Income Tax Slabs for FY 2023-24 & FY 2022-23 (Old & New Regimes)

As per the Indian Income Tax Act 1961, an individual or a HUF must pay taxes on the income or profits earned by them during a financial year. The taxable income is derived after certain deductions (if any). The government created different tax slabs to categorise individuals based on their income. All eligible individuals must pay taxes based on the tax slab they fall under. For example, an individual with a higher income would fall under a tax slab with a higher income tax rate, thus paying a higher tax, and vice versa. Thus, the slab system was introduced for a fair and progressive individual tax payment structure.

The finance minister may announce changes in the tax slabs in the Union Budget based on various economic factors. As a result, the income tax slabs for new and old regimes are different. In addition, the old regime tax slab rates also differ for different categories of individual taxpayers, whereas for the new regime, there are no such categories. The categories of individual taxpayers include:

• Resident individuals (aged less than 60 years) and non-residents

• Resident Senior citizens (60 to 80 years of age)

• Resident Super senior citizens (aged more than 80 years)

As mentioned above, old regime tax slab rates are different for different categories of individual taxpayers.

Income tax slabs for an individual below 60 years & HUF

Income tax slabs for senior citizens above 60 years & below 80 years

Income tax slabs for super senior citizens above 80 years

The new tax regime was announced in the Budget of 2020 and, since then, has gained a lot of attention. This is because the exemptions and deductions applicable to the old regime were foregone under the new regime. However, the tax slabs remain the same across the categories of individual taxpayers, and no classification is made based on age.

In the budget 2023, the tax slabs and rates have remained the same under the old regime. Thus, the old tax slabs and rates would continue for all the categories of the individual taxpayer.

In the budget for 2023, the finance minister made significant announcements on the new tax regime. The tax slab count and the tax rates have been reduced by increasing the exemption limit to ₹3 lakhs under this regime from FY 2023-24, i.e. AY 2024-25.

The number of slabs in the new regime has been reduced from 6 to 5 in the current budget. Moreover, the rebate limit of ₹5 lakhs has been increased to ₹7 lakhs for individuals opting for the new tax regime. Also, the surcharge rate on earnings above ₹5 crores has been reduced to 25% as per the budget announced in 2023.

Let us take an example to understand the difference between the two regimes in the two financial years. In the example below, the total income is ₹10 lakhs and Section 80C and Section 80D deductions of ₹1,50,000 and ₹75,000, respectively.

FY 2022-2023 (Return to be filed between 1st April 2023 - 31st March 2024)

FY 2023-2024 Latest Budget (Return to be filed between 1st April 2024 - 31st March 2025)

In the Budget of 2020, the finance minister introduced a new tax regime in addition to the existing old one. Both these regimes have pros and cons; thus, the regime's selection depends on the taxpayer. In the Union Budget of 2023, the new tax regime was announced as the default option; however, taxpayers can evaluate the two and select one. It must be noted that for a salaried individual, you can choose the option at the start of the year, which can be changed next year. However, for business or profession, once you opt for a new tax regime, you will get only once in a lifetime opportunity to return to the old tax regime.

• The new tax regime includes more tax slabs compared to the old one and the number of tax slabs of the new regime until the previous year. Also, the tax rates are lower.

• The basic exemption limit for all individuals under the new tax regime is the same. Thus, if you opt for the new regime, super senior citizens have no higher tax exemption limit. However, the exemption limit under the new regime has increased to ₹3 lakhs for FY 23-24, which stands the same as the limit for senior citizens in the old tax regime.

• All the significant deductions and exemptions, including Section 80C, Section 80D, HRA, interest on housing loans etc., available under the old tax regime are not allowed under the new tax regime.

You can evaluate the options of new and old regimes and select the one best suited for you. However, ensure you keep these things in mind before you make your decision.

Deductions and exemptions

This is one of the significant points of difference. The new regime does allow for lower tax rates, but some key deductions and exemptions cannot be claimed. Thus, if you take advantage of deductions like section 80C, 80D etc., you may not be able to claim for these if you have opted for a new regime.

Basic exemption limit

The tax slabs for senior and super-senior citizens vary under the old tax regime, which is not the case in the new one. Thus, the higher limit exemption is not applicable, especially for super senior citizens under the new tax regime.

Compliance and paperwork

Under the new regime, taxpayers need not worry about complicated paperwork and compliance procedures, as most of the deductions are not applicable. However, if you opt for the old regime, you must have all the necessary documentation to claim these deductions and exemptions.

Benefits beyond tax savings

Tax saving instruments provide dual benefits under the old regime – tax benefits and financial security. In the case of the new regime, the tax benefit aspect is nil. However, this should not be the only option that one should evaluate. The tax benefit is up to a specific limit under the old regime. Thus, using an income tax calculator to determine your tax outgo under both regimes would be best.

While the new regime provides ease of calculation and lower tax rates, the old one offers various deductions and exemptions like health insurance tax benefits. Health insurance plans have become an integral part of a healthy financial plan. It not only provides financial support during medical emergencies but also offers tax benefits.

Tata AIG offers health insurance plans explicitly curated to satisfy individuals' changing needs and demands. As a result, our plans come with extensive features and benefits at affordable rates. You can choose a plan based on your requirements and budget. The best way to know your estimated premium is to use our health insurance premium calculator before buying a plan.