Section 115BAC of Income Tax Act

Section 115BAC of Income Tax Act
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Section 115BAC of 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.

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).

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 alternate tax regime u/s 115BAC, 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/-.

Conditions for claiming Alternative Tax Regime

Deduction/ Exemptions not available

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 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

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

Due Date on filing income tax return

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) 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

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

Conclusion

It can be established that if an assessee has various deductions u/s 80C, 80D (Mediclaim), Interest on 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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About CA Mehul Gupta 31 Articles
Chartered Accountant in practice, Certified GST Practitioner & Commerce Graduate. He is mainly engaged in the practice of Direct taxes, GST, International taxation, & assurance services. A visiting faculty in the Faridabad Branch of ICAI.

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