Budget 2024 (Union Budget, July 2024) introduced changes to income tax slabs and rates that are effective from FY 2024-25 (Assessment Year 2025-26). This guide covers both the new and old regime slab rates, surcharge, cess, capital gains tax changes, and worked examples so you can estimate your tax liability.
Key Takeaways
- Budget 2024 widened new-regime slabs and raised standard deduction to ₹75,000
- Section 87A rebate (₹25,000) means effectively zero tax for income up to ₹7 lakh in the new regime
- Old regime slabs remain unchanged; standard deduction is ₹50,000
- LTCG on equity now taxed at 12.5% (up from 10%); exemption raised to ₹1.25 lakh
- Short-term capital gains on equity: 20% (up from 15%)
- Health and Education Cess: 4% on income tax (both regimes)
New Tax Regime — FY 2024-25 (Default)
The new regime is the default for FY 2024-25. Taxpayers who want the old regime's deductions must explicitly opt in.
New Regime Slab Rates (After Budget 2024)
| Total Income (Annual) | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 to ₹7,00,000 | 5% |
| ₹7,00,001 to ₹10,00,000 | 10% |
| ₹10,00,001 to ₹12,00,000 | 15% |
| ₹12,00,001 to ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Key New-Regime Benefits (FY 2024-25)
- Standard deduction for salaried employees: ₹75,000 (raised from ₹50,000 in Budget 2024)
- Family pension deduction: ₹25,000 (raised from ₹15,000)
- Section 87A rebate: ₹25,000 — full tax rebate if taxable income ≤ ₹7 lakh
- Surcharge cap: Maximum surcharge is 25% even for income above ₹5 crore (unlike 37% in old regime)
New Regime vs Budget 2023 Slabs
| Income Range | Old Slabs (Budget 2023) | New Slabs (Budget 2024) |
|---|---|---|
| ₹3–6 lakh | 5% | — |
| ₹3–7 lakh | — | 5% |
| ₹6–9 lakh | 10% | — |
| ₹7–10 lakh | — | 10% |
| ₹9–12 lakh | 15% | — |
| ₹10–12 lakh | — | 15% |
| ₹12–15 lakh | 20% | 20% |
| Above ₹15 lakh | 30% | 30% |
The Budget 2024 widening of slabs means taxpayers with income between ₹6 lakh and ₹10 lakh benefit from the lower rates on a broader range.
Old Tax Regime — FY 2024-25
The old regime remains available. Salaried individuals can opt for it when filing ITR or by informing their employer at the start of the year.
Old Regime Slab Rates
| Total Income (Annual) | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Special Exemption Limits Under Old Regime
| Category | Basic Exemption |
|---|---|
| Below age 60 | ₹2,50,000 |
| Senior citizen (60–79 years) | ₹3,00,000 |
| Super senior citizen (80 years and above) | ₹5,00,000 |
- Standard deduction: ₹50,000 for salaried employees
- Section 87A rebate: ₹12,500 — full rebate if taxable income ≤ ₹5 lakh
The key advantage of the old regime is the ability to claim deductions under Chapter VI-A (80C, 80D, 80CCD, 80TTA, etc.) and exemptions like HRA and LTA. For taxpayers with significant deductions, the old regime can result in lower tax.
Surcharge Rates — FY 2024-25
Surcharge applies when income exceeds ₹50 lakh.
| Total Income | Old Regime Surcharge | New Regime Surcharge |
|---|---|---|
| Up to ₹50 lakh | Nil | Nil |
| ₹50 lakh to ₹1 crore | 10% | 10% |
| ₹1 crore to ₹2 crore | 15% | 15% |
| ₹2 crore to ₹5 crore | 25% | 25% |
| Above ₹5 crore | 37% | 25% (capped) |
The new regime's surcharge cap at 25% makes it more attractive for very high earners. Under the old regime, the effective tax rate (including 37% surcharge and 4% cess) for income above ₹5 crore can reach nearly 43%.
Marginal Relief on Surcharge
When income slightly exceeds a surcharge threshold, marginal relief ensures the additional tax (surcharge) does not exceed the additional income above the threshold. The Income Tax Act provides this protection to prevent inequitable outcomes at slab boundaries.
Health and Education Cess
4% on income tax (including surcharge) — applicable under both regimes.
This cess funds health and education programmes. It is calculated after surcharge is added to the base income tax. It is not a deductible expense.
Capital Gains Tax Rates — FY 2024-25 (Post Budget 2024)
Budget 2024 significantly revised capital gains tax. These rates apply from 23 July 2024.
Long-Term Capital Gains (LTCG)
| Asset Type | Holding Period | LTCG Rate | Exemption |
|---|---|---|---|
| Listed equity shares / equity MFs | More than 12 months | 12.5% | ₹1.25 lakh per year |
| Debt mutual funds, bonds | More than 24/36 months | As per slab rate (old regime) | Nil |
| Property (land, building) | More than 24 months | 12.5% (without indexation) | ₹1.25 lakh (from equity pool) |
| Gold, unlisted shares | More than 24 months | 12.5% | Nil |
Note: Indexation benefit on property was removed for most cases in Budget 2024 (the LTCG rate dropped from 20% with indexation to 12.5% without indexation). This is a significant change for property sellers.
Short-Term Capital Gains (STCG)
| Asset Type | Holding Period | STCG Rate |
|---|---|---|
| Listed equity shares / equity MFs (STT paid) | 12 months or less | 20% (raised from 15%) |
| Debt MFs, property, gold, other | As per slab | Slab rate |
For income tax filing, capital gains calculations require careful attention — particularly for those who sold property or equity in FY 2024-25.
Worked Examples: Tax Calculation for FY 2024-25
Example 1: Gross Salary ₹8 Lakh (Salaried, No Other Income)
Under New Regime:
| Computation | Amount |
|---|---|
| Gross salary | ₹8,00,000 |
| Less: Standard deduction | (₹75,000) |
| Taxable income | ₹7,25,000 |
| Tax on ₹3 lakh @ 0% | ₹0 |
| Tax on ₹4 lakh @ 5% (₹3–7L) | ₹20,000 |
| Tax on ₹25,000 @ 10% (₹7–7.25L) | ₹2,500 |
| Total tax before rebate | ₹22,500 |
| Section 87A rebate (income > ₹7L, not fully eligible) | — |
| Add: Health & Education Cess @ 4% | ₹900 |
| Total tax payable | ₹23,400 |
Under Old Regime (with standard deduction and 80C ₹1.5L claimed):
| Computation | Amount |
|---|---|
| Gross salary | ₹8,00,000 |
| Less: Standard deduction | (₹50,000) |
| Less: 80C investments | (₹1,50,000) |
| Taxable income | ₹6,00,000 |
| Tax on ₹2.5L @ 0% | ₹0 |
| Tax on ₹2.5L @ 5% | ₹12,500 |
| Tax on ₹1L @ 20% | ₹20,000 |
| Total tax | ₹32,500 |
| Add: Cess @ 4% | ₹1,300 |
| Total tax payable | ₹33,800 |
Conclusion at ₹8L: New regime is better if 80C is the only deduction. If you add HRA and 80D, old regime may narrow the gap.
Example 2: Gross Salary ₹12 Lakh
Under New Regime:
| Computation | Amount |
|---|---|
| Gross salary | ₹12,00,000 |
| Less: Standard deduction | (₹75,000) |
| Taxable income | ₹11,25,000 |
| Tax: ₹3L @ 0% | ₹0 |
| Tax: ₹4L @ 5% (₹3–7L) | ₹20,000 |
| Tax: ₹3L @ 10% (₹7–10L) | ₹30,000 |
| Tax: ₹1.25L @ 15% (₹10–11.25L) | ₹18,750 |
| Total tax | ₹68,750 |
| Add: Cess @ 4% | ₹2,750 |
| Total tax | ₹71,500 |
Under Old Regime (standard deduction + 80C ₹1.5L + 80D ₹25K + HRA ₹1L):
| Computation | Amount |
|---|---|
| Gross salary | ₹12,00,000 |
| Less: Standard deduction | (₹50,000) |
| Less: HRA exempt | (₹1,00,000) |
| Less: 80C | (₹1,50,000) |
| Less: 80D | (₹25,000) |
| Taxable income | ₹8,75,000 |
| Tax: ₹2.5L @ 0% | ₹0 |
| Tax: ₹2.5L @ 5% | ₹12,500 |
| Tax: ₹3.75L @ 20% | ₹75,000 |
| Total tax | ₹87,500 |
| Add: Cess @ 4% | ₹3,500 |
| Total tax | ₹91,000 |
Conclusion at ₹12L: With total deductions of ₹3.25 lakh, the old regime results in higher tax at this income level. New regime wins. Old regime becomes competitive only with larger deductions.
Example 3: Gross Salary ₹20 Lakh
Under New Regime:
| Computation | Amount |
|---|---|
| Gross salary | ₹20,00,000 |
| Less: Standard deduction | (₹75,000) |
| Taxable income | ₹19,25,000 |
| Tax: ₹3L @ 0% | ₹0 |
| Tax: ₹4L @ 5% | ₹20,000 |
| Tax: ₹3L @ 10% | ₹30,000 |
| Tax: ₹2L @ 15% | ₹30,000 |
| Tax: ₹3L @ 20% | ₹60,000 |
| Tax: ₹4.25L @ 30% | ₹1,27,500 |
| Total tax | ₹2,67,500 |
| Add: Cess @ 4% | ₹10,700 |
| Total tax | ₹2,78,200 |
Under Old Regime (standard deduction + 80C ₹1.5L + 80D ₹25K + HRA ₹1.5L + NPS 80CCD(1B) ₹50K):
| Computation | Amount |
|---|---|
| Gross salary | ₹20,00,000 |
| Less: Standard deduction | (₹50,000) |
| Less: HRA exempt | (₹1,50,000) |
| Less: 80C | (₹1,50,000) |
| Less: 80D | (₹25,000) |
| Less: 80CCD(1B) NPS | (₹50,000) |
| Taxable income | ₹15,75,000 |
| Tax: ₹2.5L @ 0% | ₹0 |
| Tax: ₹2.5L @ 5% | ₹12,500 |
| Tax: ₹5L @ 20% | ₹1,00,000 |
| Tax: ₹5.75L @ 30% | ₹1,72,500 |
| Total tax | ₹2,85,000 |
| Add: Cess @ 4% | ₹11,400 |
| Total tax | ₹2,96,400 |
Conclusion at ₹20L: New regime saves approximately ₹18,200 even with ₹3.75 lakh in deductions. At ₹20 lakh income, the break-even deduction threshold is higher. With home loan interest added, the old regime may become competitive.
Choosing the Right Regime
The slabs above show that the correct regime depends on:
- Your actual deductions and exemptions (HRA, home loan, 80C, 80D)
- Your total income level
- Whether you have business income (switching restrictions apply)
For personalised tax planning and an accurate computation under both regimes, our income tax filing service can model both scenarios and help you choose optimally. Coordinating with your employer on TDS regime choice and advance tax planning ensures you don't face unexpected payments at year-end.
This article is for general informational purposes only and does not constitute professional advice. Tax slab rates, surcharge thresholds, and capital gains provisions are subject to change through annual budgets and government notifications. Consult a qualified Chartered Accountant for advice specific to your situation.
Frequently Asked Questions
What are the new tax slabs after Budget 2024?
Budget 2024 revised the new regime slabs: 0–₹3 lakh (nil), ₹3–7 lakh (5%), ₹7–10 lakh (10%), ₹10–12 lakh (15%), ₹12–15 lakh (20%), above ₹15 lakh (30%). The standard deduction was also raised to ₹75,000 for salaried employees under the new regime.
Is there zero tax for income up to ₹7 lakh in FY 2024-25?
Yes, effectively. Under the new regime, after the standard deduction of ₹75,000, the taxable income of a salaried person earning ₹7.75 lakh gross is ₹7 lakh. The Section 87A rebate of ₹25,000 wipes out the entire tax liability of ₹25,000 (5% on ₹4 lakh = ₹20,000; rounding makes the actual computation nil). For non-salaried individuals, effective zero tax applies up to ₹7 lakh taxable income through the rebate.
What is the surcharge rate for income between ₹50 lakh and ₹1 crore?
Income between ₹50 lakh and ₹1 crore attracts a surcharge of 10% on the income tax (before cess) under both old and new regimes.
What is the Health and Education Cess rate for FY 2024-25?
Health and Education Cess is 4% on the total income tax including surcharge. It applies under both the old and new tax regimes.
Are long-term capital gains from equity taxed differently from FY 2024-25?
Yes. Budget 2024 changed the LTCG tax rate on equity shares and equity mutual funds from 10% to 12.5%, effective from 23 July 2024. The exemption limit for such LTCG was raised from ₹1 lakh to ₹1.25 lakh per year. Short-term capital gains on equity rose from 15% to 20%.