Income Tax Slab Rates FY 2024-25

Posted on Wednesday, July 31st, 2024 | By IndusInd Bank

The Indian government has announced the new income tax slabs for the financial year 2024-25 in the recent budget. This update has introduced several changes aimed at simplifying the tax structure and providing relief to taxpayers. Let’s delve into the details of the new tax regime and its implications.

What is an Income Tax Slab?

Income tax slabs in India categorize taxpayers based on their annual income, applying different tax rates to various income levels in a progressive manner. The slabs are defined by the government and are subject to annual revisions in the Union Budget, reflecting economic conditions and policy objectives.

In India, income tax slabs are categorized based on the taxpayer’s age and residential status. There are different slabs for individuals below 60 years, senior citizens (aged 60 to 80 years), and super senior citizens (above 80 years).

Income Tax Slabs under the new regime for FY 2024-25 are as below:

Changes Announced in the New Tax Regime in Budget 2024

The aim of the Union Budget 2024 is the pursuit of ‘Viksit Bharat’. The theme of the Union Budget 2024 is particularly focussed on employment, skilling, MSMEs and middle class.

• The slab rates in the new tax regime have been revised.
• Salaried employees (under the new tax regime) can now save up to ₹17,500 annually in taxes.
• The standard deduction for salaried employees under the new regime is increased from ₹50,000 to ₹75,000.
• The deduction on family pensions for pensioners is increased from ₹15,000 to ₹25,000.
• The government has raised the deduction limit for employers’ contributions to the National Pension System (NPS) from 10% to 14%.
• NPS Vatsalya is a plan for contributions by parents and guardians for minors. Once the minor attains the age of majority, the plan can be converted into a regular NPS account.

Income Tax Regime for FY 2024-25 (AY 2025-26) – Which Option to Choose?

For the fiscal year 2024-25 (Assessment Year 2025-26), the government offers taxpayers the flexibility to choose between two taxation regimes – the new regime and the old regime. This choice is designed to cater to diverse financial situations and preferences, allowing individuals to optimize their tax liabilities.

Under the new tax regime, taxpayers can benefit from lower tax rates. However, this comes with the stipulation that they forgo certain exemptions and deductions traditionally available under the income tax laws. This regime is straightforward and can be advantageous for those who do not have significant investments or expenditures that qualify for tax deductions.

Alternatively, taxpayers can opt to continue with the existing tax regime. This option allows them to claim a variety of exemptions and rebates, albeit at higher tax rates. This traditional approach can be beneficial for those with substantial eligible deductions, such as investments in tax saving FDs, home loan interest, PPF contributions, and other permissible expenses.

In addition to the unveiling of the new income tax slabs for 2024-25 in the Budget 2024, taxpayers can benefit from exploring fixed deposit options offered by IndusInd Bank. With the revised income tax slabs, individuals may seek opportunities to optimize their savings and investments. IndusInd Bank’s Fixed deposit provides customers with an avenue to grow their savings through attractive interest rates and flexible tenure options. Customers can take advantage of the certainty and stability offered by fixed deposits, which can serve as an essential component of their financial planning and wealth management.

Furthermore, the tax implications associated with fixed deposits make them an attractive investment option, especially with the revised income tax slabs. Interest income from fixed deposit is subject to tax, but customers can benefit from utilizing the new tax slabs to potentially minimize their tax liability and maximize their after-tax returns.

Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.