Old Vs New Tax Regime Income Tax Slabs 2024-25: It is important for taxpayers to know what is the difference between the new tax regime and the old tax regime? What is the tax slab and how much is the benefit? Let us understand its intricacies from CA Ajay Bagadia, CA Santosh Mishra and Abhinandan Pandey..
New Tax Regime Vs Old Tax Regime: With the beginning of the new financial year 2024-25 from April 1, it is important for taxpayers to know what is the difference between the new tax regime and the old tax regime? What is the tax slab and how much is the benefit? Let us understand its intricacies from CA Ajay Bagadia, CA Santosh Mishra and Abhinandan Pandey..
CA Santosh Mishra said that the new income tax regime has become the default income tax system with effect from the financial year 2023-24. So if you want to opt for the Old Income Tax Regime, you will need to tell your employer at the beginning of the financial year so that your income tax can be calculated accordingly. We take a look at the income tax slabs for FY 2024-25 (Assessment Year 2025-26).
Talking about the tax slab for assessment year 2024-25 in the old tax system, there is no tax for income up to Rs 250,000. Even if your income is less than Rs 500000, the tax is zero, but as soon as you cross this limit, the tax will be calculated from Rs 250001. That means you will have to pay 5% tax on income between Rs 250001 to Rs 500000.
There will be 20% tax on income between Rs 500001 to Rs 1000000 and 30% tax on income above Rs 10 lakh. Income Tax Slabs 2024-25 Individual taxpayers with total income above Rs 500,000 under the old tax regime will be eligible for a tax rebate of Rs 12,500 or actual tax payable, whichever is lower. It is also important to know that the basic exemption limit for senior citizens aged 60 years and above is Rs 3 lakh, while the basic exemption limit for very senior citizens aged 80 and above is Rs 5 lakh.
Income tax slab for new tax regime
No tax for income up to Rs 3 lakh. 5 percent tax is fixed for income above Rs 3 lakh and less than Rs 6 lakh. The tax is fixed at 10 percent for income above Rs. 6 lakh and up to Rs. 9 lakh and 15 percent for income above Rs. 9 lakh and up to Rs. 12 lakh. There is a 20 percent tax for income above Rs 12 lakh and below Rs 15 lakh. The tax is 30% for those with income above Rs 15 lakh.
CA Ajay Bagadia said that in the new tax system the rebate eligibility limit has been fixed at Rs 7,00,000. This allows taxpayers to claim exemption of up to Rs 25,000. Additionally, marginal relief is available to people with net taxable income of more than Rs 7,00,000 where the incremental income tax liability exceeds the incremental income of more than Rs 7,00,000.
New vs old system
Talking about this, CA Abhinandan Pandey says that the basic difference between the old and new income tax system is that the old system allows major exemptions and deductions like Section 80C, Section 80D, Section 80TTA etc. Whereas, all this is not there in the new tax system.
Financial Year 2024-25 Standard Deduction
Bagadia says the standard deduction remains unchanged for fiscal year 2024-2025. It will remain at Rs 50,000 for both the old and new income tax regimes. Apart from the standard deduction, the new income tax regime provides another deduction, which is under section 80CCD(2) for employer’s contribution to the NPS account.
