For every Indian taxpayer, understanding the income tax slabs for 2024-2025 for Crypto is crucial as the year progresses. Various income groups are taxed at different rates based on different tax slabs. In this guide, we present a comprehensive overview of the individual, senior, and super senior income tax slabs for the financial year 2024-2025.
What are Income Tax Slabs?
In income tax slabs, varying tax rates are applied to different categories of income ranges. A progressive tax system is ensured by these slabs, with the tax rate increasing with the taxpayer’s income. During the announcement of the Union Budget, these slabs are revised periodically by the Government of India.
Overview of income tax slabs under the New Tax Regime for FY 2024-25
Salary individuals’ disposable income was increased by modifying lower- and middle-income tax slabs in the new tax regime.
| FY 2023-24 Income Tax Slab | FY 2024-25 Income Tax Slab | Income Tax Rates |
| Up to Rs. 3 lakh | Up to Rs. 3 lakh | NIL |
| Rs.3 lakh – Rs.6 lakh | Rs.3 lakh – Rs.7 lakh | 5% |
| Rs.6 lakh – Rs.9 lakh | Rs. 7 lakh – Rs. 10 lakh | 10% |
| Rs.9 lakh – Rs.12 lakh | Rs. 10 lakh – Rs. 12 lakh | 15% |
| Rs. 12 lakh to Rs. 15 lakh | Rs. 12 lakh – Rs. 15 lakh | 20% |
| Above Rs. 15 lakh | Above Rs. 15 lakh | 30% |
Taxpayers who file their income tax under the new regime this year can benefit from up to Rs. 17,500 in tax savings.
Using the above tweaked tax rates, we can see that salaried individuals will be in the best position under the new regime since the rate will be lower.
Standard deduction revision for the New Tax Regime:
For salaried taxpayers, the standard deduction has been revised to make the new regime more attractive.
| Standard deduction 2023-24 | Standard deduction 2023-24 | Change |
| Rs. 50,000 | Rs. 75,000 | Rs. 25,000 |
In comparison to last year, the new standard deduction will increase your tax-free income by Rs. 25,000.
Overview of income tax slabs under the Old Regime for FY 2024-25
Budget 2024 did not make any changes to the old tax regime. As in the previous year, tax rates for the old regime and the standard dedication amount remain the same.
Accordingly, taxpayers choosing the old regime will continue to receive the same benefits as they did the year before.
A comparison between old and new income tax regime
Tax benefits can be accessed by taxpayers in India under two different income tax regimes. In Budget 2020, a new tax regime was introduced to complement the existing one.
There is no choice between the two tax regimes for taxpayers. It is important for individuals to choose between the two tax regimes based on which offers the best tax outcome. Tax advantages may be maximized under the old regime if the taxpayer wishes to take advantage of substantial deductions and exemptions.
Those who earn less than $40,000 a year or who prefer a straightforward tax regime may opt for the new system.
There is now a greater standard deduction than there was previously, and tax rates for lower and middle-income tax slabs are lower under the new tax regime compared to the old one. It is possible that these changes in budget 2024 will change your preference for tax regimes.
New income tax regime
Benefits of the new income tax regime:
- There will be lower tax rates under the new regime.
- Several new rules and regulations have been implemented, such as an increase in the tax exemption limit to three lakhs.
- Compared to the old tax regime, the new tax structure is simpler.
- Under the new regime, the standard deduction is higher at Rs. 75,000 than it was under the old regime, which was Rs. 50,000.
Drawbacks:
- Exemptions and deductions are no longer available to taxpayers under the new system.
- There are limited opportunities for tax planning under the new tax regime.
Old income tax regime
There were several benefits to the old tax regime:
- With the old scheme, you could deduct and exempt a wide range of expenses.
- In addition to tax-saving fixed deposits and PPFs, taxpayers can invest in tax-saving products such as the National Savings Certificate.
Drawbacks:
- Several exemptions and deductions under the old regime make it appear complicated, requiring extensive knowledge and meticulous record-keeping.
- In the old regime, different income slabs were taxed at higher rates.
Tips for high earners to reduce taxable income
There are several effective ways to reduce taxable income for high earners:
- Tax-saving opportunities such as PF, PPF, and ELSS can be taken advantage of under Section 80C.
- To claim a deduction under Section 80D, you must purchase health insurance.
- You can deduct House Rent Allowance (HRA) from your taxes.
- You can deduct up to Rs 2 lakh of home loan interest from your taxable income under Section 24.
- Keeping money in your savings account can help you save on taxes. The interest earned on savings accounts is exempt from tax up to Rs 10,000 under section 80TTA of the Income Tax Act.
- If you donate to government-approved charities, you can claim a deduction of 50%-100% of the donation under Section 80G.
- In order to plan your taxes successfully, it is important to stay current with the latest changes in tax laws.
How to Calculate Your Taxable Income
- Determine Gross Income: Total the income from all sources, including salary, rental income, business profits, and everything else.
- Claim Deductions: To calculate your taxable income, subtract deductions under various sections, such as 80C, 80D, 80G, and so on.
- Apply Tax Rates: You must apply the appropriate tax slab rates in accordance with your taxable income.
- Add Cess: Divide the income tax amount by 4% and multiply by the health and education cess.
- Subtract Rebate: Subtract Section 87A rebates if applicable.
Can I file an income tax return if I earn less than Rs.2.5 lakh per year?
For income levels below Rs. 2.5 lakh, you need not file an income tax return, but you should file a ‘Nil Return’ just for your records, as it can be used as proof of employment. If you are applying for a loan or passport, you may have to provide your ITR.
Is Section 87A available to everyone?
Residents of India who have a total annual income below Rs.5 lakh are eligible to claim a rebate under Section 87A. There is a maximum rebate of Rs.12,500 available under 87A.
In the case of an agriculturist, will my income be taxed?
Taxes are not imposed on income generated by agriculture or related activities. Nevertheless, if you have both agricultural and non-agricultural income, the total tax will be considered.
What is the classification of a taxpayer’s income?
According to Section 14 of the Income Tax Act, taxpayers are classified as having five different types of income:
- Salaried individuals
- Capital gains
- Gains/Profits from profession or business
- Income from house property
- Income from other sources
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So, that’s all we have for you about Income Tax Slab: A Guide for Taxpayers in 2024 – 2025. We hope that this guide has helped you. But that’s not the end of the conversation here. You can comment below if you have any doubts or queries.
