Are You Aware with These 6 Income Tax Slab Rules?

As the new financial year approaches, taxpayers in India must be well-versed with the current income tax regulations. Understanding the Income Tax Slab for FY 2024-25 is imperative for effective financial planning and compliance. This article delves into the nuances of the six prominent income tax slab rules you need to know, along with the critical Section 80C provisions that can aid in tax savings.

 1. Income Tax Slab Rates for Individual Taxpayers

The income tax slabs are subject to periodic revisions, and the rates applicable for the Financial Year (FY) 2024-25 are laid out in different slabs based on income levels. Here’s a detailed breakdown:

For individuals below 60 years of age:

– Income up to ₹2,50,000: No tax

– ₹2,50,001 to ₹5,00,000: 5%

– ₹5,00,001 to ₹10,00,000: 20%

– Above ₹10,00,000: 30%

For senior citizens (60 to 80 years):

– Income up to ₹3,00,000: No tax

– ₹3,00,001 to ₹5,00,000: 5%

– ₹5,00,001 to ₹10,00,000: 20%

– Above ₹10,00,000: 30%

For super senior citizens (above 80 years):

– Income up to ₹5,00,000: No tax

– ₹5,00,001 to ₹10,00,000: 20%

– Above ₹10,00,000: 30%

 2. Enhanced Standard Deduction

The current standard deduction for salaried individuals and pensioners stands at ₹50,000. This provision allows for an automatic deduction from the gross salary, reducing the taxable income and potentially lowering the tax liability.

 3. Revised Rebate Under Section 87A

Section 87A offers a rebate to individual taxpayers if their net taxable income does not exceed ₹5,00,000. For FY 2024-25, the maximum rebate available under this section remains ₹12,500. This essentially means individuals with an income up to ₹5,00,000 can reduce their tax liability to zero through this provision.

 4. Increased Tax Benefits under Section 80C

Under Section 80C, taxpayers can claim a deduction of up to ₹1,50,000 from their total income by investing in specified instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Fixed Deposits, and more. This section remains one of the most popular means of availing tax benefits.

 5. Surcharge Rates

Surcharges are additional taxes levied on individuals earning higher incomes, and they vary based on income levels:

– Income from ₹50 lakh to ₹1 crore: 10% of income tax.

– Income from ₹1 crore to ₹2 crore: 15% of income tax.

– Income from ₹2 crore to ₹5 crore: 25% of income tax.

– Income above ₹5 crore: 37% of income tax.

These surcharges ensure that high-income earners contribute more to the nation’s exchequer.

 6. Health and Education Cess

A Health and Education Cess at the rate of 4% is applied on the income tax amount, including surcharge. For example, if your tax payable, after deductions, is ₹1,00,000, then an additional ₹4,000 as cess (4% of ₹1,00,000) is also payable, taking the total tax liability to ₹1,04,000.

 Summary

The complexities surrounding the Income Tax Slab for FY 2024-25 provide a clear roadmap for taxpayers to structure their financial year effectively. Individuals must be aware of the slab rates applicable based on their age and income levels. Additionally, understanding the significance of standard deductions, rebates under Section 87A, and the utilization of Section 80C to reduce taxable income, can materially impact the annual tax outgo.

High-income earners should pay special attention to the surcharge rates, which can significantly influence the total tax payable. The Health and Education Cess also adds to the tax burden, ensuring that contributions towards nation-building are met.

It is prudent for taxpayers to delve into these rules and align their financial planning accordingly. While this article provides an overview, it is advisable to consult with a tax professional or financial advisor to make well-informed decisions in line with individual circumstances and requirements.

 Disclaimer

This article offers a general overview of the income tax slab rules for FY 2024-25 and associated provisions. It is crucial for investors to thoroughly evaluate all aspects and consult a financial advisor or tax consultant before making any decisions related to tax planning or investments in the Indian financial markets.