Section 115BAC is introduced to provide an option to individuals or HUFs to pay tax at reduced slab rates subject to foregoing of certain exemptions / deductions and satisfaction of certain conditions.

♠The option shall be exercised for every financial year where the individual or the HUF has no business income and in other cases, the option once exercised shall be valid for that financial year and all subsequent years.

♠The option can be withdrawn by individual / HUF having business income – only where such individual / HUF ceases to have any business income in future years.

Personal Taxation / Income Tax Rates

♠Provision of AMT (Alternate Minimum Tax) shall not be applicable to individual / HUF exercising such concessional tax rate option.

♠The Tax rates, Surcharge, Education cess remains unchanged for those not opting for the concessional tax regime.

NEW TAX SLAB RATES

Sr. No. Income Slabs (Rs.) Proposed Tax Rates (excluding Health and Education Cess)
1. 0 – 2,50,000 NIL
2. 2,50,001 – 5,00,000 5%*
3. 5,00,001 – 7,50,000 10%
4. 7,50,001 – 10,00,000 15%
5. 10,00,001 – 12,50,000 20%
6. 12,50,001 – 15,00,000 25%
7. 15,00,001 & above 30%**

*Before considering rebate under section 87A – If total income of a resident individual does not exceed Rs. 5,00,000/- the amount of rebate will be 100% of Tax or Rs. 12,500/- whichever is less.

**Excluding surcharge as applicable:

10% of income tax where total income exceeds Rs. 50 lakhs.

15% of income tax where total income exceeds Rs. 1 crore.

Health & Education Cess 4% of Income Tax and Surcharge.

Which exemptions and deductions to be forgone: –

♦  Clauses referred in section 10 as follows:

    • 10(5) – Leave travel concession
    • 10(13A) – House rent allowance
    • 10(14) – Special allowance detailed in Rule 2BB (such as children education allowance, hostel allowance, transport allowance, per diem allowance, uniform allowance, etc.)
    • 10(17) – Allowances to MPs/MLAs
    • 10(32) – Allowance for income of minor

♦ Section 10AA – Exemption for SEZ unit

♦ Section 16 – Standard Deduction, deduction for entertainment allowance and employment/ professional tax

♦ Section 24 –Interest in respect of self-occupied or vacant property (loss under the head Income from House Property for rented house shall NOT be allowed to be set off under any other head and would be allowed to be c/f as per extant law)

♦ section 32(1)(iia) – Additional depreciation

♦ sections 32AD – investment in new plant or machinery in notified backward areas.

♦ Section 33AB – Business of Tea Coffee Rubber Manufacturing.

♦ Section 33ABA – Site Restoration Fund – Petroleum or Natural Gas.

♦ Clauses referred in section 35 (ii), 35(iia), 35(iii), 35(1), 35(2AA).(deductions for donation or expenditure on scientific research)

♦ Deduction under section 35AD

♦ Deduction under section 35CCC

♦ Section 57(iia) – Deduction from Family Pension

♦  Deductions of Chapter VI-A

    • 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA,80-IAB, 80-IAC, 80-IB, 80-IBA, Etc.

♦ However deduction under 80CCD(2) – employer contribution on account of employee in notified pension scheme and 80JJAA – for new employment can be claimed.

♦ Without set off of any loss:

    • Carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in para above;
    • under the head Income from House Property with any other head of income;
    • by claiming the depreciation if any and;
    • without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.

Moreover, if you are senior or super senior citizen then you should consider that the benefit of basic slab limit of Rs. 3,00,000/- and Rs. 5,00,000/- respectively will not be applicable. Equality rule shall be applicable for adopting the new regime rates.

Thus, if an individual or HUF fails to satisfy the conditions mentioned in any previousyear, the option to pay tax as per above slab rates shall become invalid in respectof the assessment year relevant to that previous year and other provisions of this Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year.

Author Bio

Qualification: CA in Practice
Company: MORAKHIYA & ASSOCIATES
Location: SURAT, Gujarat, IN
Member Since: 08 Jun 2017 | Total Posts: 10
I, CA Crispee Shah Morakhiya, have completed my CA in 2011 and also completed CS in 2015. Practising as Chartered Accountant only. View Full Profile

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