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

On 1st February 2023, the Union Finance Minister of the Government of India, Nirmala Sitharaman, announced the income tax slabs for the financial year 2023-24. The Budget 2023 introduced optional new regime tax slab rates under Section 115BAC of the Income Tax Act were declared for FY 2023-24 (AY 2024-25).

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As per the new income tax regime, the income tax slab of up to Rs.3 lakhs will now attract no tax. Also, full income tax rebates can be claimed on incomes up to Rs. 7 lakhs (earlier Rs. 5 lakhs).

What is Income Tax Slab?

The government of every nation levy income tax on every earning-class individual in their country. The amount collected from this tax is utilised to fund various government schemes and policies for development and growth of the country.

Income tax is levied on the following type of individuals:

Hindu Unified Family (HUF)
Partnership firms
Limited Liability Partnerships (LLPs)
Oher Companies

The tax is levied as per the ongoing tax slab rates decided prior by the Government of India.

New Tax Regime FY 2023-24 (AY 2024-25) per Union Budget 2023-24

The Union Budget 2023 brought major changes in the tax slab, tax rates, surcharge, tax exemptions, tax rebate, and more in the new income tax regime.

Let us have a look at all the changes in the next few sections of this article.

New Regime Tax Slab Structure in India for Financial Year 2023-24

The new tax structure for all taxpaying individuals i.e. normal taxpayers, senior citizens (60-80 years of age), and super senior citizens (above 80 years of age) is as follows:

Tax Slab of Income (Rs. in lakhs)	New Income Tax Rates (Rates in % p.a.)	Maximum Income Tax Applicable (in Rs.)
Rs. 0-3 lakhs	No tax	NIL
Rs. 3 lakhs- Rs. 6 lakhs	5%	5% of your Net Annual
Rs. 6 lakhs- Rs. 9 lakhs	10%	Rs. 15,000 + 10% of your Net Annual Income
Rs. 9 lakhs- Rs. 12 lakhs	15%	Rs. 45,000 + 15% of your Net Annual Income
Rs. 12 lakhs- Rs. 15 lakhs	20%	Rs. 90,000 + 20% of your Net Annual Income
Rs. 15 lakhs and Above	30%	Rs. 1,50,000 + 30% of your Net Annual Income
*Income limit to claim 100% tax rebate increased to up to Rs. 7 lakhs from Rs. 5 lakhs. # FY: Financial Year ## AY: Assessment Year

Cess & Surcharge on Tax Slabs FY 2023 – 24 (AY 2024-25)

Surcharge:

The surcharge is the additional charge or tax payable by the high-income category individuals. In India, the Government of India levies a surcharge on taxpayers earning income above Rs. 5o lakhs.

As a result, the levy of surcharge increases the aggregate tax burden on the taxpayer’s pocket.

For example, a surcharge of 10% on an income tax rate of 30% will result in effective chargeable tax of 33% p.a.

Following table represents surcharge rates for various income tax slabs:

Income Tax Slab (in Rs.)	Surcharge Rates (in % p.a.)
₹ 50,00,000 to ₹ 1,00,00,000	10%
₹ 1,00,00,001 to ₹ 2,00,00,000	15%
₹ 2,00,00,001 to ₹ 5,00,00,000	25%
₹ 5,00,00,001 and above	25%*

* Surcharge rate changed for FY 2023-24 (AY 2024-25) in Union Budget 2023.

Note: The maximum surcharge rate in both Old and New Tax Regimes in India is capped at 25% if your income is generated either by dividends or under 111A, 112A, and 115AD sections.

Cess:

Cess can be understood as the tax levied on the tax liability of an individual.

Health & Education Cess in both old and new tax slabs in India is charged at the rate of 4% on the amount of income tax + Surcharge.

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Deductions Under New Tax Regime

If you opt to file income tax under the new tax regime, you cannot avail of 70 exemptions and deductions available under various sections of the Income Tax Act, 1961.

Let us discuss the tax deductions as per the new tax regime 2023-24:

Some of the common allowances and tax exemptions NOT AVAILABLE with the taxpayers in tax regime 2023:

House Rent Allowance (HRA)
Leave Travel Allowance (LTA)
Relocation Allowance
Conveyance Allowance
General expenditure during employment
Children Education Allowance
Special Allowances under Section 10(14)
Standard Tax Deductions (Except for Salaried class and Pensioners)
Professional Tax
Entertainment Allowance
Deductions on interest paid on home loan for self-occupied property u/ Sec 24B (Except interest paid on home loan for Let-out property)
Deductions under Section 80C/ 80D/ 80E/ 80EEB/ 80G/ 80TTA/ 80TTB/ 80U/ and so on (Except Section 80CCD(2))

Tax deductions AVAILABLE under New Tax Regime 2023:

Tax Deductions/ Exemptions	Details	Old Tax Regime FY 2022-23	New Tax Regime FY 2022-23 (Applicable till 31st March 2023)	New Tax Regime FY 2023-24 (Applicable from 1st April 2023)
Section 87A	100% tax rebate of maximum Rs. 25,000 for income up to Rs. 7 lakhs can be claimed by all taxpayers	Rs. 12,500	Rs. 12,500	Rs. 25,000
Standard Tax Deductions	Rs. 50,000 for Salaried Class individuals Lower among Rs. 15,000 or 1/3rd of pension amount for Pensioners	Rs. 50,000	NOT AVAILABLE	Rs. 50,000
Transport Allowance	For Specially Abled individuals	YES	YES	YES
Conveyance Allowance	Expenses for travelling to-and-fro to work or on transfer	YES	YES	YES
Section 80CCD(2)	Employer’s contribution to National Pension Scheme (NPS) account of an employee	YES	YES	YES
Section 80JJAA	Deductions allowed when new employees are employed	YES	YES	YES
Section 32	Depreciations on tangible assets (other than additional depreciation)	YES	YES	YES
Section 24B	Interest paid on home loan of a Letting-out property	YES	YES	YES
Section 80CCH	Contributions made to Agniveer Corpus Fund	YES	NOT EXISTED	YES
Gifts	Up to Rs. 5000	YES	YES	YES
Section 10(10C)	On Voluntary retirement amount	YES	YES	YES
Section 10(10)	On Gratuity amount	YES	YES	YES
Section 10(10AA)	On leave encashment	YES	YES	YES

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Option to Choose Between New Tax Regime Vs Old Tax Regime

Section 115BAC:

Under Section 115BAC of the Income Tax Act, 1961 the Union Budget 2020-21 introduced an alternative new tax regime option to taxpaying individuals or HUF, allowing them to choose between the previous or new tax rates.

Union Budget 2023 allowed the taxpayers to choose between the following regime options:

Option A: New Tax Regime 2023-24	Option B: Old Tax Regime 2022-23
Lower income tax rates and higher income slabs	High tax rates and lower income slabs
Prohibit tax exemptions and deductions	Avail of all the available tax exemptions
Capped surcharge rates up to 25%	High surcharge rates of up to 37%

Old Tax Regime Slab Rates for FY 2022-23 (AY 2023-24)

Have a look at the table below to understand the income tax levied as per the old and new tax regimes of the financial year 2022-23:

Old Tax Regime Income Slab (Rs. in Lakhs)	Old Tax Regime FY 2022-23 (AY 2023-24)				New Tax Regime FY 2022-23 (AY 2023-24)
Old Tax Regime Income Slab (Rs. in Lakhs)	Tax Rates for Resident Individuals & HUF (< 60 years of age)	Tax Rates for Resident Individuals & HUF (< 60 years of age)	Tax Rates for Resident Individuals & HUF (< 60 years of age)	Maximum Income Tax Amount Levied as per Old Tax Regime FY 2022-23	For Individual Taxpayers Across All Categories & HUF	Maximum Income Tax Amount Levied as per New Tax Regime FY 2022-23
Rs. 0- Rs. 2.5 lakhs	0%	0%	0%	NO TAX	0%	NO TAX
Rs. 2.5 lakhs- Rs. 3 lakhs	5% (100% tax rebate for income up to Rs. 5 lakhs u/ Sec 87A)	0%	0%	5% of Net Taxable Income	5%	5% of Net Taxable Income
Rs. 3 lakhs- Rs. 5 lakhs	5% (100% tax rebate for income up to Rs. 5 lakhs u/ Sec 87A)	5% (100% tax rebate for income up to Rs. 5 lakhs u/ Sec 87A)	0%	5% of Net Taxable Income	5%	5% of Net Taxable Income
Rs. 5 lakhs- Rs. 7.5 lakhs	20%	20%	20%	Rs. 12,500+ 20% of Net Taxable Income	10%	Rs. 12,500+ 10% of Net Taxable Income
Rs. 7.5 lakhs- Rs. 10 lakhs	20%	20%	20%	Rs. 12,500+ 20% of Net Taxable Income	15%	Rs. 37,500+ 15% of Net Taxable Income
Rs. 10 lakhs- Rs. 12.5 lakhs	30%	30%	30%	Rs. 1,12,500+ 30% of Net Taxable Income	20%	Rs. 75,000+ 20% of Net Taxable Income
Rs. 12.5 lakhs- Rs. 15 lakhs					25%	Rs. 1,25,000+ 25% of Net Taxable Income
Rs. 15 lakhs and Above					30%	Rs.1,87,500+ 30% of Net Taxable Income

Surcharge as per Old Tax Regime FY 2022-23

Financial Year 2022-23 (AY 2023-24)
Income Range	Surcharge Rates
Rs. 50 lakhs- Rs. 1 crore	10%
Rs. 1 crore- Rs. 2 crores	15%
Rs. 2 crores- Rs. 5 crores	25%
Rs. 5 crores- Rs. 10 crores	37%
Rs. 10 Crores & Above	37%

Tax Deductions/ Exemption Benefits under Old Income Tax Regime

You can avail of tax deductions if you apply as per the existing old tax regime under Union Budget 2023-24. In the new tax regime, you can avail of deductions under 80CCD (2).

Let us explore this further through the following table:

Sections	Maximum Claim Limit
Section 80 C	Rs. 1.5 lakhs (for investments made in PF, Life insurance premium, NSC, ELSS, principle of home loan, tuition fees, etc.)
Section 80 CCC	Rs. 1.5 lakhs (on life insurance maturity amount)
Section 80 CCD	Rs. 1.5 lakhs
Section 80 CCD(1)	Tax deductions on payments done in Central Government’s pension schemes
Section 80 CCD(1B)	Rs. 50,000 (on the amount deposited in the NPS account), excluding deductions got u/ Sec. 80 CCD(1)
Section 80 CCD(2)	Tax deductions on payments made by employer in NPS account of the employee
Section 80 CCF	Up to Rs. 20,000
Section 80 CCG	Rs. 25,000 for Regular Citizens Rs. 50,000 for Senior Citizens
Section 80 D	Rs. 25,000 for Regular Citizens (for health check-ups and health premiums paid) Rs. 50,000 for Senior Citizens
Section 80 DD	Rs. 75,000 for Normal Disability (on medical treatments of specified diseases) Rs. 1,25,000 for Severe Disability
Section 80 DDB	Rs. 1 lakh for Senior Citizens Rs. 40,000 if Other than Senior Citizen
Section 80 E	NO LIMIT for maximum 8 Years education loan interest
Section 80 EE	Rs. 50,000 annual additional deduction on home loan interest
Section 80 GG	Lesser of Rs. 5,000 per month OR 25% of Total Adjusted Income
Section 80 GGA	100% tax deduction depending on donation. Max. Rs. 10,000 cash donations allowed
Section 80 GGB	Deduction depends on donation & eligibility
Section 80 GGC	Deduction depends on donation & eligibility
Section 80 IA	No limit on Tax Deduction if conditions fulfilled
Section 80 IAB	No limit on Tax Deduction if conditions fulfilled
Section 80 IB	No limit on Tax Deduction if conditions fulfilled
Section 80 IC	No limit on Tax Deduction if conditions fulfilled
Section 80 ID	No limit on Tax Deduction if conditions fulfilled
Section 80 IE	No limit on Tax Deduction if conditions fulfilled
Section 80 JJA	Tax deduction for First 5 years' profits
Section 80 QQB	Up to Rs. 3 lakhs
Section 80 RRB	Up to Rs. 3 lakhs
Section 80 TTA	Rs 10,000 annually
Section 80 U	Rs. 75,000 for Normal Disability Rs. 1,25,000 for Severe Disability

Old Tax Regime vs New Tax Regime: Which Is Better?

The Income tax regime for FY 2023-24 with previous income tax rates and new income tax rates for taxpayers below the age of 60 years is as follows:

Old Regime Tax Slab 2022-23 Applicable to New Regime Tax Rates FY 2023-24 (AY 2024-25)

Income Slab (Rs. in Lakhs)	Old Tax Regime (FY 2022-23 & AY 2023-24)			New Tax Regime (FY 2022-23 & AY 2023-24) Before Union Budget 2023-24	New Tax Regime (FY 2023-24 & AY 2024-25) After Union Budget 2023-24
Income Slab (Rs. in Lakhs)	Income Tax Rates for Resident individuals, HUF & NRIs (<60 years of age)	Income Tax Rates for Resident individuals, HUF & NRIs (60-80 years of age)	Income Tax Rates for Resident individuals, HUF & NRIs (>80 years of age)	Income Tax Rates for All Resident individuals & HUF (In % p.a.)	Income Tax Rates for All Resident individuals & HUF (In % p.a.)
Rs. 0- Rs. 2.5 lakhs	NO TAX	NO TAX	NO TAX	NO TAX	NO TAX
Rs. 2.5 lakhs- Rs. 3 lakhs	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 5 lakhs annual income)	NO TAX	NO TAX	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 5 lakhs annual income)	NO TAX
Rs. 3 lakhs- Rs. 5 lakhs	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 5 lakhs annual income)	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 5 lakhs annual income)	NO TAX	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 5 lakhs annual income)	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 7 lakhs annual income)
Rs. 5 lakhs- Rs. 6 lakhs	20%	20%	20%	10%	5% (100% tax rebate u/ Sec 87A allowed up to Rs. 7 lakhs annual income)
Rs. 6 lakhs- Rs. 7.5 lakhs	20%	20%	20%	10%	10% (100% tax rebate u/ Sec 87A allowed up to Rs. 7 lakhs annual income)
Rs. 7.5 lakhs- Rs. 9 lakhs	20%	20%	20%	15%	10%
Rs. 9 lakhs- Rs. 10 lakhs	20%	20%	20%	15%	15%
Rs. 10 lakhs- Rs. 12 lakhs	30%	30%	30%	20%	15%
Rs. 12 lakhs- Rs. 12.5 lakhs	30%	30%	30%	20%	20%
Rs. 12.5 lakhs- Rs. 15 lakhs	30%	30%	30%	25%	20%
Rs. 15 lakhs & Above	30%	30%	30%	30%	30%

Surcharge Rates Comparison of Old Vs New Tax Regime FY 2023-24

FY 2023-24 (AY 2024-25)
Income Range	Surcharge Rates for Old Tax Regime 2022-23	Surcharge Rates for New Tax Regime 2023-24
Rs. 50 lakhs- Rs. 1 crore	10%	10%
Rs. 1 crore- Rs. 2 crores	15%	15%
Rs. 2 crores- Rs. 5 crores	25%	25%
Rs. 5 crores- Rs. 10 crores	37%	25%
Rs. 10 crores & above	37%	25%

Let us see through a tax calculation example in the next section to completely understand the difference old and new tax regimes will make in the pocket of taxpayers.

Illustration of Income tax Calculation for old vs New Tax Regime

Particular Tags	Old Income Tax Regime FY 2022-23 (AY 2023-24)	New Income Tax Regime FY 2022-23 (AY 2023-24)	New Income Tax Regime FY 2023-24 (AY 2024-25)
Gross Income	Rs. 12,00,000	Rs. 12,00,000	Rs. 12,00,000
Deductions:
Under Section 80C	Rs. 1,50,000	--	–
Under Section 80D	Rs. 25,000	--	–
Under Section 24(b)	Rs. 75,000	--	–
Total Taxable Income	Rs. 9,50,000	Rs. 12,00,000	Rs. 12,00,000

Old Tax Slab Regime 2022-23
Rs. 0 to 2.5 Lakh	No Tax	--	--
Rs. 2.5 to 5 Lakh @ 5%	Rs. 12,500	--	--
Rs. 5 to 9.5 Lakh @ 20%	Rs. 90,000	--	--
New Tax Slab Regime 2022-23
Rs. 0- Rs. 2.5 lakhs	--	No Tax	--
Rs. 2.5 lakh- Rs. 5 lakh @ 5%	--	Rs. 12,500	--
Rs. 5 lakh- Rs. 7.5 lakh @ 10%	--	Rs. 25,000	--
Rs. 7.5 lakh- Rs. 10 lakh @ 15%	--	Rs. 37,500	--
Rs. 10 lakh- Rs. 12 lakh @ 20%	--	Rs. 40,000	--
New Tax Slab Regime 2023-24
Rs. 0 to 3 lakh	--	--	No Tax
Rs. 3 to 6 lakh @ 5%	--	--	Rs. 15,000
Rs. 6 to 9 lakhs @ 10%	--	--	Rs. 30,000
Rs. 9 lakhs to 12 lakhs @ 15%	--	--	Rs. 45,000
Income Tax	Rs. 1,02,500	Rs. 1,15,000	Rs. 90,000
Cess @ 4%	Rs. 4,100	Rs. 4,600	Rs. 3,600
Total Tax Levied	Rs. 1,06,600	Rs. 1,19,600	Rs. 93,600

Points to Consider for Deciding on the Tax Regime

Let us see the points below that will help you in deciding on which tax regime you should be choosing:

The income slab is higher with low tax rates for middle-income individuals the in new tax regime.
The old tax regime comes with higher tax exemptions for investment making middle-income individuals. These exemptions are not available in the new regime.
New tax regime declared in Union Budget 2023 will save more tax for middle class income individuals earning up to Rs. 15 lakhs.
In addition, new regime will put more burden on high-income taxpayers making few investments.
Old tax regime is highly beneficial for low-income individuals who invest more in tax-saving schemes.
However, if choosing for old regime and tax-saving investments are very few, it will charge high taxes as compared to new regime.
The surcharge rate is lower for HNIs earning income above Rs. 5 crores in new tax regime.

What is the Time to Select Between Old Vs New Regime?

The right time for making a selection between the old regime vs new regime can be learnt from the following table:

Income Earned From	Tax Regime Selection Timing
Income from the Salary earned in employment that attracts TDS	Opt at the start of financial year & intimate the same to the employer Employees can switch between the tax regimes at the start of FY every year. If the tax regime chosen at start of the New Year, it cannot be changed anytime during that year. In this case, the employee can change the regime while filing the ITR.
Income from running a Business or Profession	Once made a selection of the tax regime, it cannot be changed again for businesses and profession-based taxpayers.

Takeaway

The new tax regime offers lower tax rates, higher tax slabs, and lesser complications for low and middle-income taxpayers. Considering the overall lower taxes and fewer exemptions and deductions, the new tax regime still seems more promising, as one might end up paying a relatively lower tax amount in comparison to old tax regime.

Well, here the choice remains subjective on the individual’s specific conditions, whether to opt for the previous tax regime or the by default applicable new tax regime.

FAQ's

Is Sec. 80CCD allowed in the new tax regime?

The new tax regime does not provide for the exemptions in Section 80CCD of the Income Tax Act. This section allows for up to Rs. 1.5 lakhs of tax exemptions, which is available in the old tax regime. However, in the new regime, up to Rs. 50,000 of investment made in the NPS account is available u/ Sec 80 CCD (1B).
Which exemptions are not allowed in the new tax regime?
The following are the major tax exemptions and deductions, which are not available with the new tax regime:
- HRA exemptions
- LTA exemptions
- Deductions under Section 80C/ 80D/ 80E/ 80EEB/ 80TTB/ and so on.
- Employee’s contribution to NPS
- Employer’s contribution to NPS
What is the disadvantage of new tax regime?
Listed below are the disadvantages of new tax regime 2023-24:
- The new tax regime takes away all the major tax exemption benefits that were allowed in old tax regime.
- Once chosen the new regime the businesses cannot switch to the old tax regime.
- The deductions that are important for middle-class earners like education loan, life insurance premiums, health insurance maturity amounts, and more are taxable in new regime.
Which tax regime is better for 12 lakhs?

The new tax regime will save a large amount of tax for 12 lakhs income, if the individual does not make more tax-saving investments. The new tax regime will charge Rs. 93,600 only while with old tax regime he have to pay taxes up to Rs. 1,06,600 with availing Rs. 2.5 lakhs of tax exemptions.