Section 115BAC of Income Tax Act

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Last updated on September 13th, 2023 at 09:04 pm

Section 115BAC of the Income Tax Act

What are the tax rates under the alternate tax regime?| Tax Rates u/s 115BAC

Total Income	Rate of Tax
Up to Rs. 2,50,000	Nil
From Rs. 2,50,001 to Rs. 5,00,000	5%
From Rs. 5,00,001 to Rs. 7,50,000	10%
From Rs. 7,50,001 to Rs. 10,00,000	15%
From Rs. 10,00,001 to Rs. 12,50,000	20%
From Rs. 12,50,001 to Rs. 15,00,000	25%
Above Rs. 15,00,000	30%

Note: Surcharge and education cess shall be applicable as per the prevailing rates.

Note: The benefit of rebate u/s 87A is claimable if a resident individual opts for the above new tax regime.

Note: To avail of the benefit of concessional tax rates as prescribed under section 115BAC one must file Form 10IE. (All you need to know about Form 10-IE)

Who can opt for the new/alternate tax regime?

The alternative tax regime is available to only individuals and HUF from FY 20-21(AY 21-22) and onwards.

Can NRI opt for the new/alternate tax regime?

YES. The alternative tax regime is available to individuals irrespective of their residential status.

What is the exemption limit for senior citizens or super senior citizens u/s 115BAC?

In the alternate tax regime u/s 115BAC, the exemption limit of Rs. 2,50,000/- will remain the same for all individuals irrespective of age.

Can a rebate be claimed if the taxpayer opts for an alternate tax regime? |Applicability of rebate if the taxpayer opts for the new tax regime.

Rebate u/s 87A will be available if the individual is a resident and the taxable income does not exceed Rs. 5,00,000/-, then the rebate shall be lower of tax liability or Rs. 12,500/-. Click here to read FAQs on rebate

Conditions for Claiming Alternative Tax Regime

Which deductions & exemptions are not available if you opt for the new tax regime?

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Section	Deduction/Exemption
Sec 10(5)	Leave Encashment
Sec 10(13A)	House rent allowance
Sec 10(14)	Special Allowances
Sec 10(17)	Allowance to MPs/ MLAs
Sec 10(32)	Rs. 1,500/- for clubbing of income of the minor child
Sec 10AA	Special Economic Zone
Sec 16(ia)	Standard Deduction of Rs. 50,000/-
Sec 16(ii)	Entertainment allowance
Sec 16(iii)	Professional Tax deduction
Sec 24(b)	Interest on Home Loan (Self-occupied house)
Sec 32(1)(iia)	Additional Depreciation
Sec 32AD	Investment allowance in Backward Areas
Sec 33AB	Tea/ Rubber/ Coffee development account
Sec 33ABA	Site restoration fund
Sec 35	Deduction of Scientific research
Sec 35CCC	Agriculture extension project
Sec 57(iia)	Standard deduction in respect of Family pension
Sec 80C to 80U	Deductions under Chapter VI-A except NPS u/s 80CCD(2), 80JJAA

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Note: This is an exhaustive list of exemptions/deductions which cannot be availed. All other exemptions will be available.

Check the latest updated Income Tax Compliance Calendar

Adjustment of Brought Forward and Current Year Losses

Brought forward loss (incl. additional depreciation) shall not be allowed to be brought forward.
Also, the loss from house property shall not be allowed to be set off from any other head of income.

Alternative Minimum Tax (AMT) is not applicable

AMT u/s 115JC shall not be applicable.
Also, the AMT credit cannot be adjusted with the tax liability computed u/s 115BAC.

Option to exercise in Form 10-IE ( Check details required for Form 10-IE)

If the assessee does not have income from business or profession then he has an option to select between the alternate tax regime or the old tax regime every year.

But if the assessee has income from business or profession and if he exercises the option of alternate tax regime u/s 115BAC, then he has the option to return to the normal regime only once, and then that normal regime shall be continued for all subsequent years.

Author’s Note

It can be established that if an assessee has various deductions u/s 80C, 80D (Mediclaim), Interest on a Home Loan, etc. then he would benefit from the Old tax regime. But if someone does not want to make an investment and requires more in-hand money then the assessee can opt for the Alternative Tax regime.

One must calculate the tax under both regimes so that no confusion arises at the time of filing of ITR.

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Disclaimer: The above content is for general info purpose only and does not constitute professional advice. The author/ website will not be liable for any inaccurate / incomplete information and any reliance you place on the content is strictly at your risk.

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