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:-

Section Clause Name
10 5 Leave Travel concession
10 13A House rent allowance
10 14 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
32(1) Iia Additional Depreciation
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.

Author Bio

Name: Julie
Qualification: CA in Practice
Company: Rajesh Raj Gupta and Associates
Location: Faridabad, Haryana, IN
Member Since: 05 Apr 2019 | Total Posts: 3

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    What above Perquisite Benefit getting Earlier like – Car Lease, Driver or Car Maintenance Expenses .
    Earlier it was Tax to pay 32400/ PA , What above new Provisions

  2. Keshav Kumar says:

    How can an assesse who will for new tax regime can claim depreciation??? As the section specifically states that if you have business income then you can’t opt for new tax regime…

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February 2024