Income Tax Rates for Financial Year 2023-24 / AY 2024-25

This article provides detailed information about the income tax rates for the financial year 2023-24 and the assessment year 2024-25. It covers tax rates applicable to Individuals, Senior Citizens, HUFs, LLP, AOP, BOI, Partnership Firms, Local Authorities, Co-Operative Societies, Domestic Companies, Foreign Companies, Corporations and special tax rates for specific entities. Additionally, it explains the concept of surcharge, Health and Education Cess, and Alternate Minimum Tax (AMT).

The income tax rates for individuals, senior citizens, super senior citizens, HUFs, and other entities are provided in a tabular format for easy reference. It also includes the tax rates for the new tax regime, offering readers insights into the choices available. The article highlights the applicability of surcharge and marginal relief for higher-income individuals and entities.

Furthermore, the article delves into the special tax rates for domestic companies, including those opting for different sections under the Income Tax Act. The concept of AMT is discussed, along with the exemptions available under specific conditions.

Understanding income tax rates is crucial for taxpayers to comply with tax regulations. This comprehensive guide on income tax rates for FY 2023-24 / AY 2024-25 provides clarity on tax liabilities for individuals, HUFs, and various types of companies. Readers can use this information to plan their financial decisions and tax strategies effectively.

Income Tax Rates FY 2023-24 / AY 2024-25: Individuals, Senior Citizens, HUFs, LLP, AOP, BOI, Partnership Firms, Local Authorities, Co-Operative Societies, Domestic Companies, Foreign Companies, Corporations

Income Tax Rates for Financial Year 2023-24 / AY 2024-25

Tax Rates

1. In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

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a. Surcharge :Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Note:

(1) The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112, 112A and 115AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.

(2) The surcharge rate for AOP with all members as a company, shall be capped at 15%.

(3) The surcharge rate is nil if the total income of a ‘specified fund’ as referred to section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

Marginal relief is available from surcharge in following manner-

i.  in case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

ii.  in case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

iii.  in case where net income exceeds Rs. 2 crore but doesn’t exceed Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore.

iv.  in case where net income exceeds Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than the amount of income that exceeds Rs. 5 crore.

b. Health and Education Cess :Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.

Notes:

(1) The Health and Education Cess is nil if the total income of a ‘specified fund’ as referred to section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

(2) A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 12,500, whichever is less.

(3) If the total income of resident individual, who is opting for the new tax scheme under section 115BAC(1A), is up to Rs. 7,00,000, a higher rebate of Rs. 25,000 is allowed under section 87A.Such higher rebate is also subject to marginal relief.

Alternate Minimum Tax (AMT)

An individual is liable to pay Alternate Minimum Tax where tax payable by him, on his total income computed as per normal provisions of the Act, is less than 18.5% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as income of such individual and he shall be liable to pay tax at the rate of 18.5% of such ‘adjusted total income’.

However, AMT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.

1.1. Special tax Rate for Individual and HUFs

New tax regime (also known as alternative tax regime) is optional for the Assessment Year 2023-24. An individual or HUF has to exercise the option under Section 115BAC(5) to avail its benefit.

However, for the Assessment Year 2024-25, the new tax regime is the default tax regime for the Individual or HUF. Further, the benefit of new tax regime has also extended to Association of Persons (AOP)/Body of Individuals (BOI) and Artificial Juridical Person (AJP) w.e.f. Assessment Year 2024-25. If one to opt-out from default new tax regime, he has to exercise the option under Section 115BAC(6).

The tax rates under the new tax regime are as under:

(a) For Assessment Year 2023-24:

(b) For Assessment Year 2024-25:

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a. Surcharge :Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Note: The enhanced surcharge of 25% is not levied, from income chargeable to tax under sections 111A, 112, 112A and 115AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.

However, marginal relief is available from surcharge in following manner-

i.  in case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

ii.  in case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

 iii.  in case where net income exceeds Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore.

b. Health and Education Cess :Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.

Notes:

(a) For Assessment Year 2023-24, a resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 percent of income-tax or Rs.12,500, whichever is less.

(b) From Assessment Year 2024-25, a maximum rebate of Rs. 25,000 is allowed under section 87A, If the total income of an resident individual, who is opting for the new tax scheme under Section 115BAC(1A), is up to Rs. 7,00,000.

(c) Further, if the total income of the resident individual opting section 115BAC(1A) exceeds Rs. 7,00,000 and the tax payable on such income exceeds the difference between the total income and Rs. 7,00,000, he can claim a rebate with marginal relief to the extent of the difference between the tax payable on such total income and the amount by which it exceeds Rs. 7,00,000

(d) If an assessee has opted for new tax regime, the provisions of AMT shall not be applicable.

2. Partnership Firm

For the Assessment Year 2024-25, a partnership firm (including LLP) is taxable at 30%.

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(a) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

(b) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge

Alternate Minimum Tax (AMT)

A partnership firm is liable to pay Alternative Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 18.5% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as the income of the firm and it shall be liable to pay tax at the rate of 18.5% of such ‘adjusted total income’.

However, AMT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.

3. Local Authority

For the Assessment Year 2023-24 & 2024-25, a local authority is taxable at 30%.

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(a)  Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

(b)  Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Alternate Minimum Tax (AMT)

A partnership firm is liable to pay Alternative Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 18.5% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as the income of the firm and it shall be liable to pay tax at the rate of 18.5% of such ‘adjusted total income’.

However, AMT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.

4. Domestic Company

Income-tax rates applicable in case of domestic companies for assessment year 2023-24 and 2024-25 are as follows:

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(a) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. The surcharge shall be subject to marginal relief, which shall be as under:

 (i)  Where income exceeds Rs. 1 crore but not exceeding Rs. 10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

 (ii)  Where income exceeds Rs. 10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore

(b) Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Minimum Alternate Tax (MAT)

A domestic company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of ‘book profit’. In such a case the ‘book profit’ is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such ‘book profit’.

However, MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.

4.1. Special Tax rates applicable to a domestic company

The special Income-tax rates applicable in case of domestic companies are as follows:

Surcharge : The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10% irrespective of amount of total income.

Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

MAT : The domestic company who has opted for special taxation regime under Section 115BAA & 115BAB is exempted from provision of MAT. However, no exemption is available in case where section 115BA has been opted.

5. Foreign Company

Assessment Year 2023-24 and Assessment Year 2024-25

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(a)  Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:

 (i)  Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

 (ii)  Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

(b)  Health and Education Cess : The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Minimum Alternate Tax (MAT)

A foreign company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of ‘book profit’. In such a case the ‘book profit’ is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such ‘book profit’.

However, the provisions of MAT do not apply in case of foreign companies if it does not have permanent establishment (PE) in India or opts for presumptive taxation scheme of Section 44B, Section 44BB, Section 44BBA or Section 44BBB.

6. Co-operative Society

Assessment Year 2023-24 and Assessment Year 2024-25

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(a) (a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief.

(b) Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of four percent of such income-tax and surcharge.

Note:

(a) A co-op. society is liable to pay Alternate Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of ‘adjusted total income’. In such a case the ‘adjusted total income’ is taken as the income of co-op. society and it shall be liable to pay tax at the rate of 15% of such ‘adjusted total income’.

(b) If the assessee is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the rate of AMT will be 9%.

6.1. Special tax rates applicable to a Co-operative societies

6.2. Alternative Tax regime for Co-operative societies

Income-tax Act allows a co-operative society to choose from the following alternative taxation regime subject to fulfilment of prescribed conditions:

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(a) Surcharge: The surcharge is levied at a rate of 10% on the amount of income-tax irrespective of the total income of such co-operative society.

(b) Health & Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.

Note:

(a) If a co-operative society has exercised the option of Section 115BAD or Section 115BAE, the provisions of AMT shall not be applicable. Further, the provisions regarding computation and carry forward of AMT credit shall also be not applicable.

[As amended by Finance Act, 2023]

(Source -Income Tax Website)