Introduction: Section 115BAC offers taxpayers an alternative tax regime with certain conditions. However, opting for this regime comes with implications, especially in terms of exemptions and deductions across different heads of income. In this article, we delve into the details of how not claiming benefits under Section 115BAC impacts various aspects of a taxpayer’s financial profile.
Assessee does not claim benefits of exemption and deduction under Section 115BAC
If Assessee pay tax as per 115BAC then various benefits of exemptions and deduction are not available for Assessee under the different Heads of income.
These benefits is not available for the assessee Under the Head of Salary
- HRA under Section 10(13A)
- Leave travel concession u/s 10(5).
- Entertainment Allowance and Professional tax u/s 16(iii) and 16(ii)
- Allowances exemption u/s 10(14).
Except-
a) commutation Allowance for Divyang employee (RS3200p.m).
b) Travelling on Tour Allowance.
c) Daily Allowance.
d) Conveyance Allowance.
These benefits is not available under the Head of House property
a) Interest u/s 24 (b) for Self- Occupied Property
b) Losses from LOP/DLOP (Let out property/Deemed to be let out property) not allowed to set off against any other head of income.
These benefits is not available for Assessee under the Head of Profit and Gain in Business or Profession
a) Additional Depreciation u/s 32(1)(iia)
b) Section 35(1)(ii)/(iii)/(iia) & 35 (2AA) [Donation for Scientific Research]
c) Section 35AD (Specified Business).
These benefits is not available for Assessee under the Head of income from other sources
a) Exemption for Income of minor u/s 10(32)
b) Exemption for Allowance of MP/MLA/ MLC u/s 10 (17)
These deduction is not available for the assessee.
a) Deduction u/c VI-A except 80CCD(2), 80CCH(2) & 80JJAA
b) U/S 10 AA (SEZ)
NOTE:
1) Assessee cannot setoff any brought Forward depreciation (unabsorbed depreciation) or brought forward losses if such loss and depreciation is attributable to above deduction and depreciation.
2) If assessee is having Business and he is opting 115 BAC in Py 23-24. Then any additional depreciation in unabsorbed depreciation is not allowed to set off but it will be added to opening WDV as an 1/04/2023.
Example: Unabsorbed depreciation of Mr. Ram is Rs 6,00,000 (It includes Rs 2,00,000 due to additional depreciation). In this case, Rs 2,00,000 is not allowed to set off but it will be added to opening WDV of Block as on 01/04/2023 if Assessee opted 115BAC for PY 23-24.
3) IF 115BAC applicable then AMT not apply Brought Forward AMT Credit connot be setoff against income under Section 115BAC It means credit shall be lapsed.
4) Ser 115BAC is default tax regime, however Assessee can avail the benefit of regular/normal tax regime by exercising the option
a) Assessee does not have PGBP- Option of Regular tax regime must be exercised along with income tax return u/s 139 (1) for every PY,
b) Assessee having PGBP-
Option of Regular Tax regime must be exercised along with Income Tax Return u/s 139 (1), such option once exercised shall apply for subsequent years AY also. However, the options once exercised for regular tax regime can be withdraw only once for PY and thereafter the person shall never be eligible for the benefit of regular tax regime till the time having any income under PGBP.
Conclusion: Choosing Section 115BAC for tax computation provides a simplified alternative, but it comes with trade-offs in terms of exemptions and deductions. Taxpayers must carefully evaluate their financial situations and consider the long-term implications before opting for this regime. Understanding the nuances ensures informed decision-making and compliance with the applicable tax regulations.
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