Income Tax in India: A Complete Guide
Income tax is a direct tax levied by the Government of India on the income earned by individuals, businesses, and other entities. The tax is calculated based on the taxpayer’s earnings during a financial year (April 1 – March 31).
Income Tax Slabs for FY 2024-25
The income tax rates in India are based on the new tax regime and the old tax regime. Taxpayers can choose between the two.
| New Tax Regime (Default) – FY 2024-25 | |
|---|---|
| Income Slab (₹) | Tax Rate (%) |
| Up to 3,00,000 | Nil |
| 3,00,001 – 6,00,000 | 5% |
| 6,00,001 – 9,00,000 | 10% |
| 9,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
|
Key Features: No tax up to ₹7 lakh (after rebate under Section 87A) Limited exemptions and deductions |
|
| Old Tax Regime (With Deductions & Exemptions) | |
|---|---|
| Income Slab (₹) | Tax Rate (%) |
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
|
Key Features: Eligible for deductions (e.g., Section 80C, 80D, HRA) More beneficial for taxpayers with high deductions |
|
Types of Taxable Income
- Salary Income – Earnings from employment.
- Business or Professional Income – Profits from business/self-employment.
- Capital Gains – Income from the sale of assets like property, stocks.
- House Property Income – Rental income from properties.
- Other Sources – Interest, dividends, gifts, lottery winnings.
Key Tax Deductions & Exemptions (Old Regime)
- Section 80C: Up to ₹1.5 lakh (PPF, EPF, ELSS, Life Insurance, etc.)
- Section 80D: Health insurance premium (₹25,000-₹50,000)
- Section 24(b): Home loan interest (₹2 lakh)
- HRA (House Rent Allowance): Deduction for rented accommodation
- Standard Deduction: ₹50,000 for salaried individuals
Which Tax Regime Should You Choose?
Choose the Old Regime if:
- You have investments in 80C (PF, ELSS, PPF, LIC)
- You claim deductions for HRA, home loan interest, medical insurance
- Your taxable income is above ₹10 lakh and deductions significantly reduce your tax
Choose the New Regime if:
-
- You don’t have major deductions/exemptions
- You want simpler tax filing with lower rates
- Your income is below ₹7 lakh (since no tax is payable)