Introduction :
Understanding the tax slabs and regimes for the Assessment Year 2023-24 is crucial for individuals and HUFs. In this article, we delve into the options available, the differences between the Old Tax Regime and the New Tax Regime, and the impact on exemptions and deductions. Let’s unravel the complexities and help you navigate the tax landscape.
Tax Regimes and Deduction Considerations, Choosing the Optimal Approach:
- Exploring the Old Tax Regime:
- Under the Old Tax Regime, individuals and HUFs have the traditional tax structure. This regime offers a familiar approach for taxpayers who prefer to utilize the existing benefits available.
- Unveiling the New Tax Regime:
- The New Tax Regime, introduced under Section 115BAC of the Income Tax Act, offers reduced tax rates for individuals and HUFs. However, opting for this regime means forgoing certain exemptions and deductions, such as those under Section 80C, 80D, 80TTB, and HRA.
Old Tax Regime vs. New Tax Regime: Exploring the Tax Slab Rates:
- For Individuals (resident or non-resident) less than 60 years of age at any time during the previous year:
|
Old Tax Regime |
New Tax Regime | ||
| Income tax Slab | Income Tax Rate | Income tax Slab | Income Tax Rate |
| Up to ₹ 2,50,000 | NIL | Up to ₹ 2,50,000 | NIL |
| ₹ 2,50,001- ₹ 500000 | 5% and above 2,50,000 | ₹ 2,50,001- ₹ 500000 | 5% and above 2,50,000 |
| ₹ 5,00,001- ₹ 10,00,000 | ₹ 12,500 + 20% above ₹ 5,00,000 | ₹5,00,001-₹7,50,000 | ₹ 12,500 +10% and above 5,00,000 |
| Above ₹ 10,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | ₹7,50,001-₹10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 |
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 | ||
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,25,000 + 25% above ₹ 12,50,000 | ||
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 | ||
For Individuals (resident or non-resident), 60 years or more but less than 80 years of age anytime during the previous year:
|
Old Tax Regime |
New Tax Regime | ||
| Income tax Slab | Income Tax Rate | Income tax Slab | Income Tax Rate |
| Up to ₹ 3,00,000 | NIL | Up to ₹ 2,50,000 | NIL |
| ₹ 3,00,001- ₹ 500000 | 5% and above 3,00,000 | ₹ 2,50,001- ₹ 500000 | 5% and above 2,50,000 |
| ₹ 5,00,001- ₹ 10,00,000 | ₹ 10,000 + 20% above ₹ 5,00,000 | ₹5,00,001-₹7,50,000 | ₹ 12,500 +10% and above 5,00,000 |
| Above ₹ 10,00,000 | ₹ 1,10,000 + 30% above ₹ 10,00,000 | ₹7,50,001-₹10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 |
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 | ||
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,25,000 + 25% above ₹ 12,50,000 | ||
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 | ||
For Individuals (resident or non-resident) 80 years of age or more anytime during the previous year:
|
Old Tax Regime |
New Tax Regime | ||
| Income tax Slab | Income Tax Rate | Income tax Slab | Income Tax Rate |
| Up to ₹ 5,00,000 | NIL | Up to ₹ 2,50,000 | NIL |
| ₹ 5,00,001- ₹ 10,00,000 | 20% above ₹ 5,00,000 | ₹2,50,001-₹5,00,000 | 5% above ₹ 5,00,000 |
| Above ₹ 10,00,000 | ₹ 1,00,000 + 30% above ₹ 10,00,000 | ₹5,00,001-₹7,50,000 | ₹ 12,500 +10% and above 5,00,000 |
| ₹7,50,001-₹10,00,000 | ₹ 37,500 + 15% above ₹ 7,50,000 | ||
| ₹ 10,00,001 – ₹ 12,50,000 | ₹ 75,000 + 20% above ₹ 10,00,000 | ||
| ₹ 12,50,001 – ₹ 15,00,000 | ₹ 1,25,000 + 25% above ₹ 12,50,000 | ||
| Above ₹ 15,00,000 | ₹ 1,87,500 + 30% above ₹ 15,00,000 | ||
Note:
1. The rates of Surcharge and Health & Education cess are the same under both tax regimes.
2. Rebate u/s 87A: Resident Individual whose Total Income is not more than ₹ 5,00,000 is also eligible for a Rebate of up to 100% of income tax or ₹ 12,500, whichever is less. This Rebate is available in both tax regimes.
Surcharge, Marginal Relief, and Health & Education Cess :
1. What is Surcharge?
The surcharge is an additional charge levied for persons earning Income above the specified limits, it is charged on the amount of income tax calculated as per applicable rates.
- 10% – Taxable Income above ₹ 50 lakh – up to ₹ 1 crore
- 15% – Taxable Income above ₹ 1 crore – up to ₹ 2 crore
- 25% – Taxable Income above ₹ 2 crore – up to ₹ 5 crore
- 37% – Taxable Income above ₹ 5 crore
- Maximum rate of Surcharge on Income by way of Dividend or Income under the provisions of Sections 111A, 112, and112A is 15%
2. What is Marginal Relief?
Marginal relief is a Relief from Surcharge, provided in cases where the Surcharge payable exceeds the additional income that makes the person liable for Surcharge. The amount payable as a Surcharge shall not exceed the amount of income earned exceeding ₹ 50 lakh, ₹ 1 crore, ₹ 2 crores, or ₹ 5 crore respectively.
3. What is Health and Education cess?
Health & Education cess @ 4% shall also be paid on the amount of income tax plus Surcharge (if any).
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