With 2024 upon us, understanding the revised Indian Income Tax Brackets and how inflation adjustments impact your tax planning is critical for both individuals and businesses. Whether you’re a salaried employee or a high-income earner, the updated tax landscape can significantly influence your financial strategies.
At Taxfiniti, we specialize in providing expert tax advice tailored to your needs, ensuring you make the most of the 2024 tax deductions and rebates. Let’s dive into how you can optimize your tax planning and minimize your liabilities.
1. 2024 Income Tax Slabs: Choosing the Right Tax Regime
For 2024, the Indian government continues to offer two distinct tax regimes: the Old Tax Regime, with its extensive deductions, and the New Tax Regime, which provides lower rates but limits exemptions.
Old Tax Regime (FY 2023-24):
- Nil: Income up to ₹2.5 lakhs
- 5%: Income between ₹2.5 lakhs and ₹5 lakhs
- 20%: Income between ₹5 lakhs and ₹10 lakhs
- 30%: Income above ₹10 lakhs
New Tax Regime (FY 2023-24):
- Nil: Income up to ₹2.5 lakhs
- 5%: Income between ₹2.5 lakhs and ₹5 lakhs
- 10%: Income between ₹5 lakhs and ₹7.5 lakhs
- 15%: Income between ₹7.5 lakhs and ₹10 lakhs
- 20%: Income between ₹10 lakhs and ₹12.5 lakhs
- 25%: Income between ₹12.5 lakhs and ₹15 lakhs
- 30%: Income above ₹15 lakhs
| Tax Slab | Old Regime | New Regime |
| Up to ₹2.5 Lakhs | Nil | Nil |
| ₹2.5L – ₹5L | 5% | 5% |
| ₹5L – ₹7.5L | 20% | 10% |
| ₹7.5L – ₹10L | 20% | 15% |
| ₹10L – ₹12.5L | 30% | 20% |
| ₹12.5L – ₹15L | 30% | 25% |
| ₹15L+ | 30% | 30% |
The New Regime offers simplified tax slabs but eliminates deductions. At Taxfiniti, we help you decide which regime works best for your financial situation.
2. The Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) plays a critical role in ensuring that high-income earners and businesses contribute their fair share of taxes, even after claiming substantial deductions. The AMT ensures that taxpayers pay a minimum amount of tax, preventing overuse of deductions to reduce liabilities.
In 2024, the AMT thresholds have been adjusted to reflect inflation, ensuring that those with higher incomes still contribute fairly. If your income is significantly affected by Section 80C deductions or you regularly claim other exemptions, you may fall under the AMT framework.
At Taxfiniti, we specialize in providing high-net-worth individuals with strategic tax advice, ensuring compliance while maximizing savings within the AMT framework.
3. Inflation Adjustments: Maximize Standard Deductions and Section 80C Investments
Inflation significantly affects your tax planning, as the government adjusts various thresholds to reflect changes in the cost of living. For salaried individuals, the standard deduction is currently set at ₹50,000, but we anticipate potential increases in the upcoming Union Budget.
Moreover, Section 80C allows for deductions up to ₹1.5 lakhs through investments like Public Provident Fund (PPF), National Savings Certificate (NSC), and Equity-Linked Savings Schemes (ELSS). These tax-saving instruments are vital in shielding your income from tax burdens, especially during high-inflation periods.
Our experts at Taxfiniti can help you navigate these deductions, ensuring you invest wisely and secure the maximum benefit.
4. Earned Income Tax Credits and Rebates for Low-Income Families
Although India doesn’t have a direct equivalent to the U.S.’s Earned Income Tax Credit (EITC), the Section 87A rebate provides critical tax relief for individuals with incomes up to ₹5 lakhs. Under this provision, eligible taxpayers can claim a tax rebate that results in zero tax liability, helping alleviate the financial strain for lower-income households.
This rebate is vital for those looking to minimize their tax burden, and Taxfiniti provides personalized tax planning solutions to ensure you fully capitalize on this opportunity.