Budget 2023 introduced New Tax Slabs 2023-24 for new tax regime which is reduced tax slab rates. Now we have 6 slab rates in new tax regime in FY 2023-24 instead of 7 in FY 2022-23. Below are some key points about new tax slabs 2023-24.
- New Tax Regime will be default tax regime from FY 2023-24. You also have to option to choose old tax regime
- Standard Deduction of Rs. 50,000 will be available with new tax regime
- Tax rebate with new tax slabs 2023-24 will be Rs. 7 lakh instead of Rs. 5 lakh
- Tax exemption limit with new tax regime is Rs. 3 lakh instead of Rs. 2.5 Lakh
- Below are the new tax slabs for 2023-24 for all age groups:
- New Tax Slabs 2023-24 (New Tax Regime)
- DEDUCTIONS and Exemptions available in New Tax Regime
- DEDUCTIONS and Exemptions not available in New Tax Regime
- Old Tax Slabs 2023-24
- Income Tax Calculation Examples
- Income Tax Calculation formula in Excel
- How to Calculate your Income Tax
- New vs Old Tax Regime Which is Better?
- Conclusion
New Tax Slabs 2023-24 (New Tax Regime)
| SLABS | TAX RATE |
|---|---|
| Rs. 0 – Rs. 3,00,000 | 0% |
| Rs. 3,00,000 – Rs. 6,00,000 | 5% |
| Rs. 6,00,000 – Rs. 9,00,000 | 10% |
| Rs. 9,00,000 – Rs. 12,00,000 | 15% |
| Rs. 12,00,000 – Rs. 15,00,000 | 20% |
| More than Rs. 15,00,000 | 30% |
Above tax slabs are applicable for all age groups for 2023-24.
Let us now see the deductions available in New Tax slabs 2023-24 (New Regime)
DEDUCTIONS and Exemptions available in New Tax Regime
- Standard Deduction of Rs. 50,000 is available under New Tax Regime from FY 2023-24
- Transport allowance can be claimed in case of specially-abled person
- Conveyance allowance for employees received to meet conveyance expenditures
- Compensation received for cost of travel or tour
- Daily Allowance received as compensation for cost of living in some other place compared to regular place of working
- Deduction for employer’s contribution in NPS Account under Section 80CCD(2)
- Home Loan Interest amount under Section 24 in case of let-out property
- Deduction of amount paid or deposited in Agniveer Corpus Fund under Section 80CCH(2)
- Gifts up to Rs. 5000
- Exemption on voluntary retirement 10(10C), gratuity u/s 10(10) and Leave encashment u/s 10(10AA)
DEDUCTIONS and Exemptions not available in New Tax Regime
There are multiple deductions and exemptions not available under New Tax Regime:
- Investments included in Section 80C such as Provident Fund, Public Provident Fund, Life Insurance Premiums, 5 year Fixed Deposits, Equity Linked Saving Savings, etc. are not available in New Tax Regime
- NPS (National Pension Scheme) under Section 80CCD(1B) which allows maximum of Rs. 50,000 deduction is not available in New Tax Regime
- All other Deductions available under Chapter VI A is not available under New Tax Regime
Old Tax Slabs 2023-24
Below is the old tax slabs for FY 2023-24 applicable for age up to 60 years:
| Income | Tax Slab Rates (Old Tax Regime) |
|---|---|
| Rs. 0 – Rs. 2.5 Lakh | 0% |
| Rs. 2.5 Lakh – Rs. 5 Lakh | 5% |
| Rs. 5 Lakh – Rs. 10 Lakh | 20% |
| Rs. 10 Lakh or above | 30% |
Let us now see income tax calculation examples with both tax regimes.
Income Tax Calculation Examples
You can easily use the online Income Tax Calculator or the Income tax excel calculator to calculate income tax.
Let’s take few examples for tax calculation purpose:
Income = Rs. 8 Lakh
Deductions = Rs. 50,000 (Standard Deducton)
Old Regime = Rs. 65,000
New Regime = Rs. 31,200
Below is the income tax calculation with excel
As seen above, with only Rs. 50,000 deductions and 8 lakh income, it is better to select new tax regime as you’ll pay less tax compared to old tax regime.
Also it is important to note that tax rebate under Section 87A has limit of Rs. 5 lakh income with old regime and Rs. 7 lakh income with new regime. Which means you pay zero income tax when taxable income is Rs. 5 lakh or below with old regime and when taxable income is Rs. 7 lakh or below with new tax regime.
Now how do you get the income below these levels? By making investments and claiming deductions under various sections.
Let’s say in above example we make more investments of:
- Rs. 1,50,000 in Section 80C
- Rs. 50,000 in Section 80CCD(1B) – NPS
- Standard Deduction of Rs. 50,000
- Rs. 50,000 in Section 80D – Medical Insurance premiums
- Total deductions – Rs. 3,00,000
When we mention these deductions in excel, below is the calculation:
So as seen, we pay zero income tax with old tax regime now due to tax rebate under section 87A, Note that tax with new tax regime is not changed since these deductions are not available in new tax regime, except standard deduction of Rs. 50,000
Income Tax Calculation formula in Excel
The formula for income tax calculation in excel is quite simple and based on the tax slab rates, we can provide the formula for old and new tax regime. Below are the steps to follow:
- For 5% slab rate, check if the income is between 2.5 lakh to 5 lakh
- If yes than on income between 2.5 lakh to your actual income, multiple the difference by 5 and divide by 100
- Similarly, same formula need to be applied for new tax regime
- Now for 20% in old regime, check the difference of income between actual income and 5 lakh
- Multiply this difference by 20 and divide by 100
- In the same way, apply formula in various tax slab rates of old and new regime
Download Income Tax Calculator 2023-24 in Excel [FREE]
You can fill below form to download income tax calculator in excel:
How to Calculate your Income Tax
So there are 2 ways to calculate your income tax:
Below is the screenshot of using the online income tax calculator:
You only need to provide income and investments/ deductions to calculate your income tax for FY 2023-24 and upcoming financial years.
- Using Income Tax Excel calculator:
Another way is to use the income tax excel calculator that will help you to know the tax details with various slab rates. You can use this excel calculator offline as well and choose between old and new tax regimes.
New vs Old Tax Regime Which is Better?
It depends on your income and investments you are planning to make.
- If you don’t want to make any investments and claim deductions than new tax regime is better since you’ll pay less income tax with reduced tax slab rates
- Where as if you can make investments up to Rs. 6 lakh, than even when income is Rs. 11 Lakh, you pay zero income tax with old tax regime, in which case, old regime is better for you
- Not only 11 lakh but income beyond this level with old tax regime will help you to save income tax
Here’s a vide explaining New vs Old Tax regime which is better:
Watch more Videos on YouTube Channel
Conclusion
So the new tax slabs 2023-24 are reduced tax slab rates that gives you the benefit of lower income tax.
Also you get the benefit of standard deduction of Rs. 50,000 for salaried employees and pensioners.
Some more Reading:
- Income Tax Calculator 2023-24
- Income Tax Calculation Examples
- Zero income tax up to Rs. 7.5 lakh with no Investments
- How to save income tax
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Income Tax Calculator App – FinCalC
For Income Tax Calculation on your mobile device, you can Download my Android App “FinCalC” which I have developed for you to make your income tax calculation easy.
What you can do with this mobile App?
- Calculate Income Tax for new FY 2024-25 and previous FY 2023-24
- Enter estimated Investments to check income tax with Old and New Tax Regime
- Save income tax details and track regularly
- Know how much to invest more to save income tax
- More calculators including PPF, SIP returns, Savings account interest and lot more
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