The income tax filing deadline is just 46 days away as of today, with a deadline of July 31, 2024. Taxpayers should now be ready to file their returns at any time at the government’s declared tax rates. It should be noted that there are two types of tax regimes: the old tax regime and the new tax regime. The tax rates are different for both.

The government has introduced a new tax regime, section 115BAC, from April 1, 2020 (financial year 2020-21) as an optional alternative to the old tax regime. Initially, the regime targeted individuals and Hindu Undivided Families (HUF), to provide taxpayers with more flexibility and choice in managing their tax obligations.

During the budget proceedings for the financial year 2023-2024, Finance Minister Nirmala Sitharaman stated that the new tax structure will be introduced as a default regime.

New tax regime

The new tax regime is structured with revised tax slabs and concessional tax rates and applies uniformly to all categories of taxpayers, including individuals, HUFs and Associations of Persons (AOPs). Current rules state that if taxpayers fail to express their preference to their employer, deductions will be processed under the new tax regime.

The new tax system has limitations. Claims for exemption from deductions such as HRA, LTA, Sections 80C, 80D, etc. are not available. These benefits were intended for the Old Tax Regime.

Here are the tax slabs for financial year 2024-25 (AY 2025-26)

Up to Rs. 3L NIL

Rs 3L to Rs 6L 5% on income exceeding Rs 3,00,000

Rs 6L to Rs 9L Rs 15,000 + 10% on income above Rs 6,00,000

Rs 9L to Rs 12L Rs 45,000 + 15% on income above Rs 9,00,000

Rs 12L to Rs 15L Rs 90,000 + 20% on income above Rs 12,00,000

Above Rs 15L Rs 150,000 + 30% on income above Rs 15,00,000

New list of exemptions for tax regimes (not exclusive)

> Transport allowances for persons with disabilities (PwD)

> Transport allowance

> Travel/tour/transfer allowance

> Voluntary superannuation scheme exemptions u/ Section 10(10C)

> Tip amount u/ Section 10(10)

> Exit collection u/ Section 10(10AA)

> Deductions on deposits in Agniveer Corpus Fund u/ Section 80CCH(2)

Old tax regime

The old tax regime provides various tax exemptions and deductions for private individuals. Commonly claimed exemptions and deductions include housing allowance (HRA), travel allowance (LTA), deductions under sections 80C, 80D, 80CCD(1b), 80CCD(2) and others.

> Income up to Rs 2.5 lakh is exempt from tax under the old tax regime.

> Income between Rs 2.5 lakh and Rs 5 lakh will be taxed at the rate of 5% under the old tax regime.

> Personal income of Rs 5 lakh to Rs 10 lakh is taxed at the rate of 20% in the old regime

> Under the old regime, personal income above Rs 10 lakh is taxed at a rate of 30%.