Decoding Income Tax Regimes: AY 2024-25 Insights for Taxpayers

Introduction: As taxpayers prepare to file their income tax returns for the assessment year 2024-25, understanding the nuances of the old and new tax regimes is crucial. This article explains key aspects such as deductions, setoffs, and other rules to help taxpayers make informed decisions before filing their Income Tax Returns.

Article 246 of constitution of India has given power to CG for makes Laws on Income Tax. The Government introduced first time a New Tax Regime, under Section 115 BAC with effect from 1st April, 2020 i.e. from FY 2020-21. The Union Finance Minister Nirmala Sitaraman announced during the Union Budget 2023 that going forward; the new tax regime would become the default tax regime for the taxpayers who do not express any preference. Now people who pay taxes can choose between two ways to do it. Every taxpayer should know about these before they file their income tax return. Here we will cover as below:-

Tax Rates for assessment year 2024-25 (old regime/Regular)

In case of Individual, HUF, AOP, BOI, & Artificial Juridical Person (General)

S.No.	Net Total Income /slab pool	Income Tax Rate
1	Upto 2,50,000.00	Nil
2	2,50,001.00 to upto 5,00,000.00	5%
3	5,00,001.00 to 10,00,000.00	20%
4	Above 10,00,000.00	30%

For Senior Citizen (Only Resident Individual and age 60 or above)

S.No.	Net Total Income /slab pool	Income Tax Rate
1	Upto 3,00,000.00	Nil
2	3,000,001.00 to upto 5,00,000.00	5%
3	5,00,001.00 to 10,00,000.00	20%
4	Above 10,00,000.00	30%

For Super Senior Citizen (Only Resident Individual and age 80 or above)

S.No.	Net Total Income /slab pool	Income Tax Rate
1	Upto 5,00,000.00	Nil
2	5,00,001.00 to 10,00,000.00	20%
3	Above 10,00,000.00	30%

Section 87A:-Rebate

Rebate from Tax to only RESIDENT INDIVIDUAL and having Total Income up to 5, 00,000.00

1) 100% of Tax payable

2) Rs 12,500/-

Whichever is lower rebate given to Resident Individual?

Note: – This rebate shall be reduced before adding HEC cess

This rebate available against all types of income except LTCG U/s 112A

Surcharge for Assessee being of Individual, HUF, AOP, BOI, & Artificial Juridical Person

S.No.	Total Income	Income Tax Rate
1	Upto 50,00,000.00	Nil
2	50,00,001.00 to 1,00,00,000.00	10%
3	1,00,00,001.00 to 2,00,00,000.00	15%
4	2,00,00,001.00 to 5,00,00,000.00	25%
5	Above 5,00,00,000.00	37%

Note:-If surcharge is applicable than subject to Marginal Relief.

Note:-After we have added by 4% of Cess.

Section 115BAC (New Regime)

The new tax regime has the benefit of the assessee standard deduction and there is a full rebate provided to individuals earning up to Rs. 7 lakhs annually. Now let’s see details discussion as per below :-

Section 115BAC: Tax on Income of Individual, HUF, AOP, BOI & AJP

S.No.	Total Income /slab pool	Income Tax Rate
1	Upto 3,00,000.00	Nil
2	3,000,001.00 to upto 6,00,000.00	5%
3	6,00,001.00 upto 9,00,000.00	10%
4	9,00,001.00 upto 12,00,000.00	15%
5	12,00,001 upto 15,00,000.00	20%
6	Above 15,00,000.00	30%

Surcharge for Assessee being of Individual, HUF, AOP, BOI, & Artificial Juridical Person

S.No.	Total Income	Income Tax Rate
1	Upto 50,00,000.00	Nil
2	50,00,001.00 to 1,00,00,000.00	10%
3	1,00,00,001.00 to 2,00,00,000.00	15%
4	Above 2,00,00,000.00	25%

Special point regarding Section 115BAC:-

1) If we shall not choose any tax regime, our ITR (Income Tax Return) for the current assessment year 2024-25 will be filed under the new tax regime.

2) If assessee does not have PGBP income this option always is available to exercise either old regime or new regime with the hand of the assessee and choose option which is more beneficial to assessee.

3) But if the assessee has business/professional than such option once exercise shall apply for subsequent AY also. However the option one exercise for old regime can be withdraw only once for PY & there after the person shall never be eligible for the benefit of regular tax regimen till the time having any income under the PGBP.

4) Assessee paid tax as per 115BAC is not required to pay AMT.

5) Deduction under chapter VI-A is not allowed except:-80JJAA, 80CCD (2), 80CCH (2) & 80LA.

6) If assessee having Business income & opting 115BAC for first time in AY 2024-25 and if any additional depreciation is included in B/F unabsorbed depreciation then such additional deprecation is not allowed to be set-off but it will be added to opening WDV of that fixed assets block as on 01/04/2023.

7) Section 87A:-Rebate

Rebate from Tax to only RESIDENT INDIVIDUAL and having Total Income up to 7, 00,000.00

1) 100% of Tax payable

2) Rs 25,000/-

Whichever is lower rebate given to Resident Individual Only?

8) Marginal Relief: – If total Income little bit more than 7, 00,000.00 than marginal relief available. But noted that if assessee have opted regular scheme than marginal relief not available.

9) Under the New tax regime, we can claim tax exemption for the following:

A) Transport allowance in case of a specially-abled person.

B) Conveyance allowance, Daily allowance & Travelling allowance received to meet the expenditure incurred as part of the employment.

C) Deduction for employer contribution to NPS u/s 80CCD(2),Deduction for additional employee cost u/s 80JJAA,Dedcution amount paid /deposit in the Agniveer corpus fund U/s 80CCH(2)

D) Standard Deduction of Rs. 50,000 was available under the New Tax Regime also.

E) Interest u/s 24(b) for let-out property set-off HP income only It means HP loss cannot be set off by other income

F) Family Pensioners can now claim either Rs. 15,000 or 1/3rd of their pension, whichever is lower

 Let’s see Example for above situation: – Suppose an individual has a salary income of Rs. 8, 00,000, & Investment in 1, 50,000.00 in PPF account. The following table shows the tax calculation under the new and old regimes:

Particulars	Regular/ Old Regime	New Regime
Salary	8,00,000.00	8,00,000.00
Less: Standard Deduction	50,000.00	50,000.00
Taxable Income	7,50,000.00	7,50,000.00
Less:-Deduction u/s 80C	1,50,000.00	–
Net Taxable Income	6,00,000.00	7,50,000.00
Relief 87A	Nil	Nil
Income Tax (without HEC)	32,500	30,000.00

Let’s see another Example for above situation: – Suppose an individual has an salary income of Rs. 10, 00,000, & Investment in 1, 50,000.00 in PPF account. The following table shows the tax calculation under the new and old regimes:

Particulars	Regular/ Old Regime	New Regime
Salary	10,00,000.00	10,00,000.00
Less: Standard Deduction	50,000.00	50,000.00
Taxable Income	9,50,000.00	9,50,000.00
Less:-Deduction U/s 80C	1,50,000.00	–
Net Taxable Income	8,00,000.00	9,50,000.00
Relief 87A	Nil	Nil
Income Tax (without HEC)	72,500	52,500.00

Let’s see another Example for above situation: – Suppose an individual has an salary income of Rs. 10, 00,000, & Investment in 1, 50,000.00 in PPF account & self occupied house interest is 2,00,0000. The following table shows the tax calculation under the new and old regimes:

Particulars	Regular/ Old Regime	New Regime
Salary	10,00,000.00	10,00,000.00
Less: Standard Deduction	50,000.00	50,000.00
Taxable Income	9,50,000.00	9,50,000.00
Less:- Interest u/s 24(b)	2,00,000.00	–
Less:-Deduction 80C	1,50,000.00	–
Net Taxable Income	6,00,000.00	9,50,000.00
Relief 87A	Nil	Nil
Income Tax (without HEC)	32,500	52,500.00

So now assessee calculate tax before file of own ITR which more beneficial than he will go with regime but other than who have business & file ITR-3/4.

This article only for informational and education purpose, however it is advisable to consult with tax professional for specific issue and challenge.