The income-tax rates for the assessment year 2024-25 remain unchanged from the previous year, with specific rates provided for different categories of taxpayers. Under section 115BAC, individuals, HUFs, AOPs, BOIs, and artificial juridical persons are taxed at progressive rates starting from nil for incomes up to Rs. 3 lakh and reaching 30% for incomes above Rs. 15 lakh. Surcharge rates also apply, ranging from 10% to 25% based on income slabs. For domestic companies, sections 115BAA and 115BAB outline tax rates, while sections 115BAD and 115BAE apply to cooperative societies. Additionally, Part I of the First Schedule details rates for individuals, HUFs, cooperative societies, firms, local authorities, and companies. The health and education cess remains at 4%.
For AY 2025-26, new tax rates are introduced for individual and HUF incomes under section 115BAC (New Tax Regime), including nil for incomes up to Rs. 3 lakh, and rising to 30% for incomes above Rs. 15 lakh. For the Assessment Year (AY) 2025-26, the income tax slabs for individuals and Hindu Undivided Families (HUFs) have been revised as follows:
- Income up to ₹3,00,000: Nil
- Income from ₹3,00,001 to ₹7,00,000: 5%
- Income from ₹7,00,001 to ₹10,00,000: 10%
- Income from ₹10,00,001 to ₹12,00,000: 15%
- Income from ₹12,00,001 to ₹15,00,000: 20%
- Income above ₹15,00,000: 30%
These rates will apply starting from the financial year beginning on or after April 1, 2025. The amendments are intended to make tax rates more progressive and will be applicable for the assessment year 2025-26 and subsequent years.
Marginal relief provisions will be in place to alleviate the impact of surcharges for higher income brackets.
A. RATES OF INCOME-TAX
I. Rates of income-tax in respect of income liable to tax for the assessment year 2024-25.
In respect of income of all categories of assessees liable to tax for the assessment year 2024-25, the rates of income-tax have either been specified in specific sections of the Act (like section 115BAA or section 115BAB for domestic companies, section 115BAC for individual/HUF/AOP (other than a co-operative society)/BOI/AJP and section 115BAD or section 115BAE for cooperative societies) or have been specified in Part I of the First Schedule to the Bill. There is no change proposed in tax rates either in these specific sections or in the First Schedule. The rates provided in sections 115BAA or 115BAB or 115BAC or 115BAD or 115BAE of the Act for the assessment year 2024-25 would be same as already enacted. Similarly rates laid down in Part III of the First Schedule to the Finance Act, 2023, for the purposes of computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable in certain cases for the assessment year 2024-25 would now become part I of the first schedule. Part III would now apply for the assessment year 2025-26.
(1) Tax rates under section 115BAC—
For assessment year 2024-25, as per the provisions of sub-section (1A) of section 115BAC of the Act, an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, has to pay tax in respect of the total income at following rates:
| Total Income (Rs) | Rate |
| Up to 3,00,000 | Nil |
| From 3,00,001 to 6,00,000 | 5% |
| From 6,00,001 to 9,00,000 | 10% |
| From 9,00,001 to 12,00,000 | 15% |
| From 12,00,001 to 15,00,000 | 20% |
| Above 15,00,000 | 30% |
2. The above mentioned rates shall apply, unless an option is exercised as per provisions of sub-section (6) of section 115BAC. Thus, rates specified in sub-section (1A) of section 115BAC of the Act are the default rates.
3. In respect of income chargeable to tax under clause (i) of sub-section (1A) of section 115BAC of the Act, the income-tax for the assessment year 2024-25 shall be increased by a surcharge, for the purposes of the Union, computed, in the case of every individual or Hindu undivided family or association of persons, or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act,-
(i) having a total income (including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of 10% of such income-tax;
(ii) having a total income (including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of 15% of such income-tax;
(iii) having a total income (excluding the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Act) exceeding two crore rupees, at the rate of 25% of such income-tax;
(iv) having a total income (including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Act) exceeding two crore rupees, but is not covered under clause (iii) above, at the rate of 15% of such income-tax;
3.1 In case where the provisions of sub-section (1A) of section 115BAC are applicable and the total income includes any income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Act, the rate of surcharge on the income-tax in respect of that part of income shall not exceed 15%.
3.2 Further, in the case of an association of persons consisting of only companies as its members, and having its income chargeable to tax under sub-section (1A) of section 115BAC, the rate of surcharge on the income-tax shall not exceed 15%.
3.3 Marginal relief shall be provided in such cases.
Tax rates under Part I of the First Schedule applicable for the assessment year 2024-25
A. Individual, HUF, association of persons, body of individuals, artificial juridical person.
Paragraph A of Part-I of First Schedule to the Bill provides following rates of income-tax:—
(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or HUF or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part I applies) are as under:—
| Up to Rs. 2,50,000 | Nil. |
| Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
–
| (ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,— | |
| Up to Rs. 3,00,000 | Nil. |
| Rs. 3,00,001 to Rs.5,00,000 | 5% |
| Rs. 5,00,001 to Rs.10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,—
| Up to 5,00,000 | Nil |
| From 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
These rates are the same as those applicable for the assessment year 2023-24.
B. Co-operative Societies
In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part I of the First Schedule to the Bill. They remain unchanged at (10% up to Rs. 10,000; 20% between Rs. 10,001 and Rs. 20,000; and 30% in excess of Rs. 20,000).
C. Firms
In the case of firms, the rate of income-tax has been specified in Paragraph C of Part I of the First Schedule to the Bill. They remain unchanged at 30%.
D. Local authorities
The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part I of the First Schedule to the Bill. They remain unchanged at 30%.
E. Companies
The rates of income-tax in the case of companies have been specified in Paragraph E of Part I of the First Schedule to the Bill and remain unchanged vis-à-vis those for the AY 2023-24. In case of domestic company, the rate of income-tax shall be 25% of the total income, if the total turnover or gross receipts of the previous year 2021-22 does not exceed four hundred crore rupees and in all other cases the rate of income-tax shall be 30% of the total income.
2. In the case of company other than domestic company, the rates of tax are the same as those specified for the AY 2023-24.
(2) Surcharge on income-tax
The rates of surcharge on the amount of income-tax for the purposes of the Union is the same as that specified for the FY 2022-23. Further, for person whose income is chargeable to tax under sub-section (1A) of section 115BAC of the Act, the surcharge at the rate of 37% on the income or aggregate of income of such person (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees is not applicable. In such cases the surcharge is restricted to 25%.
(3) Marginal Relief—
Marginal relief has also been provided in all cases where surcharge is proposed to be imposed.
(4) Education Cess—
For assessment year 2024-25, “Health and Education Cess” is to be levied at the rate of 4% on the amount of income-tax so computed, inclusive of surcharge wherever applicable, in all cases. No marginal relief shall be available in respect of such cess.
II. Rates for deduction of income-tax at source during the financial year (FY) 2024-25 from certain incomes other than “Salaries”.
The rates for deduction of income-tax at source during the FY 2024-25 under the provisions of section 193, 194A, 194B, 194BB, 194D, 194LBA, 194LBB, 194LBC and 195 have been specified in Part II of the First Schedule to the Bill.
2. For sections specifying the rate of deduction of tax at source, the tax shall continue to be deducted as per the provisions of the relevant sections of the Act.
3. It is proposed that for deduction of income-tax at source on other income in case of company which is not a domestic company, rates shall be reduced from 40% to 35%.
4. It is proposed that for deduction of income-tax at source on the incomes in the nature of capital gains for non-residents, the rates shall be as per the Table below:
| Sl. No. | Income | For transfers taking place before 23rd day of July, 2024 / Rate of TDS | For transfers taking place on or after 23rd day of July, 2024 / Rate of TDS |
| (1) | long-term capital gains referred to in section 115E |
10% | 12.5% |
| (2) | long-term capital gains referred to in sub-clause (iii) of clause (c) of sub- section (1) of section 112 |
10% | The clause is not applicable for transfers on or after 23rd July, 2024 |
| (1) | long-term capital gains referred to in section 112A exceeding one lakh twenty five thousand rupees |
10% | 12.5% |
| (2) | long-term capital gains [not being long-term capital gains referred to in clauses (33) and (36) of section 10] | 20% | 12.5% |
| (3) | short-term capital referred to in section 111A | 15% | 20% |
5. Apart from the above, the rates will remain the same as those specified in Part II of the First Schedule to the Finance Act, 2023, for the purposes of deduction of income-tax at source during the FY 2024-25.
6. The surcharge on the amount of income-tax for the purposes of the Union is the same as that specified for the FY 2023-24.
(2) Education Cess—
“Health and Education Cess” shall continue to be levied at the rate of four per cent. of income tax including surcharge wherever applicable, in the cases of persons not resident in India including company other than a domestic company.
III. Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income-tax in special cases during the FY 2024-25 (Assessment Year 2025-26).
The rates for deduction of income-tax at source from “Salaries” or under section 194P of the Act during the FY 2024-25 and also for computation of “advance tax” payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the FY 2024-25 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during the financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration, etc. The salient features of the rates specified in the said Part III are indicated in the following paragraphs-
A. Individual, HUF, association of persons, body of individuals, artificial juridical person.
With effect from assessment year 2025-26, it is proposed that the following rates provided under the proposed clause (ii) of sub-section (1A) of section 115BAC of the Act shall be the rates applicable for determining the income-tax payable in respect of the total income of a person, being an individual or Hindu undivided family or association of persons [other than a co-operative society], or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2:—
| Sl. No. | Total income | Rate of tax |
| (1) | (2) | (3) |
| 1. | Upto Rs. 3,00,000 | Nil |
| 2. | From Rs. 3,00,001 to Rs. 7,00,000 | 5% |
| 3. | From Rs. 7,00,001 to Rs. 10,00,000 | 10% |
| 4. | From Rs. 10,00,001 to Rs. 12,00,000 | 15% |
| 5. | From Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| 6. | Above Rs. 15,00,000 | 30% |
2. However, if such person exercises the option under sub-section (6) of section 115BAC of the Act, the rates as provided in Part III of the First Schedule shall be applicable.
3. Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:—
(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or HUF or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:—
| Upto Rs. 2,50,000 | Nil. |
| Rs. 2,50,001 to Rs.5,00,000 | 5% |
| Rs. 5,00,001 to Rs.10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—
| Upto Rs. 3,00,000 | Nil. |
| Rs. 3,00,001 to Rs. 5,00,000 | 5% |
| Rs. 5,00,001 to Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,—
| Up to 5,00,000 | Nil |
| From 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
4. The amount of income-tax computed in accordance with the preceding provisions of this Paragraph (including capital gains under section 111A, 112 and 112A), shall be increased by a surcharge at the rate of,—
(a) having a total income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of 10% of such income-tax;
(b) having a total income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding one crore rupees, at the rate of 15% of such income-tax;
(c) having a total income (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of 25% of such income-tax;
(d) having a total income (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees, at the rate of 37% of such income-tax;
(e) having a total income (including the income by way of dividend or income under the provisions of section 111A, 112 and section 112A of the Act) exceeding two crore rupees, but is not covered under clauses (c) and (d), shall be applicable at the rate of 15% of such income-tax.
4.1 Provided that in case where the total income includes any income by way of dividend or income chargeable under section 111A, section 112 and section 112A of the Act, the rate of surcharge on the amount of income-tax computed in respect of that part of income shall not exceed 15%.
4.2 Provided further that in case of an association of persons consisting of only companies as its members, the rate of surcharge on the amount of income-tax shall not exceed 15%.
4.3 Further, for person whose income is chargeable to tax under sub-section (1A) of section115BAC of the Act, the surcharge at the rate 37% on the income or aggregate of income of such person (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) exceeding five crore rupees shall not be applicable. In such cases the surcharge shall be restricted to 25%.
5. Marginal relief is provided in cases of surcharge.
B. Co-operative Societies
In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Bill. These rates will continue to be the same as those specified for FY 2023-24. The amount of income-tax shall be increased by a surcharge at the rate of 7% of such income-tax in case the total income of a co-operative society exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of 12% of such income-tax shall continue to be levied in case of a co-operative society having a total income exceeding ten crore rupees.
2. Marginal relief is provided in cases of surcharge.
3. On satisfaction of certain conditions, a co-operative society resident in India shall have the option to pay tax at 22% as per the provisions of section 115BAD. Surcharge would be at 10% on such tax. Further, under section 115BAE of the Act, a manufacturing co-operative society set up on or after 1.4.2023, which commenced manufacturing or production on or before 31.3.2024 and does not avail of any specified incentive or deductions, may opt to pay tax at a concessional rate of 15% for assessment year 2024-25 onwards. Surcharge would be at 10% on such tax.
C. Firms
In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for FY 2023-24. The amount of income-tax shall be increased by a surcharge at the rate of 12% of such income-tax in case of a firm having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
D. Local authorities
The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the FY 2023-24. The amount of income-tax shall be increased by a surcharge at the rate of 12% of such income-tax in case of a local authority having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.
E. Companies
The rates of income-tax in the case of companies have been specified in Paragraph E of Part III of the First Schedule to the Bill. In case of domestic company, the rate of income-tax shall be 25% of the total income, if the total turnover or gross receipts of the previous year 2022-23 does not exceed four hundred crore rupees and where the companies continue in section 115BA regime. In all other cases the rate of income-tax shall be 30% of the total income. However, domestic companies also have an option to opt for taxation under section 115BAA or section 115BAB of the Act on fulfillment of conditions contained therein. The tax rate is 15% in section 115BAB and 22% in section 115BAA. Surcharge is 10% in both cases.
2. In the case of a company other than a domestic company, it is proposed that the rates of tax shall be reduced from 40% to 35%, on income other than income chargeable at special rates, specified in respective sections of Chapter XII of the Act.
3. Surcharge at the rate of 7% shall continue to be levied in case of a domestic company (except those opting for taxation under section 115BAA and section 115BAB of the Act), if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of 12% shall continue to be levied, if the total income of the domestic company (except those opting for taxation under section 115BAA and section 115BAB of the Act) exceeds ten crore rupees.
4. In case of companies other than domestic companies, the existing surcharge of 2% shall continue to be levied, if the total income exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of 5% shall continue to be levied, if the total income of the company other than domestic company exceeds ten crore rupees.
5. It is proposed that the surcharge shall not apply on advance tax / tax computed on income of specified fund (referred to in clause (c) of the Explanation to clause (4D) of section 10) that is chargeable under clause (a) of sub-section (1) of section 115AD of the Act.
6. Marginal relief is provided in surcharge in all cases.
7. In other cases [including sub-section (2A) of section 92CE, 115QA, 115R, 115TA or 115TD], the surcharge shall be levied at the rate of 12%
8. For FY 2024-25, additional surcharge called the “Health and Education Cess on income-tax” shall be levied at the rate of 4% on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such cess.
[Clauses 2, 37 & the First Schedule]
Extract of Clause 2 of Finance Bill 2024
Clause 2 read with the First Schedule to the Bill, seeks to specify the rates at which income-tax is to be levied on income chargeable to tax for the assessment year 2024-2025. Further, it lays down the rates at which tax is to be deducted at source during the financial year under the Income-tax Act; and the rates at which “advance tax” is to be paid, tax is to be deducted at source from, or paid on, income chargeable under the head “Salaries” or deducted under section 194P of the Income-tax Act and tax is to be calculated and charged in special cases for the financial year 2024-2025.
Extract of Clause 37 of Finance Bill 2024
Clause 37 of the Bill seeks to amend section 115BAC of the Income-tax Act relating to tax on income of individuals and Hindu undivided family.
It is proposed to amend sub-section (1A) of the said section to provide that notwithstanding anything contained in this Act but subject to the provisions of Chapter XII, the income-tax payable in respect of the total income of a person, being an individual or Hindu undivided family or association of persons (other than a co-operative society), or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, other than a person who has exercised an option under sub-section (6),––
(i) for any previous year relevant to the assessment year beginning on the 1st day of April, 2024, shall be computed at the rate of tax given in the following Table, namely:—
TABLE
| Sl. No. | Total income | Rate of tax |
| (1) | (2) | (3) |
| 1. | Upto Rs. 3,00,000 | Nil |
| 2. | From Rs. 3,00,001 to Rs. 6,00,000 | 5 per cent. |
| 3. | From Rs. 6,00,001 to Rs. 9,00,000 | 10 per cent. |
| 4. | From Rs. 9,00,001 to Rs. 12,00,000 | 15 per cent. |
| 5. | From Rs. 12,00,001 to Rs. 15,00,000 | 20 per cent. |
| 6. | Above Rs. 15,00,000 | 30 per cent.; |
(ii) any previous year relevant to the assessment year beginning on or after the 1st day of April, 2025, shall be computed at the rate of tax given in the following Table, namely:—
TABLE
| Sl. No. | Total income | Rate of tax |
| (1) | (2) | (3) |
| 1. | Upto Rs. 3,00,000 | |
| 2. | From Rs. 3,00,001 to Rs. 7,00,000 | 5 per cent. |
| 3. | From Rs. 7,00,001 to Rs. 10,00,000 | 10 per cent. |
| 4. | From Rs. 10,00,001 to Rs. 12,00,000 | 15 per cent. |
| 5. | From Rs. 12,00,001 to Rs. 15,00,000 | 20 per cent. |
| 6. | Above Rs. 15,00,000 | 30 per cent. |
These amendments will take effect from 1st April, 2025 and will, accordingly, apply in relation to the assessment year 2025-2026 and subsequent years.
