Finance Minister Nirmala Sitharaman proposed to reduce the number of tax slabs under the clutter-free New Tax Regime from six to five. The revised tax slabs under the new regime will be applicable for Assessment Year (AY) 2024-25 or for the income made in FY 2023-24. For income in FY 2022-23 (AY 2023-24), you will have to file Income Tax Return as per the old tax slabs.

As per the latest tax slabs under the New Regime, individuals having an annual income of Rs 5-6 lakh will have to pay 5% tax while those earning Rs 6-9 lakh will have to pay 10% of their income as tax. Further, individuals earning Rs 9-12 lakh per year will pay 15% tax while those earning Rs 12-15 lakh annually will pay 20% tax. The tax rate for individuals earning more than Rs 15 lakh will pay 30% tax.

Interestingly, the Finance Minister has made annual income up to Rs 7 lakh tax-free by increasing the rebate limit. But what about those earning Rs 7.5 lakh or Rs 8.5 lakh per year? You can calculate your tax liability in the Income Tax Calculator given below. With this calculator, you can also make a comparison of your tax liability under old and new regimes.

New Tax Regime Calculator FY 2023-24 (AY 2024-25)

The following chart prepared by Dr Suresh Surana, Founder of RSM India, will also help:

Individual Tax on Income under New Tax Regime for FY 2023-24 (AY 2024-25)

Source: RSM India

To say it in words, following will be the tax liability for income of Rs 7 lakh, Rs 7.5 lakh, Rs 9 lakh, Rs 10 lakh, Rs 12 lakh, Rs 12.5 lakh, Rs 15 lakh, according to Dr Surana.

• Tax Liability for Rs 7 Lakh Annual Income in FY 2023-24: For Income upto Rs 7 lakh, there will be no tax in AY 2024-25 under New Tax Regime
• Tax Liability for Rs 7.5 Lakh Annual Income in FY 2023-24: For Income up to Rs 7.5 lakh, the total tax liability will be Rs 31,200 in AY 2024-25 under New Tax Regime.
• Tax Liability for Rs 9 Lakh Annual Income in FY 2023-24: For Income upto Rs 9 lakh, the total tax liability will be Rs 46,800 in AY 2024-25 under New Tax Regime
• Tax Liability for Rs 10 Lakh Annual Income in FY 2023-24: For Income upto Rs 10 lakh, the total tax liability will be Rs 62,400 in AY 2024-25 under New Tax Regime
• Tax Liability for Rs 12 Lakh Annual Income in FY 2023-24: For Income upto Rs 12 lakh, the total tax liability will be Rs 93,600 in AY 2024-25 under New Tax Regime
• Tax Liability for Rs 12.5 Lakh Annual Income in FY 2023-24: For Income upto Rs 12.5 lakh, the total tax liability will be Rs 1,04,000 in AY 2024-25 under New Tax Regime
• Tax Liability for Rs 15 Lakh Annual Income in FY 2023-24: For Income upto Rs 15 lakh, the total tax liability will be Rs 1,56,200 in AY 2024-25 under New Tax Regime

New Tax Regime (New Slabs vs Old): How much will you save

The Finance Minister said that the revised tax slabs under New Regime will provide a major relief to all taxpayers. “An individual with an annual income of Rs 9 lakh will be required to pay only Rs 45,000. This is only 5 per cent of his or her income. It is a reduction of 25 per cent on what he or she is required to pay now, ie, Rs 60,000. Similarly, an individual with an income of Rs 15 lakh would be required to pay only Rs 1.5 lakh or 10 per cent of his or her income, a reduction of 20 per cent from the existing liability of Rs 1,87,500,” she said.

The Finance Minister also proposed to make the New tax Regime the default tax regime. However, taxpayers will have the option to file ITR under the Old Regime and avail of the benefits of various relaxations.

Experts say that the decision to reduce tax slabs and increase the tax rebate under the New Regime will put more money in the hands of taxpayers.

“The relief has been given, with a nudge to shift to the New Tax Regime. This will certainly put more money in the hands of consumers and investors. The Old Tax Regime gives concessions based on investments and insurance and tax is levied after giving effect to these deductions. This used to direct the savings to avenues favoured by the policymakers. In my opinion, this will not adversely affect the flow into investments. The investors have evolved and are committing to goal-based investments on their own. The limits under the Old Tax Regime were already getting fulfilled due to housing loan repayment and PF contributions. The adoption of self-propelled investments is evident from continuous monthly flows of over 12,000 crores into mutual funds.