INCOME TAX RATE FOR AY 2023 - 24 UNDER OLD TAX REGIME AND NEW TAX REGIME

[Mr. M. GOVINDARAJAN]

The income tax return for the Assessment year 2023-24 is to be filed on or before 31.07.2023.  For the easy reference of readers the tax rates applicable under old tax regime as well as new tax regime are furnished.  The exemption and rebate available for both regions are also discussed.

UNDER OLD TAX REGIME

Individuals

Up to Rs.2,50,000/- = NIL

Rs.2,50,001 - Rs.5,00,000 - 5%

Rs.5,00,001 to Rs.10,00,000 - Rs.12,500 + 20% above Rs.5,00,000/-

Above Rs.10,00,000 = Rs.1,12,500 + 30% above Rs.10,00,000/-

Senior citizen

Up to Rs.3,00,000 = NIL

Rs.3,00,001 to Rs.5,00,000 = 5%

Rs.5,00,001 to Rs.10,00,000 = Rs.10000 + 20%  above Rs.5,00,000/-

Above Rs.10,00,000 = Rs.1,10,000 + 30% above Rs.10,00,000/-

Super Senior Citizen

Up to Rs.5 lakhs = NIL

Rs.5,00,001 to Rs.10,00,000/- = 20%

Above Rs.10,00,000 = Rs.1,00,000 + 30% above Rs.10,00,000/-

Health and Education Cess = 4% on income tax + surcharge, if any.

Tax Rebate under section 87A - Less than Rs.5 lakhs - eligible for a rebate up to 100% of income tax or Rs.12,500/- whichever is less.

Standard deduction - Rs.50,000/-.

Surcharge

    The rate of surcharge is as detailed below-

• 10% taxable income above Rs.50 lakhs - Rs.1 crore;
• 15% taxable income above Rs. 1 crore  - Rs. 2 crores;
• 25% taxable income above Rs. 2 crores - Rs. 5 crores;
• 37% taxable income above Rs. 5 crores.

Maximum rate of surcharge on income by way of dividend or income under sections 111A, 112A and 115AD is 15%.

Marginal relief is the relief from surcharge, provided in cases where the surcharge payable exceeds the additional income that makes the person liable for surcharge.  The amount payable as surcharge shall not exceed the amount of income earned exceeding Rs. 50 lakh, Rs. 1 crore, Rs. 2 crores, Rs. 5 crores respectively.

Tax Benefits

Interest on house loans

Section 24(b) provides the deduction income from House property on interest for self occupied or let out.  The following are the limit for deduction-

• For self occupied

• Before 01.04.1999 - For construction or purchase of house property - Rs.30000/-

         For repairs of house property - Rs.30000/-

• After 01.04.1999   - For construction or purchase of house property - Rs.2 lakhs;

         For repairs of house property - Rs.30000/-

• For let out  - any time - for construction or purchase of house property - Actual value without any limit.

Under section 80C, 80CCC, 80 CCD (1)

• Section 80C - The investments made in the following are eligible for exemption-

• Life Insurance Premium
• Provident Fund
• Subscription to certain equity shares;
• Tuition fees;
• National Savings Certificate;
• Housing Loan Principle;
• Other various items.

• Section 80 CCC - Investment in annuity plan of LIC or other insurer towards pension scheme.
• Section 80 CCD (1) - Pension scheme of Central Government.

The combined deduction for the above said sections is limited to Rs.150000/- per year.

Under Section 80 CCD (1B)

Deduction towards payments made to Pension Scheme of Central Government, excluding deduction claimed under 80CCD (1) - Deduction limit is Rs.50000/-.

Under Section 80 CCD (2)

Deduction towards contribution made by an employer to the Pension Scheme of Central Government

• If employer is a PSU, State Government or others - Deduction limit is 10% of salary;
• If employer is the Central Government - Deduction limit is 14% of salary.

Under Section 80D

Deduction towards payments made to Health Insurance Premium & Preventive Health check up

• For self/spouse or dependent children -

• Rs.25000/- (Rs. 50000/- if any person is a senior citizen;
• Rs.5000/- for preventive health check up, included in the above limit.

• For parents-

• Rs.25000/- (Rs. 50000/- if any person is a senior citizen;
• Rs.5000/- for preventive health check up, included in the above limit.

Expenditure incurred on a Senior Citizen, if no premium is paid on health insurance coverage-

• For Self/ Spouse or Dependent Children - Deduction limit is Rs.50000/-;
• For parents - deduction limit is Rs.50000/-.

Under Section 80D

Deduction towards payments made towards Maintenance or Medical treatment of a Disabled Dependent or Paid / deposited any amount under relevant approved scheme-

• Flat deduction of Rs. 75,000 available for a person with Disability, irrespective of expense incurred;
• The deduction is Rs. 1,25,000 if the person has Severe Disability (80% or more).

Under Section 80DDB

Deduction towards payments made towards Medical treatment of Self or Dependant for specified diseases - Deduction limit is Rs. 40,000 (Rs. 1 lakh if Senior Citizen).

Under Section 80E

Deduction towards interest payments made on loan for higher education of Self or relative - Total amount paid towards interest on loan taken.

Under Section 80EE

Deduction towards interest payments made on loan taken for acquisition of residential house property where the loan is sanctioned between 1st April 2016 to 31st March 2017 -  Deduction limit of Rs.50,000 on the interest paid on loan taken.

Under Section 80EEA

Deduction available only to individuals  towards interest payments made on loan taken for acquisition of residential house property for the first time where the loan is sanctioned between 1st April 2019 to 31st March 2022 & deduction should not have been claimed u/s 80EE - Deduction limit of Rs. 1,50,000 on the interest paid on loan taken.

Under Section 80EEB

Deduction towards interest payments made on loan for purchase of electric vehicle where the loan is sanction between 01.04.2019 to 31.03.2023 - Deduction limit is Rs.1,50,000/- on the interest paid on the loan taken.

Under Section 80G

Deduction towards Donations made to prescribed Funds, Charitable Institutions, etc. Donation are eligible for deduction under the below categories-

• Without any limit - 100% deduction and 50% deduction

No deduction shall be allowed under this section in respect of donation made in cash exceeding  Rs.2000/-

• Subject to qualifying limit - 100% deduction and 50% deduction.

Under Section 80GG

Deduction towards rent paid for house & applicable to only those who are self-employed or for whom HRA is not part of Salary

Least of the following shall be allowed as deduction

Rent paid reduced by 10% of Total Income before this deduction - Rs.5000/- per month. 25% of Total Income (excluding long term capital gains, short term capital gains under section 111A or income under section 115A or 115D)

**Form 10BA to be filled for claiming this deduction.

Under Section 80 GGA

Deduction towards Donations made for Scientific Research or Rural Development

• Research Association or University, College or other Institution for-

• Scientific Research
• Social Science or Statistical Research

• Association or Institution for -

• Rural Development
• Conservation of Natural Resources or for Afforestation

• PSU or Local Authority or an association or institution approved by the National Committee for carrying out any eligible project 
• Funds notified by Central Government for-

• Afforestation;
• Rural Development.

• National Urban Poverty Eradication Fund as setup and notified by Central Government 

No deduction shall be allowed under this section in respect of donation made in cash exceeding Rs.2000/- or if Gross Total Income includes income from Profit/Gains of Business/Profession.

Under Section 80GGC

Deduction towards Donations made to Political Party or Electoral Trust - Deduction towards Donations made to Political Party or Electoral Trust

Under Section 80TTA

Deduction on interest received on saving bank accounts by Non-Senior Citizens - Deduction limit is Rs.10000/-

Under Section 80TTB

Deduction on interest received on deposits by Resident Senior Citizens - Deduction limit of Rs. 50,000/-

Under Section 80U

Deductions for a resident individual taxpayer with Disability-

• Flat Rs. 75,000 deduction for a person with Disability, irrespective of expense incurred;
• Flat Rs.1,25,000 deduction for a person with Severe Disability (80% or more), irrespective of expense incurred 

NEW TAX REGIME UNDER SECTION 115BAC

Tax Rate

• Up to Rs.250000/-      = NIL
• Rs.250001 to Rs.500000 = 5% above Rs.250000;
• Rs.500001 - Rs.750000 = Rs.12500 + 10% above Rs.5 lakhs;
• Rs.750001 - Rs.1000000 = Rs.37500 +15% above Rs.750000/-;
• Rs.1000001 - Rs.1250000= Rs.75000 +20% above Rs.1000000/-;
• Rs.1250001 - Rs.1500000 =Rs.125000 +25% above Rs.1250000/-;
• Above Rs.1500000 = Rs.18700 + 30% above Rs.1500000.

Health and Education Cess = 4% on income tax + surcharge, if any.

Budget 2023 introduced a standard deduction of Rs 50,000 under New Tax Regime applicable from FY 2023-24.

Surcharge

    The rate of surcharge is as detailed below-

• 10% taxable income above Rs.50 lakhs - Rs.1 crore;
• 15% taxable income above Rs. 1 crore  - Rs. 2 crores;
• 25% taxable income above Rs. 2 crores - Rs. 5 crores;
• 37% taxable income above Rs. 5 crores.