Archive / Investment Adviser (Level 2) / Concepts in Taxation

nism-series-xb-new-tax-regime-slabs-section-115bac[ INVESTMENT ADVISER (LEVEL 2) ]

Under the revised New Tax Regime (Section 115BAC as amended by Finance Act 2024), what are the statutory income tax slabs for resident individuals?

[ A ]₹0 to ₹5 Lakhs: 10% | Above ₹5 Lakhs: 50%.

[ B ]Flat 30% on all income from Rupee 1.

[ C ]Zero tax on all income up to ₹1 Crore.

Takeaway

The correct answer is D: the revised new tax regime under Section 115BAC (Finance Act 2024) taxes income Nil up to ₹3L, 5% on ₹3-7L, 10% on ₹7-10L, 15% on ₹10-12L, 20% on ₹12-15L, and 30% above ₹15L.

Derivation

Budget 2024 widened several of the new-regime slabs to leave more disposable income at the middle-income level compared to the regime's earlier version: the 5% slab remained ₹3-7L, but the 10% slab was widened to ₹7-10L and a new 15% slab was created for ₹10-12L, before 20% and 30% apply above that. Combined with a standard deduction (₹75,000 for salaried taxpayers under the new regime), this reduces effective tax at the lower-middle income bands relative to the pre-2024 slab structure. The exam checks whether candidates have updated their slab knowledge to the current Finance Act rather than reciting the older 2023 structure.

Why the others fail

A — ₹0 to ₹5 Lakhs: 10% | Above ₹5 Lakhs: 50%.

Fabricated slabs; no such 10%/50% two-tier structure exists under Section 115BAC -- the actual regime has six graduated slabs from Nil to 30%.

B — Flat 30% on all income from Rupee 1.

Contradicts the entire concept of progressive taxation embedded in Section 115BAC, which starts at Nil and rises gradually to 30%, not a flat 30%.

C — Zero tax on all income up to ₹1 Crore.

False; the new regime taxes income above ₹3 lakh progressively -- there is no blanket exemption up to ₹1 crore.