“Understand the new income tax rates for individuals and HUFs in India for the financial year 2023-24. Explore the default ‘New Regime,’ deductions foregone, and changes in surcharge. Make informed decisions based on income slabs and rebates. Stay updated with tax implications and plan your finances accordingly.”
In India, changes in the income tax rates are bought down in the Union Budget of the respective year. The Budget session is generally carried out in the month of February every year. Generally these amendments are made applicable from the 1st day of the immediate next financial year.
For example, Budget session of February 2023 are made applicable from FY 23-24 which starts from 1/April/2023. In certain cases, the changes are bought into effect through notifications in the Official Gazette.
During the Union Budget session of 22-23, certain changes were brought in on the income tax rates. The same, along with the tax rates applicable on various entities are mentioned below,
For Individuals and HUF
Individual and HUF taxpayers must pay income tax based on the slab system into which they fall.
From FY 22-23, this bracket of tax payers would have to pay taxes under the “New Regime” by default, unless the assessee chooses to pay taxes under the “Old Regime”.
The new regime of tax is as follows,
| Income | Tax Rate |
| (Rs.) | (%) |
| 0 – 3,00,000 | Nil |
| 3,00,000 – 6,00,000 | 5% on income exceeding Rs. 3,00,000 |
| 6,00,000 – 9,00,000 | Rs. 15,000 + 10% on income exceeding Rs. 6,00,000 |
| 9,00,000 – 12,00,000 | Rs. 45,000 + 15% on income exceeding Rs. 9,00,000 |
| 12,00,000 – 15,00,000 | Rs. 90,000 + 20% on income exceeding Rs. 12,00,000 |
| > 15,00,000 | Rs. 1,50,000 + 30% on income exceeding Rs. 15,00,000 |
Under the new regime, tax payers would have to forego some of the deductions and exemptions that are available in the old regime. Such deductions and exemptions are mentioned below,
- Leave Travel Allowance
- Conveyance Allowance
- House Rent Allowance
- Relocation Allowance
- Children Education Allowance
- Professional Tax
- Helper Allowance
- Interest on Housing Loan (Section 24)
- Deduction u/s 80 [Except 80CCD(2) and 80JJAA]
List of deductions allowed under the new regime,
- Transport Allowance for specially abled
- Conveyance Allowance for expenditure incurred for travelling to work
- Investment in Notified Pension Scheme u/s 80CCD(2)
- Deduction u/s 80JJAA
- Depreciation u/s 32, other than additional depreciation
- Standard Deduction on Salary
- Any Allowance for travelling for employment or on transfer
Further, it is to be noted that the new tax regime will be the same for senior and super-senior citizens as well. Hence, the higher slab benefit available for people aged above 60 and 80 respectively is not available. Same slab is applicable for all kind of individuals.
Under the new regime, the rebate limit u/s 87 has been enhanced from Rs. 5,00,000 to Rs. 7,00,000. Therefore, there would be no tax on income upto Rs. 7,00,000.
Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-
| Range of Income | Rs. 50 Lakhs to Rs. 1 Crore | Rs. 1 Crore to Rs. 2 Crores | Rs. 2 Crores to Rs. 5 Crores | Exceeding Rs. 5 crores |
| Surcharge Rate | 10% | 15% | 25% | 37% |
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 Dividend Income. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%, except when the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E.
Note 2: Marginal relief is available from surcharge in following manner-
| Net Income Range | Marginal Relief | |
| Exceeds | Do not Exceed | |
| 50 Lakh | 1 Crore | 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 |
| 1 Crore | 2 Crore | 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 |
| 2 Crore | 5 Crore | 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 |
| 5 Crore | – | 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 |
c. Health and Education Cess :Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.
Author Bio
it was announced in the fiscal budget Feb 2023, that upto 7 Lakhs no tax as agst last FY 2022-23 was 5 Lakhs. this is not showing in ur tax slabs. further u/s 87A tax rebate is Rs 12,500 last FY years. please clarify if nil tax upto 7L is available
Section 87A Rebate is separate from the slabs.
Slab is what is mentioned in this article. The rebate provision states that if the total income of an assessee is upto 7 Lakhs, then a rebate of upto Rs. 25,000 is available.
If you analyse this, Income of 7Lakhs falls in the Rs. 6,00,000 – 9,00,000 slab bracket, and when you calculate the tax amount is Rs. 25,000. So, ideally when your income is upto 7Lakhs, you would be paying 0 taxes.
Earlier, this 7lakhs limit was Rs. 5Lakhs and the rebate was upto Rs. 12,500.
I hope this clarifies your doubt.
Is NPS deduction permitted under new tax regime? If so how much.??
NPS Deduction is permitted under the new regime only to salaried individuals, which is under Section 80CCD(2).
The maximum deduction is as follows,
1. For Government Employees – 14% of Basic Salary(Basic+DA) contributed by CG or SG towards NPS.
2. For Other Employees – 10% of Basic Salary (Basic+DA) contributed by the employer towards NPS.
Surcharge section in the article seems to be incorrect. It should have been as follows:
10% of Income-tax if total income > Rs. 50 lakhs
15% of Income-tax if total income > Rs. 1 crore
25% of Income-tax if total income > Rs. 2 crores.
Thats correct @Vishal Jakkal. I stand corrected.
For FY 23-24 the surcharge rates are amended and it is at the rates mentioned by you.