OLD VS NEW TAX RATES FOR FY 2023-24/ AY 2024-25

Understanding about tax regimes for the Financial Year 2023-2024/ Assessment Year 2024-2025.

Tax Slab rates Under both the regimes for Financial Year 2023-24.

OLD TAX REGIME		NEW TAX REGIME
TAX SLAB (IN Rs.)	TAX RATE	TAX SLAB (IN Rs.)	TAX RATE
0-250000	0%	0-300000	0%
250001-500000	5%	300001-600000	5%
500001-1000000	20%	600001-900000	10%
>1000000	30%	900001-1200000	15%
		1200001-1500000	20%
		>1500000	30%

Tax Rebate U/s.87A for the Financial Year 2023-24 under both the regimes.

TAX REBATE U/s.87A
	OLD REGIME	NEW REGIME
AMOUNT OF REBATE	Rs.12,500 if total income does not exceed Rs.5,00,000.	Rs.25000 if total income does not exceed Rs.700,000
MARGINAL TAX REBATE	Not applicable	Applicable

What is the default tax regime while filing the returns for Financial Year 2023-24?

DEFAULT TAX REGIME
	IF FILING BEFORE DUE DATE OF FILING i.e., 31.07.2024	IF FILING AFTER DUE DATE OF FILING i.e., 31.07.2024
DEFAULT REGIME	NEW TAX REGIME	NEW TAX REGIME
CHANGING TAX REGIME	ALLOWED	NOT ALLOWED

Marginal Relief under Section 87A For New Tax Regime

Under the new tax regime, the rebate is available for Rs. 25,000 if the income of the individual does not exceed Rs. 7 lakhs. However, if the income slightly increases by Rs. 7 lakhs then the individual will end up paying a higher amount of taxes. In such cases, they will be eligible to claim the benefit of marginal relief.

Marginal Rebate= tax payable - Income exceeding Rs.700,000(basic exemption limit)

Let us understand with an example.

Aditya is earning a total annual income of Rs. 7,15,000 for FY 2023-24 and he is opting for a new tax regime. His tax liability as per the tax rates available under the new regime will be Rs. 26,500. Here we can see that by a slight increase of Rs.15,000 in his income he is liable to pay the tax of Rs. 26,500.

Hence, in this case, he will be eligible to claim the relief as calculated below:

Marginal relief = Tax liability – Income over Rs. 7 lakhs
= 26,500 – 15,000
= 11,500

So, now he has to pay taxes Rs.15,000 (26500-11500) plus education cess and interest if any.

What deductions and exemptions are allowed under both the regimes?

Particulars	Old Tax Regime	New Tax Regime
Standard Deduction of Rs. 50,000	☑	☑
HRA	☑	⮽
LTA	☑	⮽
Food allowance	☑	⮽
Professional Tax	☑	⮽
Interest on home loan on Self-Occupied Property	☑	⮽
Interest on home loan on Let-Out Property	☑	☑
Deduction U/s.80C	☑	⮽
Employee’s OWN contribution to NPS	☑	⮽
Employer’s Contribution to NPS	☑	☑
Deduction U/s.80D	☑	⮽
Deduction U/s.80E	☑	⮽
Deduction U/s.80G	☑	⮽
Deduction U/s.80TTA/80TTB	☑	⮽
Exemption on Gratuity U/s.10(10)	☑	☑
Exemption on Leave Encashment U/s. 10(10AA)	☑	☑

It is advisable to check which tax regime is beneficial before filing the income tax return for financial year 2023-24.

You can compare the tax liability under both the regimes using the following link. The following tax calculator is designed by Income Tax Department and hence authentic.

Tax Regime calculator