New Income Tax Slabs (FY 2023-24): An Illustrative Analysis

Chetan Chauhan | Last updated: 26 August 2023

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This article explains the new income tax slabs for the Financial Year 2023-24. A key change is the increase in the rebate limit to Rs. 7 lakh in the new tax regime, meaning individuals earning up to this amount will not have to pay any income tax. The article also provides a detailed breakdown of the tax rates for different income brackets and includes an illustrative example to help taxpayers understand how their tax liability is calculated.

Income tax is a type of direct tax, which means that it is directly paid to the government by the taxpayer. It is based on the taxpayer's income and is calculated using the tax slabs defined by the Income Tax Department.

Note: Rebate limit of Personal Income Tax to be increased to Rs. 7 lakh from the current Rs. 5 lakh in the new tax regime. Thus, persons in the new tax regime, with income up to Rs. 7 lakh to not pay any tax.

New Income Tax Slabs FY 2023-24: Your Guide

New tax slabs

Income	Tax Rate
Up to Rs 3 lakh	Nil
Above Rs 3 lakh and up to Rs 6 lakh	5% on income over Rs 3 lakh
Above Rs 6 lakh and up to Rs 9 lakh	Rs 15000 + 10% on income over Rs 6 lakh
Above Rs 9 lakh and up to Rs 12 lakh	Rs 45000 + 15% on income over Rs 9 lakh
Above Rs 12 lakh and up to Rs 15 lakh	Rs 90000 + 20% on income over Rs 12 lakh
Above Rs 15 lakh	Rs 150000 + 30% on income over Rs 15 lakh

Click here to calculate Total Tax

Let us take an example to understand the current tax slabs

Rohit is a salaried person with a basic of Rs 1,20,000 per month. HRA of Rs 52,000 per month. Special Allowance of Rs 18,000 per month. LTA of Rs 20,000 annually and pays a rent of Rs 40,000. He has income from other sources like FD interest 20000 respectively.

Particulars	Amount
Income from Salary
Basic Salary (1,20,000 * 12)	1440000
HRA (52,000 * 12)	624000
Special Allowance (18000 * 12)	216000
LTA (20,000 annually)	20000
Less: Standard Deduction	50000
Total Income from Salary	2250000
Total Income from Salary	2250000
Add: Income from Other Sources FD Interest 20,000	20000
Gross Total Income	2270000
Gross Total Income	2270000
Income Tax [1,50,000 + (2270000 - 1500000) * 30%]	381000
Income Tax [1,50,000 + (2270000 - 1500000) * 30%]	381000
Add: Cess @4% on 3,81,000	15240
Add: Cess @4% on 3,81,000	15240
Total Income Tax	396240
Total Income Tax	396240

FAQ :

The rebate limit for personal income tax has been increased to Rs. 7 lakh in the new tax regime for FY 2023-24.

Individuals in the new tax regime with an income up to Rs. 7 lakh will not have to pay any income tax.

For income above Rs. 3 lakh and up to Rs. 6 lakh, the income tax rate is 5% on the income exceeding Rs. 3 lakh.

For income above Rs. 15 lakh, the tax rate is Rs. 150,000 plus 30% on the income exceeding Rs. 15 lakh.

Income tax is calculated by applying the specified rates to different income brackets. For example, income up to Rs. 3 lakh is taxed at Nil, while income above Rs. 3 lakh and up to Rs. 6 lakh is taxed at 5%.

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