Introduction
Income tax slabs are structured ranges of income to determine the tax rate applicable to different income levels.
In India, we follow a slab system of taxing the Income. This ensures an equitable tax burden, since people with higher income would be liable to pay a higher tax and lower income earners pay a lower tax in comparison.
As the Financial Year has drawn to a close, the time is near for everyone to file their returns and pay taxes. A surcharge is an additional tax apply to individuals or entities with income exceeding a specified threshold. It is an extra tax applicable on the total calculated tax.
Let us explore the various Income Tax Slabs and their respective tax rates applicable for FY 23-24 (AY 24-25).
Individuals
It is important to note that from FY 23-24, the new tax regime under Section 115BAC has made default. An individual wishing to pay tax as per the slab rates in the old tax regime has to opt out of the default Section 115BAC now.
Let us explore both the regimes of tax slab rates available to Individuals and the surcharge rates as well.
Slab Rates under New Tax Regime ie Section 115BAC
| Net Income | Rate of tax | Tax Amount |
| Up to ₹3,00,000 | Nil | Nil |
| ₹3,00,000 to ₹6,00,000 | 5% | ₹15,000 |
| ₹6,00,000 to ₹9,00,000 | 10% | ₹30,000+₹15,000 = ₹45,000 |
| ₹9,00,000 to ₹12,00,000 | 15% | ₹45,000+₹30,000+₹15,000 = ₹ 90,000 |
| ₹12,00,000 to ₹15,00,000 | 20% | ₹60,000+₹45,000+₹30,000+₹15,000 = ₹ 1,50,000 |
| More than ₹15,00,000 | 30% | Income exceeding ₹15,00,000*30% + ₹1,50,000 |
- These are the slab rates available to all individuals irrespective of their age. There is no higher slab rate benefit available for senior citizens in Section 115BAC.
- Section 87A rebate of 25,000 or tax amount whichever is lower is available when the net income after all Chapter VIA deductions have been made does not exceed Rs.7,00,000.
- Furthermore, several Deductions and Exemptions are also unavailable for the individual to claim in the new regime.
Surcharge
| Total Income | Surcharge rate |
| 50 lakh to 1 crore | 10% |
| 1 crore to 2 crore | 15% |
| Greater than 2 crore | 25% |
- The higher surcharge rate of 37% on income above 5 crore has removed from Section 115BAC.
- The surcharge rate on Income from Sections 111A, 112A, 112 and Dividend has capped at 15%, irrespective of the amount of income earned from those sources beyond 2 crores.
An example of Total Income exceeding 5 crores:
| Total Income | 5,50,00,000 |
| Income Tax | 1,62,00,000 |
| Surcharge at 25% | 40,50,000 |
| Total | 2,02,50,000 |
| Cess at 4% | 8,10,000 |
| Tax Liability | 2,10,60,000 |
Slab Rates under the Old Tax Regime
Income Tax Slab Rates for Individuals
| Net Income | Rate of tax | Tax Amount |
| Up to ₹ 2,50,000 | Nil | 0 |
| ₹ 2,50,000 to ₹ 5,00,000 | 5% | ₹ 12,500 |
| ₹ 5,00,000 to ₹ 10,00,000 | 20% | ₹ 1,00,000 + ₹ 12,500 = ₹ 1,12,500 |
| Above ₹ 10,00,000 | 30% | Income exceeding 10 lakh * 30% + ₹ 1,12,500 |
Income Tax Slab Rates for Resident Individuals aged 60 and above but below 80 years
| Net Income | Rate of tax | Tax Amount |
| Up to ₹ 3,00,000 | Nil | 0 |
| ₹ 3,00,000 to ₹ 5,00,000 | 5% | ₹ 10,000 |
| ₹ 5,00,000 to ₹ 10,00,000 | 20% | ₹ 1,00,000 + ₹ 10,000 = ₹ 1,10,000 |
| Above ₹ 10,00,000 | 30% | Income exceeding 10 lakh*30% + ₹ 1,10,000 |
Income Tax Slab Rates for Resident Individuals aged 80 and above
| Net Income | Rate of tax | Tax Amount |
| Up to ₹ 5,00,000 | Nil | 0 |
| ₹ 5,00,000 to ₹ 10,00,000 | 20% | ₹ 1,00,000 |
| Above ₹ 10,00,000 | 30% | Income exceeding 10 lakh * 30% + ₹ 1,00,000 |
- Section 87A rebate of 12,500 or tax amount whichever is lower is available when the Net Income after all deductions does not exceed Rs.5,00,000.
Surcharge
| Total Income | Surcharge Rate |
| 50 lakh to 1 crore | 10% |
| 1 crore to 2 crore | 15% |
| 2 crore to 5 crore | 25% |
| Greater than 5 crore | 37% |
- Surcharge rates are the same for individuals of any age.
- The old regime has a higher rate of 37% applicable on total income greater than 5 crores.
- The surcharge rate on Income from Sections 111A, 112A, 112 and Dividend has been capped at 15%, irrespective of the amount of income earned from those sources beyond 2 crores or 5 crores.
An example of Total Income exceeding 5 crore:
| Total Income | 5,50,00,000 |
| Income Tax | 1,63,12,500 |
| Surcharge at 37% | 60,35,625 |
| Total | 2,23,48,125 |
| Cess at 4% | 8,93,925 |
| Tax Liability | 2,32,42,050 |
Firms/LLPs/Local Authorities
Income Tax : 30% on Total Income.
Surcharge : 12% when Total Income exceeds 1 crore.
Example : A Firm’s total income is calculated to be 2 crore. The Firm’s tax liability will be as follows:
| Total Income | 2 crore |
| Income Tax (30% on 2 crores) | 60,00,000 |
| Surcharge at 12% | 7,20,000 |
| Total | 67,20,000 |
| Cess at 4% | 2,68,800 |
| Tax Liability | 69,88,800 |
Co-operative Societies
Income Tax
| Total Income | Rate of Tax |
| Up to 10,000 | 10% |
| 10,001 to 20,000 | 20% |
| Greater than 20,000 | 30% |
Surcharge
| From 1 crore to 10 crore | 7% |
| Greater than 10 crore | 12% |
If exercised option under Section 115BAD or 115BAE, the surcharge rate for Co-operative Societies is 10%.
Section 115BAD for Co-operative Societies
A special rate of tax of 22% and a compulsory surcharge of 10% shall apply to any resident co-operative societies that opt-in. Once this section is opted, the decision cannot be reversed. A detailed analysis of this section has been done here.
Section 115BAE for Co-operative Societies
A new introduction for the FY 23-24 is Section 115BAE which allows for a lower tax rate of 15% plus a mandatory surcharge of 10%. This Section can be availed by Resident cooperative societies engaged in the manufacturing of any product or article that has been set up on or after 01.04.2023 and commences its activities before 31.03.2024.
The lower tax rate is applicable only when certain deductions and exemptions are not avail by the cooperative society. The time limit to avail this section is on or before the due date of filing the return under section 139(1) for the first previous year of filing of the newly set-up co-operative society.
Companies
Income Tax
| Domestic Companies with Turnover or Gross Receipts in PY 2021-22 up to 400 crores | 25% |
| Other Domestic Companies | 30% |
| Foreign Companies | 40% |
Surcharge
| Total Income | Domestic Company | Foreign Company |
| 1 crore to 10 crores | 7% | 2% |
| Greater than 10 crores | 12% | 5% |
However, if a company opts for Sections 115BAA or 115BAB, then the surcharge rate is 10%.
Section 115BAA
A concessional tax rate of 22% and surcharge of 10% shall be charge if a domestic company exercises this section. Once the company exercises, it cannot be reverse. There are various conditions that a company must follow to avail of this section. To know more in detail click here.
Section 115BAB
A concessional tax rate of 15% along with a surcharge rate of 10% is available to domestic manufacturing companies set up on or after 01.04.2019 and before 31.03.2024. The option under this section once exercised is permanent and the company is to exercise the option in the return of the first previous year on or before the due of filing under Section 139(1). A breakdown of the same is here.
FAQs
To choose between the old and new tax regimes it totally depends on individual circumstances.
The old regime offers more deductions and exemptions.
The new regime offers lower tax rates with fewer deductions.
Yes, a standard deduction of Rs. 50,000 under the new tax regime can be claim similar to the old regime.
The main disadvantage of the new tax regime is the absence of tax deductions, which can be negatively impact individuals for those who have investments in tax-saving instruments like ELSS funds or tax-saving insurance plans.