Income tax calculator: Changes in income tax slab for FY 2023-24 that you must know

Financial Checkups

Income tax calculator: The new income tax regime became the default tax regime for taxpayers on April 1, 2023, marking the start of a new fiscal year. An earner will, however, have the option of choosing the previous income tax system. The basic deduction under the new income tax system has also been increased to $50,000 annually as of today. The most significant change starting today, though, is the new income tax slab for FY 2023–24, which went into effect with the start of the new fiscal year.

No income tax is due under this new income tax slab on an annual income up to 3 lakh rupees due to the extension of the 50,000 rupee annual standard deduction to the new income tax regime. In the current fiscal year, income tax of 5% would be due on incomes between 3,001 and 6 lakh rupees annually. An income taxpayer would be required to pay 10% income tax on income between $6,001 and $9 lakh in FY24. In the fiscal year 2023–2024, a 15% income tax will be applied on annual incomes between 9,001,001 and 12 lakh rupees. 20% income tax will be charged to the taxpayer on income between Rs. 12,001,001 and Rs. 15 lakh in a single financial year. With effect from 1 April 2023, a new income tax bracket would impose a 30% income tax on taxpayers who earn more than 15 lakh rupees annually.

However, only taxpayers who choose the new income tax regime while filing their income tax return will be subject to the new income tax slab (ITR).

Zero income tax on income of up to 7 lakh rupees
The new income tax regime will also be eligible for the income tax rebate under Section 87A of the Income Tax Act in FY24. So, this advantage is now accessible to all taxpayers who file ITRs without selecting the old tax regime.

Pankaj Mathpal, MD & CEO of Optima Money Managers, elaborated on the advantages of this income tax refund “A maximum reimbursement of $25,000 is now available under Section 87A of the Income Tax Act under the new income tax system beginning in FY24. This means that a person making $7 lakh or less in FY24 will not be required to pay any income tax because they are eligible for a $15,000 and a $10,000 income tax rebate, respectively, depending on their income tax bracket.”

debt mutual fund tax
According to SEBI-registered tax and investment expert Jitendra Solanki, “From 1st April 2023, income from debt mutual fund investments would be considered short term capital gain taxable at income tax slab rates.” Solanki advised debt mutual fund investors to keep track of their income tax slab after gains in debt mutual fund investments.