Default Tax Regime | Optional Tax Regime

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Tax rates under default tax regime: –

The slab rates for Assessment Year 2024-25 under default tax regime under section 115BAC of Income-tax Act, 1961

Note:- The basic exemption limit is ₹ 3,00,000 under the default tax regime.

Sr. No.Total income [in ₹]Rate of tax
1Up to ₹ 3,00,000Nil
2From ₹ 3,00,001 to ₹ 6,00,0005%
3From ₹ 6,00,001 to ₹ 9,00,00010%
4From ₹ 9,00,001 to ₹ 12,00,00015%
5From ₹ 12,00,001 to ₹ 15,00,00020%
6Above ₹ 15,00,00030%
Surcharge and Rebate under section 87A: –

Surcharge is an additional tax levied on income-tax.

The rates of surcharge for the Assessment Year 2024-25 for individual who pays tax under default tax regime under section 115BAC are as follows: –

Rates of Surcharge: –

Sr. No.ParticularsSurcharge
1.Total income >₹ 50 lakhs but ≤ ₹ 1 crore 10%
2. Total income >₹ 1 crore but ≤ ₹ 2 crore 15%
3. Total income >₹ 2 crore [including dividend income & capital gains taxable u/s 111A, 112 and 112A].15%
4. Total income >₹ 2 crore [excluding dividend income & capital gains taxable u/s 111A, 112 and 112A].25%
Note:- Rate of surcharge on the income-tax on portion of dividend income and capital gains chargeable u/s 111A, 112 and 112A would be 15% even if total income exceeds ₹ 2 crore in both regime.

Note:- Marginal relief would be available.
Rebate

Rebate under section 87A under default tax regime u/s 115BAC

An individual resident in India whose total income ≤ ₹ 7 lakhs, assessee shall be entitled to a deduction from the amount of income tax.

Least of the following would be rebate –

  1. Amount of income-tax
    • OR
  2. ₹ 25,000

If the total income of such individual >₹ 7 lakhs and income tax payable on such total income exceeds the amount by which total income is in excess of ₹ 7 lakhs, assessee shall be entitled to a deduction from the amount of income tax.

steps to calculate deduction :-

  1. Compute income-tax payable on total income [A]
  2. Total income (–) ₹ 7 lakhs [B]
  3. if A>B, then, rebate would be A-B.

Tax rates under optional tax regime: –

The slab rates for Assessment Year 2024-25 under optional tax regime under regular provisions of Income-tax Act, 1961

Sr. No.Total income [in ₹]Rate of tax
1Up to ₹ 2,50,000 [if age is below 60 years]
Up to ₹ 3,00,000 [ if age is 60 years or above but less than 80 years and resident in India]
Up to ₹ 5,00,000 [ if age is 80 years or above and resident in India]		Nil
2From ₹ 2,50,001 to ₹ 5,00,000 5%
3From ₹ 5,00,001 to ₹ 10,00,00020%
4Above ₹ 10,00,00030%
Rates of Surcharge: –
Sr. No.ParticularsSurcharge
1.Total income >₹ 50 lakhs but ≤ ₹ 1 crore10%
2.Total income >₹ 1 crore but ≤ ₹ 2 crore15%
3.Total income >₹ 2 crore [including dividend income & capital gains taxable u/s 111A, 112 and 112A].15%
4.Total income >₹ 2 crore but ≤ ₹ 5 crore25%
5.Total income >₹ 5 crore 37%
Note:- Marginal relief would be available.

Rebate under section 87A under optional tax regime under normal provisions of the Act.

An individual resident in India whose total income ≤ ₹ 5 lakhs, assessee shall be entitled to a deduction from the amount of income tax.

Least of the following would be rebate –

  1. Amount of income-tax
    • OR
  2. ₹ 12,500

Note:- Rebate under section 87A of the Income-tax Act, 1961 is not available from tax on long term capital gain u/s 112A.

Suggestion:- u/s represents under section.

Health and Education cess @4% on income-tax and surcharge, if applicable.

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