Understanding Section 115BAC: The New Tax Regime in India

The Indian government introduced Section 115BAC of the Income Tax Act through the Budget 2020, offering taxpayers an alternative tax regime with lower rates but fewer exemptions and deductions. This new regime aims to simplify the tax system and reduce the compliance burden for individuals and Hindu Undivided Families (HUFs).

Key Features of the New Tax Regime

  • Lower Tax Rates: The new tax regime offers lower tax rates compared to the old regime. The tax slabs and rates for FY 2023-24 (AY 2024-25) are as follows:
Income Slab Tax Rate
Up to Rs. 3 lakh Nil
Rs. 3 lakh to Rs. 6 lakh 5%
Rs. 6 lakh to Rs. 9 lakh 10%
Rs. 9 lakh to Rs. 12 lakh 15%
Rs. 12 lakh to Rs. 15 lakh 20%
Income above Rs. 15 lak

What is New Tax regime 2023 Section 115BAC under income tax | what is New Tax Regime


What is the new regime under section 115BAC?

Eligible taxpayers can also only opt to pay tax under the new tax regime u/s 115BAC if the calculation for their declared taxable income for the financial year is done without including the following exemptions and deductions: All deductions under Chapter VI-A, except those u/s 80CCD and 80JJAA.

What happens if we opt for new tax regime?

New Tax Regime: Offers lower tax rates but eliminates most deductions and exemptions. Old Tax Regime: Imposes higher tax rates but allows various deductions and exemptions.

Which exemptions are not allowed in the new tax regime?

Deductions such as those under Sections 80C, 80D, 80E, interest on home loans (Section 24b), leave travel concession, house rent allowance, standard deduction, deduction for entertainment allowance, SEZ unit exemption, and various other deductions under Sections 32AD, 33AB, 33ABA, 35AD, and 35CCC are not permitted …

Can we claim 80C deduction in new tax regime?

It is important to note that the new tax regime does not allow deduction under Section 80C of the Income-tax Act. The finance minister has not made any change in Section 80C limit in the interim Budget 2024 budget speech.

Leave a Comment