income tax
Income Tax Rates Overview for AY 2024-25 and 2025-26
Income Tax Rates for Assessment Year 2024-25 and 2025-26
The income tax rates for the assessment year (AY) 2024-25 remain unchanged compared to the prior year. Tax rates apply to various categories of taxpayers, with specific rates outlined under different sections of the Income Tax Act.
Income Tax Rates for AY 2024-25
Under section 115BAC, the following progressive tax rates apply to individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs), Bodies of Individuals (BOIs), and artificial juridical persons:
- Income up to ₹3,00,000: Nil
- Income from ₹3,00,001 to ₹6,00,000: 5%
- Income from ₹6,00,001 to ₹9,00,000: 10%
- Income from ₹9,00,001 to ₹12,00,000: 15%
- Income from ₹12,00,001 to ₹15,00,000: 20%
- Income above ₹15,00,000: 30%
Additional surcharge rates are applicable based on income slabs, ranging from 10% to 25%.
Overview of Tax Rates
Domestic Companies
- Sections 115BAA and 115BAB outline tax rates for domestic companies.
- For cooperative societies, sections 115BAD and 115BAE specify applicable tax rates.
- Part I of the First Schedule details rates for various entities including individuals, HUFs, and companies.
Health and Education Cess
The health and education cess is applicable at a rate of 4% on the income tax computed.
Income Tax Rates for AY 2025-26
For AY 2025-26, new tax rates are introduced for individual and HUF incomes under section 115BAC (New Tax Regime). The revised rates are as follows:
- Income up to ₹3,00,000: Nil
- Income from ₹3,00,001 to ₹7,00,000: 5%
- Income from ₹7,00,001 to ₹10,00,000: 10%
- Income from ₹10,00,001 to ₹12,00,000: 15%
- Income from ₹12,00,001 to ₹15,00,000: 20%
- Income above ₹15,00,000: 30%
These rates will be effective for the financial year commencing on or after April 1, 2025.
Marginal Relief
Marginal relief provisions will be in place for taxpayers experiencing surcharge implications in higher income brackets.
Detailed Tax Rates Under Section 115BAC for AY 2024-25
- Tax rates for the specified income categories:
| Total Income (Rs) | Rate |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 to 6,00,000 | 5% |
| 6,00,001 to 9,00,000 | 10% |
| 9,00,001 to 12,00,000 | 15% |
| 12,00,001 to 15,00,000 | 20% |
| Above 15,00,000 | 30% |
- Rates of Surcharge:
- A surcharge will apply based on total income, with specific rates for various income ceilings; for instance, a surcharge of:
- 10% for total income between ₹50 lakh and ₹1 crore.
- 15% for total income between ₹1 crore and ₹2 crore.
- 25% for total income above ₹2 crore.
- A surcharge will apply based on total income, with specific rates for various income ceilings; for instance, a surcharge of:
Marginal relief will be available where the surcharge is imposed.
Tax Rates for Other Entities
- Cooperative Societies: Income tax remains at 10% for up to ₹10,000, 20% for income between ₹10,001 and ₹20,000, and 30% for income exceeding ₹20,000.
- Firms, Local Authorities, and Companies: The tax rate remains at 30% for firms and local authorities; for domestic companies, the income tax rate is 25% if their turnover does not exceed ₹400 crore, otherwise 30% applies.
Surcharge and Cess Implications
A surcharge, if applicable, will follow existing rates, and the Health and Education Cess will continue to be levied at 4% of the calculated tax amount, including any surcharges.
Conclusion
This overview highlights the tax structure for AY 2024-25 and the proposed changes for AY 2025-26, outlining progressive rates, cess, and provisions for marginal relief applicable to various categories of taxpayers. The financial framework aims to maintain clarity in the tax obligations of individuals and entities, ensuring compliance with the Income Tax Act provisions.