Comprehending India's Individual Income Tax Slabs for FY 2024-2025
Indian taxpayers are faced with the choice between the old tax system and the new tax system as the fiscal year 2024-2025 draws near. Understanding each tax system's various income tax slabs, rates, and advantages is essential before filing your returns. The tax arrangements under both systems for people, elderly citizens, and certain groups are broken down below.
Income Tax Slabs for FY 2024-2025 Under the Old System.
Under provisions like 80C (PPF investments, insurance premiums, etc.), 80D (medical insurance), and House Rent Allowance (HRA), the old tax System provides several exclusions and deductions. Although these deductions lower taxable income, their tax rates are comparatively greater than under the current system.
The following are the tax slabs:
1. Up to ₹2,50,000 in income: nothing
2. 5% increase in income from ₹ 2,50,001 to ₹ 5,00,000
3. 20% of income between ₹ 5,00,001 and ₹ 10,000,000
4. 30% of income beyond ₹ 10,000,000
Higher Exemption limitations are available to elderly persons (60–80 years old) and super senior citizens (over 80):
1. Senior persons are exempt up to ₹3,00,000.
2. Super elderly persons are exempt up to ₹5,00,000.
3. Due to substantial tax savings through exemptions, taxpayers with many deductions frequently find this regime attractive.
Income Tax Slabs for FY 2024-2025 Under the New System.
Introduced to streamline tax reporting, the New Tax System offers reduced tax rates but does away with the majority of exemptions and deductions. The slabs for the New system were as follows:
1. Income up to ₹ 3,00,000: Nil
2. Income from ₹ 3,00,001 to ₹ 6,00,000: 5%
3. Income from ₹ 6,00,001 to ₹ 9,00,000: 10%
4. Income from ₹ 9,00,001 to ₹ 12,00,000: 15%
5. Income from ₹ 12,00,001 to ₹ 15,00,000: 20%
6. Income above ₹ 15,00,000: 30%
The Section 87A refund for persons earning up to ₹7,00,000, which essentially eliminates their tax due, is one of the main advantages of the new system.
Key Differences Between Old and New System.
1. Exemptions and Deductions : Under the previous system, taxable income may be greatly decreased by making use of deductions such as HRA, standard deductions, and investments under Section 80C. Such deductions are not available under the current regime, although reduced rates are used as compensation.
2. Income Levels : The lower tax rates under the new system may result in a lower tax burden for people with few deductions. Nonetheless, the previous system can still be more advantageous for people who make significant investments in tax-saving options.
3. Reimbursement : During Section 87A, income up to ₹5,00,000 was eligible for a rebate under the previous administration. This benefit is now available to anyone making up to ₹7,000,000 under the new rule.
Tax Slabs for Senior Citizens
Senior Folks Benefit In Particular Ways Under Both System:
1. The baseline exemption limit for elderly persons under the previous administration was ₹3,00,000, while for super senior citizens, it was ₹ 5,00,000.
2. No such distinction is made under the current rule, and everyone is exempt up to ₹ 3,00,000.
Choosing Between the Two Systems.
Your financial profile will determine whether you choose the new or old tax System.
Old Tax System: Perfect for people who have several deductions, such as interest on a house loan, insurance payments, or investments in tax-saving plans. It enables you to reduce your taxable income by claiming a variety of deductions. The new tax system is ideal for people who want a simpler tax system without having to engage in tax-saving measures. It provides reduced rates, and because of the rebate, anybody making up to ₹7,000,000 can avoid paying any taxes at all. The new system may be advantageous for paid people with little deductions. Those who have substantial assets in tax-saving schemes, such as the National Pension System (NPS) or Public Provident Fund (PPF), may, however, choose the previous system.
Taxable Income Calculation
Under both systems, your total taxable income is determined either straight from your gross income (under the new system) or after taking into account permitted deductions (under the old regime). The tax rate is then determined by the slab that applies to your income band.
Conclusion:The Indian income tax system gives taxpayers the option to select between a simpler regime with reduced rates (new) or a complicated regime with deductions (old) for FY 2024–2025. You may choose the best tax regime by evaluating your income, investments, and financial objectives. Additionally, taxpayers should keep abreast of any modifications to the Union Budget 2024 that can impact rates or add new benefits.
