Income Tax Slabs for FY 2023-24 (New & Old Regimes)
Old Income Tax Scheme:
The old income tax scheme, also known as the existing tax regime, has been in place for many years. Under this scheme, tax rates are based on an individual’s income. The applicable tax rates are:
Up to Rs. 2.5 lakh: Nil
Rs. 2.5 lakh to Rs. 5 lakh: 5%
Rs. 5 lakh to Rs. 10 lakh: 20%
Above Rs. 10 lakh: 30%
This scheme allows deductions under various sections of the Income Tax Act, such as Section 80C, 80D, and 80G, which cover investments like provident fund, life insurance premiums, and donations to charitable organizations.
New Income Tax Scheme:
The new income tax scheme, introduced in the Union Budget of 2020, is an optional scheme with lower tax rates but fewer deductions. The tax rates under this scheme are:
Up to Rs. 3 lakh: Nil
Rs. 3 lakh to Rs. 6 lakh: 5%
Rs. 6 lakh to Rs. 9 lakh: 10%
Rs. 9 lakh to Rs. 12 lakh: 15%
Rs. 12 lakh to Rs. 15 lakh: 20%
Above Rs. 15 lakh: 30%
Comparison Between Old and New Income Tax Schemes
| Feature | Old Income Tax Scheme | New Income Tax Scheme |
|---|---|---|
| Tax Rates | Higher tax rates | Lower tax rates |
| Deductions | Available (80C, 80D, etc.) | Limited deductions |
| Eligibility | Default regime | Optional scheme |
Taxpayers can choose between the two schemes based on their financial situation.
Example: Tax Calculation for Income of Rs. 15 Lakh
Under the Old Income Tax Scheme:
Up to Rs. 2.5 lakh: Nil
Rs. 2.5 lakh to Rs. 5 lakh: 5% on Rs. 2.5 lakh = Rs. 12,500
Rs. 5 lakh to Rs. 10 lakh: 20% on Rs. 5 lakh = Rs. 1,00,000
Above Rs. 10 lakh to Rs. 15 lakh: 30% on Rs. 5 lakh = Rs. 1,50,000
Total Tax Liability: Rs. 2,62,500
Under the New Income Tax Scheme:
Up to Rs. 3 lakh: Nil
Rs. 3 lakh to Rs. 6 lakh: 5% on Rs. 3 lakh = Rs. 15,000
Rs. 6 lakh to Rs. 9 lakh: 10% on Rs. 3 lakh = Rs. 30,000
Rs. 9 lakh to Rs. 12 lakh: 15% on Rs. 3 lakh = Rs. 45,000
Rs. 12 lakh to Rs. 15 lakh: 20% on Rs. 3 lakh = Rs. 60,000
Total Tax Liability: Rs. 1,50,000
Common Deductions Available in Both Regimes:
The standard deduction of ₹50,000 (previously available only in the old regime) is now extended to the new tax regime.
Employer contributions to NPS (Section 80CCD(2)) are deductible under both regimes.
Interest paid on housing loans for rented-out properties is deductible under Section 24(b) in both tax regimes.
Taxpayers should evaluate which regime is more beneficial based on their deductions and financial planning.