Income-tax on Individuals / HUF / AOP / BOI or Artificial Judicial Persons for the financial year 2024-25, relevant to the assessment year 2025-26.
(as amended by Finance Act, 2024 – No. 2)
A. Optional Tax Regime (also known as Old Tax Scheme)
Under the Income Tax law of India, every income earned during the financial year by any person is chargeable to income tax in the assessment year as per the provisions given under section 4 of the Income-tax Act, 1961. The rates at which tax is to be charged on such income are prescribed in the Income-tax Act or the Finance Acts presented annually in the budget by the Government of India.
Currently, the Finance Act, 2024 (No. 2) outlines two tax schemes for computing tax on the total income (i.e. taxable income) earned by Individuals / HUF / AOP / BOI or Artificial Judicial Persons during the financial year 2024-25, relevant to the assessment year 2025-26. The choice to opt for the most beneficial scheme among these two tax schemes undoubtedly rests with the taxpayer himself. Both the tax schemes are outlined below for an easy comparison.
A. Optional Tax Regime (also known as Old Tax Scheme)
As the name of the scheme itself suggests, you have to select the option in ITR form for this regime and the person who opts for this scheme has to pay tax in respect of the total income (other than income chargeable to tax at special rates such as section 111A, 112, 112A, 115BB, 115BBJ etc.) at the following rates as specified in the Finance Act, 2024 (No.2);
| Sr No | Total Income | Rate of tax |
| 1 | Upto ₹2,50,000 | Nil |
| 2 | From ₹2,50,000 to ₹5,00,000 | 5% |
| 3 | From ₹5,00,000 to ₹10,00,000 | 20% |
| 4 | Above ₹10,00,000 | 30% |
Note: The tax amount as calculated above shall be increased by Health & Education Cess at the rate of 4% of such tax.
However, the basic exemption limit (i.e. initial income slab where the tax rate is NIL) is ₹3,00,000 for senior citizens, being 60 or more but less than 80 years of age, and ₹5,00,000 for super senior citizens, being 80 or more years of age.
It is pertinent to mention that if any individual taxpayer, being resident in India, has a total taxable income of ₹5,00,000 or less during the financial year 2024-25, then the taxpayer does not have to pay any taxes thereon. Here, section 87A of the Act provides a rebate of tax up to a maximum of ₹12,500.
B. Default Tax Regime (also known as New Tax Scheme)
To understand the default tax regime and a detailed comparison between both tax regimes, refer here!