Brief of New Section 115BAC of Income Tax Act: New Income Tax Slab for the FY 20-21
A New section 115BAC of the Income-Tax Act, has been inserted with effect from the 1st day of April 2021 i.e. AY 2021-22. This section will provide the new and lower-income tax slab rates for the individual and HUF if the Individual or HUF shall satisfy a certain condition. An individual and HUF from the AY 2021-20 onwards have an option to pay tax at the rates mentioned below;
|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 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%|
This option shall be available if the Individual or HUF fulfill the following conditions:
(1) The Assessee shall not avail exemptions or deductions as prescribed below:-
|10||5||Leave Travel concession|
|10||13A||House rent allowance|
|10||17||Allowance to MPs/MLAs|
|10AA||Exemption for Sez|
|16||Deductions form Salaries|
|24||Interest in respect of the self-occupied or vacant property|
|57||Iia||Deduction from family pension|
|32AD||Investment in new plant or machinery in notified backward areas in certain states|
|32AB||Tea development account|
|33ABA||Site restoration fund|
|35(1)||(ii) (iia) (iii)||Expenditure on Scientific Research|
|35 (2AA)||Expenditure on Scientific Research|
|35AD||Deduction in respect of expenditure on specified business|
|35CCC||Expenditure on Agricultural extension project|
|57||Iia||Deduction of family pension|
Further, the assessee shall not claim any deduction as specified under Chapter VI-A of the Income-tax Act. However, Assessee can claim deduction under section 80CCD(2) and 80JJAA of the chapter VIA.
(2) The assessee will not be entitled to set off any loss under the head “Income from the House Property” or carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deduction referred to in clause (1);
(3) The assessee shall claim the depreciation if any, under any provision of section 32, except clause (iia) of sub-section (1) of Section 32, determined in such manner as may be prescribed; and
(4) The assessee will not be able to take any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.
Manner of exercising of the Option
(a) In the case of the Individual or HUF having no business income, the new tax regime is optional and can be exercised in any of the assessment years before filing return of income.
(b) In case assessee having a business income, the option shall be exercised before the due date specified under section 139(1) of the act. The option once exercised cannot be withdrawn in subsequent assessment years.
Further, it should be noted that provision relating to AMT is not applicable to individual/HUF having a business income.
In case conditions as mentioned above are not satisfied by the assessee having business income then this option will become invalid and never available to such assesse unless the person ceases to have business income. If the conditions overruled by the assessee having no business income then the option becomes invalid only for the previous year in which conditions not complied with.