Let us understand the Old Vs. New Tax regimes for FY 2023-24. In this article, we will discuss taxability under both new vs. old Income Tax regimes after considering revised Income Tax slabs proposed by Finance minister in Union Budget 2023-24 as applicable for Assessment Year 2024-25 i.e., Financial Year 2023-24. Author has analyzed different income situations and and as per those situations which tax regime is better to opt is been explained with the help of practical examples.
Proposed Tax Slabs for FY 2023-24 under new vs. old Income Tax regimes
| New Tax Regime | Rate | Old Tax Regime | Rate |
| Rs 0 to Rs 3 lakh | 0% | Rs 0 to Rs 2.5 lakh | 0% |
| Rs 3 lakh to 6 lakh | 5% | Rs 2.5 lakh to 5 lakh | 5% |
| Rs 6 lakh to 9 lakh | 10% | Rs 5 lakh to 10 lakh | 20% |
| Rs 9 lakh to Rs 12 lakh | 15% | Above Rs 30 lakh | 30% |
| Rs 12 lakh to Rs 15 lakh | 20% | ||
| Above Rs 15 lakh | 30% | ||
Let’s discuss taxability in both Tax regimes with some situations, these are some examples and can be more with different scenarios of income and investments.
Situation 1: If your Income is below ₹ 7 lakh or Up to 7 lakh in a FY 2023-24
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 7 lakh | 10% | 10,000 | Rs 5 lakh to 10 lakh | 20% | 1,00,000 |
| Total Tax payable | 25,000 | Total Tax payable | 1,12,500 | ||
| Less: Rebate U/s 87A | 25,000 | Less: Rebate U/s 87A | – | ||
| Tax Payable | – | Tax Payable | 1,12,500 |
Conclusion: If Income is less than or up to 7 lacs, better to go with the New Tax regime.
Situation 2: If your Income is 9 lakh in a FY 2023-24
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 9 lakh | 10% | 30,000 | Rs 5 lakh to 9 lakh | 20% | 80,000 |
| Total Tax payable | 45,000 | Total Tax payable | 92,500 | ||
| Less: Rebate U/s 87A (rebate is available for Income upto 7 lacs only, No rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 45,000 | Tax Payable | 92,500 |
Conclusion: If Income is upto 9 lacs, then also better to go with New Tax regime.
Situation 3: If your salary Income is 9 lakh in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000
| Gross Income | 9,00,000 | Gross Income | 9,00,000 | ||
| Less: Std. Deductions | 50,000 | Less: Std. Deductions | 50,000 | ||
| Net Income | 8,50,000 | Net Income | 8,50,000 | ||
| Les: 80C (Not allowed under New Regime) | – | Les: 80C | 1,50,000 | ||
| Les: 80D (Not allowed under New Regime) | – | Les: 80D | 25,000 | ||
| Net Income | 8,50,000 | Net Income | 6,75,000 | ||
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 8.5 lakh | 10% | 25,000 | Rs 5 lakh to 6.75 lakh | 20% | 35,000 |
| Total Tax payable | 40,000 | Total Tax payable | 47,500 | ||
| Less: Rebate U/s 87A (rebate is available for Income upto 7 lacs only, No rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 40,000 | Tax Payable | 47,500 |
Conclusion: If Income is upto 9 lacs, then also better to go with New Tax regime.
Note: Standard deduction is available to salaried employees only
Situation 4: If your Income other than salary is 9 lakhs in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000
|
Gross Income |
9,00,000 | Gross Income | 9,00,000 | ||
| Les: 80C (Not allowed under New Regime) | – | Les: 80C | 1,50,000 | ||
| Les: 80D (Not allowed under New Regime) | – | Les: 80D | 25,000 | ||
| Net Income | 9,00,000 | Net Income | 7,25,000 | ||
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 9 lakh | 10% | 30,000 | Rs 5 lakh to 7.25 lakh | 20% | 45,000 |
| Total Tax payable | 45,000 | Total Tax payable | 57,500 | ||
| Less: Rebate U/s 87A (rebate is available for Income upto 7 lacs only, No rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 45,000 | Tax Payable | 57,500 |
Conclusion: If Income is upto 9 lacs, then also better to go with New Tax regime.
Situation 5: If a person is having home loan and paying interest on loan more than 2 lacs and Income other than salary is 9 lakh in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000
| Gross Income | 9,00,000 | Gross Income | 9,00,000 | ||
| Les: 80C (Not allowed under New Regime) | – | Les: 80C | 1,50,000 | ||
| Les: 80D (Not allowed under New Regime) | – | Les: 80D | 25,000 | ||
| Les: 80EE | 50,000 | ||||
| Net Income | 9,00,000 | Net Income | 6,75,000 | ||
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 9 lakh | 10% | 30,000 | Rs 5 lakh to 6.75 lakh | 20% | 35,000 |
| Total Tax payable | 45,000 | Total Tax payable | 47,500 | ||
| Less: Rebate U/s 87A (rebate is available for Income upto 7 lacs only, No rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 45,000 | Tax Payable | 47,500 |
Conclusion: If Income is upto 9 lacs, then also better to go with New Tax regime.
Situation 6: If your Income is 12 lakh in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000
| Gross Income | 12,00,000 | Gross Income | 12,00,000 | ||
| Les: 80C (Not allowed under New Regime) | – | Les: 80C | 1,50,000 | ||
| Les: 80D (Not allowed under New Regime) | – | Les: 80D | 25,000 | ||
| Net Income | 12,00,000 | Net Income | 10,25,000 | ||
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 9 lakh | 10% | 30,000 | Rs 5 lakh to 10 lakh | 20% | 1,00,000 |
| Rs 9 lakh to 12 lakh | 15% | 45,000 | Rs 10 lakh to 10.25 lakh | 30% | 7,500 |
| Total Tax payable | 90,000 | Total Tax payable | 1,20,000 | ||
| Less: Rebate U/s 87A (rebate is available for Income upto 7 lacs only, No rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 90,000 | Tax Payable | 1,20,000 |
Conclusion: If income is more than 9 lacs then it is preferrable to go with old regime
Situation 7: If your Income is 15 lakhs in a FY 2023-24, and have deductions under Section 80C-1.5 lacs and 80D- 25000
| Gross Income | 15,00,000 | Gross Income | 15,00,000 | ||
| Les: 80C (Not allowed under New Regime) | – | Les: 80C | 1,50,000 | ||
| Les: 80D (Not allowed under New Regime) | – | Les: 80D | 25,000 | ||
| Net Income | 15,00,000 | Net Income | 13,25,000 | ||
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 9 lakh | 10% | 30,000 | Rs 5 lakh to 10 lakh | 20% | 1,00,000 |
| Rs 9 lakh to 12 lakh | 15% | 45,000 | Above 10 lacs | 30% | 97,500 |
| Rs 12 lakh to 15 lakh | 20% | 60,000 | |||
| Total Tax payable | 1,50,000 | Total Tax payable | 2,10,000 | ||
| Less: Rebate U/s 87A (rebate is available for Income upto 7 lacs only, No rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 1,50,000 | Tax Payable | 2,10,000 |
Conclusion: If income is more than 15 lacs then it’s preferrable to go with new tax regime
Situation 8: If your Income is 20 lakh in a FY 2023-24, and have deduction under Section 80C-1.5 lacs and 80D- 25000
| Gross Income | 20,00,000 | Gross Income | 20,00,000 | ||
| Les: 80C (Not allowed under New Regime) | – | Les: 80C | 1,50,000 | ||
| Les: 80D (Not allowed under New Regime) | – | Les: 80D | 25,000 | ||
| Net Income | 20,00,000 | Net Income | 18,25,000 | ||
| New Tax Regime | Rate | Amount | Old Tax Regime | Rate | Amount |
| Rs 0 to Rs 3 lakh | 0% | NIL | Rs 0 to Rs 2.5 lakh | 0% | NIL |
| Rs 3 lakh to 6 lakh | 5% | 15,000 | Rs 2.5 lakh to 5 lakh | 5% | 12,500 |
| Rs 6 lakh to 9 lakh | 10% | 30,000 | Rs 5 lakh to 10 lakh | 20% | 1,00,000 |
| Rs 9 lakh to 12 lakh | 15% | 45,000 | Above 10 lakh | 30% | 2,47,500 |
| Rs 12 lakh to 15 lakh | 20% | 60,000 | |||
| Above 15 Lakh | 30% | 1,50,000 | |||
| Total Tax payable | 3,00,000 | Total Tax payable | 3,60,000 | ||
| Less: Rebate U/s 87A (rebate is available for Income up to 7 lacs only, no rebate to individuals having income more than 7 lacs) | – | Less: Rebate U/s 87A | – | ||
| Tax Payable | 3,00,000 | Tax Payable | 3,60,000 |
Conclusion: If income is more than 20 lacs then it is preferable to go with the New Regime
Author Bio
Situation 1: 7 lakhs, old tax regime, tax is 1,12,500
Situation 2: 9 lakhs, old tax regime, tax is 92,500, Totally confusing.
in situation no 6 , why we choose old regime.