tax Slab Rates For FY 2023-24 (AY 2024-25) 

Under the Old Tax regime

Rates of the old tax regime slabs are categorized into three groups:

old tax regime slabs are categorized into three groups
  • 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
SlabsIndividuals(< 60 years)Resident Senior Citizens (60-80 years)Resident Super Senior Citizens (80+ years)
Up to Rs 2,50,0000NilNilNil
Rs 2,50,001 to Rs 3,00,0005%NilNil
Rs 3,00,001 to Rs 5,00,0005%5%Nil
Rs 5,00,001 to Rs 10,00,00020%20%20%
Above Rs 10,00,00030%30%30%

Under the New Tax regime

The new tax regime applies uniform tax rates to all individuals, eliminating the age-based distinctions in the old system. The new tax regime slabs 2023-24 are outlined below.

New Tax regime slabs 2023-24

Applicability of Surcharge for FY 2023-24 (AY 2024-25)

The income tax surcharge is an extra fee imposed on top of the regular income tax. An additional tax is applied to individuals with higher income earnings in a specific financial year. Let’s look at the applicable surcharge rate under the Old and New tax regime.

IncomeSurcharge rate(New regime) Surcharge rate(Old regime)
Up to Rs 50 lakhNILNIL
Above Rs 50 lakh but up to Rs 1 crore10%10%
Above Rs 1 crore but up to Rs 2 crore15%15%
Above Rs 2 crore but up to Rs 5 crore-25%
Above Rs 2 crore25%-
Above Rs 5 crore-37%

However, 25% or 37% surcharge rates will not apply to income under the following sections.

  • 111A (Short-Term Capital Gain on Shares)
  • 112A  (Long-Term Capital Gain on Shares)
  • 115AD (Tax on income of Foreign Institutional Investors)

Consequently, the highest surcharge rate on the tax payable for such incomes will be 15%.

Starting from the Assessment Year 2023-24, the maximum surcharge rate on tax payable for dividend income or capital gain specified in Section 112 will be capped at 15%. 

A 4% Health and Education cess will be applied to all cases’ total income tax liability and surcharges.

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