Income Tax Slabs in India for FY 2024-25: Simplified Guide to Old vs New Regime

The New Tax Regime was introduced to simplify the tax process. It offers lower tax rates but removes most exemptions and deductions that taxpayers commonly use under the Old Regime. This means you won’t need to keep track of investments, rent receipts, or insurance proofs for tax-saving purposes.

Here are the New Tax Regime slabs for FY 2024-25:

• Up to ₹3,00,000: No tax
• ₹3,00,001 to ₹6,00,000: 5%
• ₹6,00,001 to ₹9,00,000: 10%
• ₹9,00,001 to ₹12,00,000: 15%
• ₹12,00,001 to ₹15,00,000: 20%
• Above ₹15,00,000: 30%

Taxpayers with income up to ₹7,00,000 can also benefit from the Section 87A rebate, which reduces their tax liability to zero under this regime.

The New Regime is usually preferred by individuals who do not invest much in tax-saving schemes or who prefer a straightforward, paperwork-free tax process.

The Old Tax Regime remains popular because it allows taxpayers to claim various exemptions and deductions that reduce their taxable income. Although the slab rates are higher, many people still save more under this system because of deductions under sections like 80C, 80D, HRA, and home loan interest.

Old Regime slabs for FY 2024-25:

• Up to ₹2,50,000: No tax
• ₹2,50,001 to ₹5,00,000: 5%
• ₹5,00,001 to ₹10,00,000: 20%
• Above ₹10,00,000: 30%

Under Section 87A, taxpayers with income up to ₹5,00,000 pay no tax in this regime as well.

Common deductions available under the Old Regime include:

• Section 80C (₹1.5 lakh for PPF, EPF, ELSS, etc.)
• Section 80D (health insurance)
• HRA exemption
• Home loan interest deduction

This regime is often beneficial for those who already make tax-saving investments or have eligible expenses.

The best regime for you depends on how much you usually claim as deductions. Here’s a general way to think about it:

You may prefer the New Tax Regime if:

• You don’t invest regularly in tax-saving schemes
• You prefer a simple tax structure without documentation
• You don’t claim HRA or home loan benefits
• Your total deductions are less than ₹2 to ₹2.5 lakhs

You may prefer the Old Tax Regime if:

• You claim HRA exemption
• You have a home loan and claim interest deduction
• You invest in 80C instruments
• Your total deductions exceed ₹2.5 lakhs

These are general guidelines, not strict rules. Your best option will depend on your specific income and deductions. You can use our Income Tax Calculator to compare both regimes instantly and see which one offers lower tax payable for your situation.

In addition to the slab rates, a few more components affect your final tax calculation:

Section 87A Rebate: Available to individuals with income up to ₹7,00,000 (New Regime) and ₹5,00,000 (Old Regime), reducing total tax to zero.

Surcharge: Applies to individuals with income above ₹50 lakhs, with rates that increase depending on income level.

Health and Education Cess: A 4% cess is applied on the calculated tax (including surcharge), applicable to all taxpayers.

Understanding these elements helps create a clearer picture of your final tax amount and ensures accurate tax planning.

Effective tax planning is not just about choosing a regime—it also involves making informed financial choices throughout the year. Here are some general tips:

Review deductions and expenses: If you follow the Old Regime, ensure that you record eligible investments and payments that qualify for deductions.

Understand your salary components: Allowances like HRA, LTA, and reimbursements can reduce taxable income under the Old Regime when used correctly.

Use tools to compare regimes: Simple online calculators can help you estimate your tax under both regimes so you can plan ahead.

Revisit your choice every year: Salaried individuals have the freedom to switch regimes yearly based on what benefits them more in that particular financial year.

These general practices can help you manage your tax planning better, without offering personalised financial advice or recommendations.