Old Tax Regime vs. New Tax Regime - What You Need to Know About Income Tax Slabs for FY 2024-25

Old Tax Regime vs. New Tax Regime[Credit: ClearTax]

Old Tax Regime vs. New Tax Regime: While it is still early days for filing income tax returns, the Income Tax department has enabled the feature on its website. If you wish, you can file your ITR, but it is advisable to ensure that no discrepancies are revealed at a later stage that might require you to deal with them.

In addition, there's a lot of confusion among income taxpayers about whether to use the old or new tax regimes. Taxpayers should choose the regime that's best for them. Check out these tips for your FY 2024-25 income tax slab.

Here's what you need to know about the new income tax slab for FY 2024-25.

Make sure you want to work with the new income tax system before you start crunching numbers.

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Compared to the old tax regime, the new tax regime differs fundamentally

There are fundamental differences between the new and old income tax regimes when it comes to the treatment taxpayers receive for deductions and exemptions. It used to be possible to claim quite a few deductions based on Sections 80C, 80D, and 80TTA of the Income Tax Act under the old tax regime.

For the first time in recent times, CBDT has enabled taxpayers to file their Income Tax Returns (ITRs) for AY 2024-25 (relevant to FY 2023-24) on the first day of the new FY (1st April onwards)!

A giant step towards ease of compliance & seamless taxpayer services!

✅ITR-1,… pic.twitter.com/2O2EDnv0jp

— Income Tax India (@IncomeTaxIndia) April 4, 2024

In a report by LiveMint, taxpayers can benefit from lower tax rates under the new tax plan. However, deductions available under the old plan won't be available.

Both the old and new tax regimes will have a standard deduction of Rs. 50,000 for 2024-2025.

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The new tax regime's income tax slabs

• Tax-free income up to Rs. 3 lakh.
• Taxes on income in the Rs. 3-6 lakh bracket will be 5 percent (tax rebate under Section 87A).
• For income up to Rs. 7 lakh, the tax rate is 10% (tax rebate under Section 87A applies for income up to Rs. 6 lakh).
• Tax rate of 15% applies to income brackets between Rs. 9-12 lakhs.
• The tax rate on income between Rs. 12-15 lakhs is 20%.
• For incomes above Rs. 15 lakh, the tax rate is 30%.

Salary earners may receive capital gains from the sale of assets or dividends from equity shares and mutual funds during the financial year.

As these incomes are usually difficult to estimate in advance, when filing income tax returns for FY 2024-25, compare the tax liability between both tax regimes based on actual taxable income. Select the favorable tax regime and file your ITR accordingly based on the actual tax liability.

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