According to the section 115BAC of income tax act , it is an alternate option available to an individual or huf. This scheme is known as new tax regime.
Further, similar to section 115BAA and 115BAB in the act giving an option to domestic companies to opt for concessional rate provided they do not claim certain specified exemptions and deductions. Now similar option binge extended to an Individual/Huf.
What is section 115BAC of income tax ??
Section 115BAC is a new tax regime . The budget 2020 introduced new tax regime under section 115BAC.
Further, this section gives an Individual/Huf option to pay income tax at lower rate. Under section 115BAC of income tax act total income is calculated as per the rate prescribed under the new tax regime 2023.
Who is eligible for section 115BAC of income tax act??
An individual/Huf can claim benefit of this section and they can compute tax as per the slab rates prescribed under new tax regime 2023.
In brief,an individual/Huf is eligible for this section.
What are the exemption and deductions are not available under section 115BAC of income tax act??
Individual/Huf cannot claim following exemptions and deductions under section 115BAC of the income tax act.
- Income is computed without exemptions and deductions
- no deductions under chapter via except 80JJAA and 80CCD(2)
- Leave travel concession under section 10(5) of the income tax act
- section 24(b) interest on housing loan on self occupied or vacant property
- Section 10/10AA/16 and other allowance u/s 10(14)
- Minor child income allowance
- Child eduction allowance
- standard deduction u/s 80TTA/80TTB
- Profession tax and entertainment allowance u/s 16
- Employees contribution to national pension scheme.
- Donation to political party /trust
- Deduction family Pension income upto fy 2022-23. As per latest budget 2023 this deduction will be available from financial year 2023-24.
- Standard deduction of Rs. 50,000 from gross salary only for year upto 2022-23. But As per latest budget 2023 this deduction will be available from financial year 2023-24.
What are the exemption and deductions are available under section 115BAC of income tax act??
However many of the exemptions and deductions are not available under new tax regime but some exemptions or deductions are available are as under:
- Transport Allowance.
- Conveyance allowance received to meet expenses incurred as a part of employment
- Any compensation received to meet cost of travel on tour or transfer.
- Perquisite for official purpose
- Interest on home loan to let out property
- Gift up to Rs. 5,000
- Employers contribution to National pension scheme.
- Deduction for additional employee cost u/s 80JJA
- Budget 2023 introduced standard deduction of Rs. 50,000 from gross salary under new tax regime applicable from 1st april 2023.
- Again Budget 2023 introduced deduction u/s 57(iia) of family pension income.
- Budget 2023 introduced deduction of amount paid or deposited in Agniveer Corpus Fund u/s 80CCH(2) of income tax act.
How to opt new tax regime scheme under section 115BAC of income tax act??
Taxpayer has to furnish form 10IE to the income tax department before filing income tax return if taxpayer intends to opt this scheme.
What are the slab rates under new tax regime for financial year 2022-23 and 2023-24 ??
Any person earning income in financial year 2022-23 (i.e. from 1st April, 2022 to 31st March, 2023) and planning to opt new tax regime will have to calculate income tax on the basis of below mentioned income tax slabs:
| Income slab | Tax rate |
| 0 to 2,50,000 | Nil |
| 2,50,001 to 5,00,000 | 5% |
| 5,00,001 to 7,50,000 | 10% |
| 7,50,001 to 10,00,000 | 15% |
| 10,00,001 to 12,50,000 | 20% |
| 12,50,001 to 15,00,000 | 25% |
| Above 15,00,000 | 30% |
As compared to old tax regime , the new tax regime provide lower tax liability but many deductions are not allowed which were allowed under old regime.
new income tax slabs for FY 2023-24 (AY 2024-25)
| Income slab | Tax rate |
| From 0 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% |
Is house property loss is eligible for deduction under new tax regime??
Here are the two cases where loss may occurs under house property head.
| In case of self occupied property | In case of let out property |
|---|---|
| You cannot claim deduction of interest on housing loan under new tax regime. | You can claim interest paid for housing loan . |
| You cannot set off house property loss against salary income. | However , under section 115BAC you cannot set off loss arising from HP due to excess interest paid over rent income and also cannot carry forward this loss in future. |
What are the deductions and losses not allowed under new tax regime??
Following deductions are not allowed under new tax regime:
Additional depreciation, Capital Expenditure U/S 35AD, Expenditure for scientific research u/s 35,Investment allowance u/s 32AD, Deductions u/s 33AB and 35ABA, and Exemption u/s 10AA etc.
Unabsorbed losses and depreciation under section 115BAC
unabsorbed losses and depreciation cannot not be set off against business income under this regime.
Conclusions:
- Section 115BAC is called new tax regime.
- This section is applicable to an Individual/Huf.
- Assessee have option to choose new tax regime. It means he/she can opt old tax regime.
- New tax regime lowers the tax liability of an assessee
- Many of the deductions and exemptions will not be available under new tax regime.
You can refer: https://taxandfinanceguide.com/income-tax-slab-rates-new-tax-regime-fy-2023-24/ and https://taxandfinanceguide.com/income-tax-slab-rate-old-new-tax-regime-f-y-2022-23/
