{"id":7141,"date":"2022-02-22T18:09:58","date_gmt":"2022-02-22T12:39:58","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=7141"},"modified":"2022-05-24T10:26:23","modified_gmt":"2022-05-24T04:56:23","slug":"section-115bac-of-income-tax-act","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/","title":{"rendered":"Section 115BAC of New Income Tax Regime: Meaning, Features and Slab Rates"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Understanding-Section-115BAC-Of-Income-Tax-Act\" title=\"Understanding Section 115BAC Of Income Tax Act\">Understanding Section 115BAC Of Income Tax Act<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#What-is-Section-115BAC-of-the-Income-Tax-Act\" title=\"What is Section 115BAC of the Income Tax Act?\">What is Section 115BAC of the Income Tax Act?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Existing-vs-new-tax-regime\" title=\"Existing vs new tax regime\">Existing vs new tax regime<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemptions-and-deductions-not-claimable-under-Section-115BAC\" title=\"Exemptions and deductions not claimable under Section 115BAC\">Exemptions and deductions not claimable under Section 115BAC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemptions-and-deductions-available-under-Section-115BAC\" title=\"Exemptions and deductions available under Section 115BAC\">Exemptions and deductions available under Section 115BAC<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemption-on-EPF-interest\" title=\"Exemption on EPF interest:\">Exemption on EPF interest:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemption-on-gratuity\" title=\"Exemption on gratuity:\">Exemption on gratuity:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Deduction-on-employers-contribution-to-NPSEPF-account\" title=\"Deduction on employer\u2019s contribution to NPS\/EPF account: \">Deduction on employer\u2019s contribution to NPS\/EPF account: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemption-on-post-office-savings-account-interest\" title=\"Exemption on post office savings account interest: \">Exemption on post office savings account interest: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemption-on-NPS-maturity-amount\" title=\"Exemption on NPS maturity amount: \">Exemption on NPS maturity amount: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemption-on-Sukanya-Samriddhi-Yojana-and-PPF-account-interest-and-maturity-amount\" title=\"Exemption on Sukanya Samriddhi Yojana and PPF account interest and maturity amount:\">Exemption on Sukanya Samriddhi Yojana and PPF account interest and maturity amount:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Exemption-on-Life-Insurance-maturity-amount\" title=\"Exemption on Life Insurance maturity amount:\">Exemption on Life Insurance maturity amount:<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Some-other-deductionsexemptions\" title=\"Some other deductions\/exemptions:\">Some other deductions\/exemptions:<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Opting-for-the-new-tax-regime\" title=\"Opting for the new tax regime\">Opting for the new tax regime<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#If-your-income-is-not-from-businessprofessional\" title=\"If your income is not from business\/professional&nbsp;\">If your income is not from business\/professional&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#If-your-income-includes-businessprofessional-income\" title=\"If your income includes business\/professional income\">If your income includes business\/professional income<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.tickertape.in\/blog\/section-115bac-of-income-tax-act\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding-Section-115BAC-Of-Income-Tax-Act\"><\/span>Understanding Section 115BAC Of Income Tax Act<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-income-tax\/?utm_source=blog&amp;utm_medium=article\">Income Tax<\/a> Act, 1961 is the statute guiding the levy, collection, and administration of <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-income-tax\/\">income tax<\/a> in India. It contains several sections dealing with taxation, including the tax regimes that define the tax slabs and rates.&nbsp;<\/p>\n\n\n\n<p id=\"income\">During the 2020 Union Budget, the Finance Minister announced a new tax regime under Section 115BAC of the Income Tax Act. However, taxpayers can choose between the existing and new tax regimes. But it\u2019s worthwhile to see what the new tax regime offers compared to the existing one.&nbsp;<\/p>\n\n\n\n<p>So, let\u2019s explore Section 115BAC in detail.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"115bac\"><span class=\"ez-toc-section\" id=\"What-is-Section-115BAC-of-the-Income-Tax-Act\"><\/span><strong>What is Section 115BAC of the Income Tax Act?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Section 115BAC is an addition to the Income Tax Act, effective from FY 2020 &#8211; 2021. This section allows you to opt for a new tax regime with revised tax slabs and rates. It is applicable for HUFs and individuals, both residents and non-residents. Although the new tax regime introduces lower tax rates, it has fewer exemptions and deductions than the existing one.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"regime\"><span class=\"ez-toc-section\" id=\"Existing-vs-new-tax-regime\"><\/span><strong>Existing vs new tax regime<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>While the new tax regime allows you to pay lower tax rates, it foregoes several allowances and deductions. On the contrary, you can claim more <a href=\"https:\/\/www.tickertape.in\/blog\/important-tax-exemptions-for-salaried-individuals\/?utm_source=blog&amp;utm_medium=article\">exemptions <\/a>and <a href=\"https:\/\/www.tickertape.in\/blog\/section-80d-of-income-tax\/?utm_source=blog&amp;utm_medium=article\">deductions<\/a> if you go for the existing tax regime.&nbsp;<\/p>\n\n\n\n<p>Since you can opt for either of the tax regimes, it is imperative to make a comparative study of both. The table below compares the income tax slabs and rates under the existing and new tax regimes:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><br><strong>Existing tax regime<\/strong><\/td><td><br><strong>New tax regime<\/strong><\/td><\/tr><tr><td>Income Slab<\/td><td>Tax Rate<\/td><td>Income Slab<\/td><td>Tax Rate<\/td><\/tr><tr><td>Rs. 2.5 lakh &#8211; Rs. 5 lakh<\/td><td>5%<\/td><td>Rs. 2.5 lakh &#8211; Rs. 5 lakh<\/td><td>5%<\/td><\/tr><tr><td>Rs. 5 lakh &#8211; Rs. 10 lakh<\/td><td>20%<\/td><td>Rs. 5 lakh &#8211; Rs. 7.5 lakh<\/td><td>10%<\/td><\/tr><tr><td>Above Rs. 10 lakh<\/td><td>30%<\/td><td>Rs. 7.5 lakh &#8211; Rs. 10 lakh<\/td><td>15%<\/td><\/tr><tr><td><\/td><td>Rs. 10 lakh- Rs. 12.5 lakh<\/td><td>20%<\/td><\/tr><tr><td>Rs. 12.5 lakh &#8211; Rs. 15 lakh<\/td><td>25%<\/td><\/tr><tr><td>Above Rs. 15 lakh<\/td><td>30%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"exemptions\"><span class=\"ez-toc-section\" id=\"Exemptions-and-deductions-not-claimable-under-Section-115BAC\"><\/span><strong>Exemptions and deductions not claimable under Section 115BAC<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per Section 115BAC, the new tax regime has done away with 70 exemptions and deductions. The rationale behind it is to simplify the tax rate regime, administration of tax laws, and compliance by taxpayers.&nbsp;<\/p>\n\n\n\n<p>Here\u2019s a list of some of the major exemptions and deductions that the new tax regime does not permit:<\/p>\n\n\n\n<ul><li>House rent allowance&nbsp;<\/li><li>Leave <a href=\"https:\/\/www.tickertape.in\/blog\/effective-money-saving-travel-hacks\/\">travel<\/a> allowance&nbsp;<\/li><li>Interest income under Section 80TTA<\/li><li>Income for senior citizens under Section 80TTB<\/li><li>Investments under Section 80C<\/li><li>Cost of medical expenses of self or dependent<\/li><li>Children education allowance<\/li><li>Housing loan interest payments<\/li><li>Education loan interest<\/li><li>Donations under <a href=\"https:\/\/www.tickertape.in\/blog\/learn-about-80g-income-tax\/\">Section 80G<\/a><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"deductions\"><span class=\"ez-toc-section\" id=\"Exemptions-and-deductions-available-under-Section-115BAC\"><\/span><strong>Exemptions and deductions available under Section 115BAC<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Although the new<a href=\"https:\/\/www.tickertape.in\/blog\/how-to-save-income-tax-in-india\/?utm_source=blog&amp;utm_medium=article\"> tax <\/a>regime has done away with key exemptions and deductions, it does permit some exemptions that can benefit you. Given below is a list of some of the important exemptions and deductions available under Section 115BAC:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption-on-EPF-interest\"><\/span><strong>Exemption on EPF interest:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong> <\/strong>You can avail tax exemption benefits if the interest you earn in a year through the<a href=\"https:\/\/www.tickertape.in\/blog\/interest-on-pf\/?utm_source=blog&amp;utm_medium=article\"> EPF scheme<\/a> doesn\u2019t exceed 9.5%.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption-on-gratuity\"><\/span><strong>Exemption on gratuity:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong> <\/strong>If you\u2019re a government employee receiving a gratuity, there is no limit up to which you can claim tax exemption benefits. However, the limit is Rs. 20 lakh for non-government employees.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deduction-on-employers-contribution-to-NPSEPF-account\"><\/span><strong>Deduction on employer\u2019s contribution to NPS\/EPF account: <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Your employer\u2019s contribution towards your <a href=\"https:\/\/www.tickertape.in\/blog\/is-nps-good\/?utm_source=blog&amp;utm_medium=article\">NPS<\/a>, <a href=\"https:\/\/www.tickertape.in\/blog\/interest-on-pf\/?utm_source=blog&amp;utm_medium=article\">EPF<\/a>, and superannuation account is liable for exemption up to Rs. 7.5 lakh.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption-on-post-office-savings-account-interest\"><\/span><strong>Exemption on post office savings account interest: <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The new tax structure lets you avail a certain exemption on the interest from post office savings account. However, the same is not available on the interest you earn from bank savings accounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption-on-NPS-maturity-amount\"><\/span><strong>Exemption on NPS maturity amount: <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In the new tax regime, you can withdraw up to 60% of your <a href=\"https:\/\/www.tickertape.in\/blog\/is-nps-good\/\">NPS<\/a> (National Pension Scheme) corpus which will be tax-exempt on maturity. However, you have to compulsorily use the remaining 40% maturity amount to buy annuity plans. Any partial withdrawal is also tax-free.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption-on-Sukanya-Samriddhi-Yojana-and-PPF-account-interest-and-maturity-amount\"><\/span><strong>Exemption on Sukanya Samriddhi Yojana and PPF account interest and maturity amount:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong> <\/strong>The maturity amount and the interest from<a href=\"https:\/\/www.tickertape.in\/blog\/ppf-vs-mutual-fund\/?utm_source=blog&amp;utm_medium=article\"> PPF <\/a>and Sukanya Samriddhi account are eligible for exemption under the new tax regime.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Exemption-on-Life-Insurance-maturity-amount\"><\/span><strong>Exemption on Life Insurance maturity amount:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong> <\/strong>Under the new tax structure, the maturity amount you receive from a life insurance company is eligible for tax exemption.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Some-other-deductionsexemptions\"><\/span><strong>Some other deductions\/exemptions:<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ul><li>Daily allowance when working out of office<\/li><li>Additional employee cost<\/li><li>Conveyance allowance for office duties<\/li><li>Transport allowance for differently-abled employees<\/li><li>Allowance to meet tour\/travel\/transfer cost<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"opting\"><span class=\"ez-toc-section\" id=\"Opting-for-the-new-tax-regime\"><\/span><strong>Opting for the new tax regime<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An individual or HUF can switch to the new tax regime either on a y-o-y basis or only once. However, the choice to switch depends on the sources of income in a given financial year.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"If-your-income-is-not-from-businessprofessional\"><\/span><strong>If your income is not from business\/professional&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>You can opt for the new tax regime on a y-o-y basis if your income is not from a business\/profession. If you are a salaried employee, you can choose a tax regime at the beginning of the year. But make sure to inform your employer of the same since they have to withhold tax before paying your salary. However, you can still change the tax regime while filing your income tax return.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"If-your-income-includes-businessprofessional-income\"><\/span><strong>If your income includes business\/professional income<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If your income is from a business\/profession, the new tax rates you choose for a financial year apply for subsequent years. However, you get only once in a lifetime chance to switch to the old tax regime. The option to switch is available unless you stop earning from a business\/professional source of income.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If you\u2019re wondering which tax regime you should go for, you\u2019re not alone. The debate around which tax regime is better is endless since the source of income and eligible deductions differ with individuals. Nevertheless, understanding section 115BAC is helpful since it will help you determine if the new tax regime is in your favour. However, do reach out to your tax advisor\/CA for professional advice on taxes.<\/p>\n","protected":false},"excerpt":{"rendered":"<p> Want to know what is section 115 BAC of income tax act? Here&#8217;s a simple explanation on what it means and how it is different from the old regime. Click here to know more!<\/p>\n","protected":false},"author":45,"featured_media":7170,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[8,1741],"tags":[1351],"acf":[],"modified_by":null,"jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2022\/02\/08-1.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7141"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/45"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=7141"}],"version-history":[{"count":19,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7141\/revisions"}],"predecessor-version":[{"id":8504,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/7141\/revisions\/8504"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/7170"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=7141"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=7141"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=7141"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}