1. Introduction Income tax is a direct tax levied by the Government of India on the income earned by individuals and entities. The tax system follows a progressive structure, meaning higher income levels attract higher tax rates. The Income Tax Act, 1961, governs taxation in India, and the Central Board of Direct Taxes (CBDT) administers it.
Tax Slab 2025-2026: There is no tax if the annual income is up to 12,00,000 / annum (60,000 rebate U/S 87A). For salaried it will be upto 12,75,000 (75,000 Standard deduction).
- Individuals (Residents and Non-Residents)
- Hindu Undivided Families (HUFs)
- Partnership Firms and Limited Liability Partnerships (LLPs)
- Companies (Domestic and Foreign)
- Trusts, Associations, and Societies
3. Income Tax Slabs for Financial Year 2023-24 (Assessment Year 2024-25)
New Tax Regime (Default)
| Income Slab (INR) | Tax Rate |
|---|---|
| Up to 3,00,000 | NIL |
| 3,00,001 - 6,00,000 | 5% |
| 6,00,001 - 9,00,000 | 10% |
| 9,00,001 - 12,00,000 | 15% |
| 12,00,001 - 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Old Tax Regime (Optional)
| Income Slab (INR) | Tax Rate |
| Up to 2,50,000 | NIL |
| 2,50,001 - 5,00,000 | 5% |
| 5,00,001 - 10,00,000 | 20% |
| Above 10,00,000 | 30% |
5. Differences Between Old and New Tax Regime
| Feature | Old Regime | New Regime |
| Standard Deduction | ₹50,000 | ₹50,000 |
| Section 80C Deduction | Up to ₹1.5 lakh | Not Available |
| House Rent Allowance (HRA) | Available | Not Available |
| Tax Slabs | Higher Rates | Lower Rates |
| Simplicity | Complex (Many Exemptions) | Simple (Fewer Exemptions) |
6. Taxation for Senior Citizens
- Senior citizens (60-80 years) get a higher exemption limit of ₹3,00,000.
- Super senior citizens (above 80 years) have an exemption limit of ₹5,00,000.
7. Tax Collection and Compliance
- Advance Tax: Paid quarterly if tax liability exceeds ₹10,000.
- TDS (Tax Deducted at Source): Deducted by employers and financial institutions.
- ITR Filing: Mandatory for individuals earning above the exemption limit.
- Penalties: Late filing attracts fines under Section 234F.
8. Conclusion Income tax is a crucial part of India's revenue system. The introduction of the new tax regime provides flexibility to taxpayers to choose between exemptions and lower rates. Understanding the tax slabs and compliance rules helps individuals and businesses manage their finances effectively.
9. References
- Income Tax Act, 1961
- Central Board of Direct Taxes (CBDT) official website: https://www.incometax.gov.in
- Finance Bill 2023