Finance Bill 2020 has introduced new section, Section 115BAC where employee can pay tax on their total income at the rate specified in the Table from the assessment year 1st April, 2021.

Table

Sr. No. Total Income Rate
(1) (2) (3)
1. Upto Rs.2.50 lacs Nil
2. From 2.50 lacs to 5 lacs 5%
3. From 5 lacs to 7.50 lacs 10%
4. From 7.50 lacs to 10 lacs 15%
5. From 10 lacs  to 12.50 lacs 20%
6. From 12.50 lacs to 15 lacs 25%
7. Above Rs 15 lacs 30%

If employee fails to satisfy conditions specified under sub section (2), the option exercised will become invalid in respect of the assessment year relevant to the previous year and other provision of this Act apply , as if the option has not been exercised for the assessment year relevant to that previous year. Employee is required to exercise this option each year in the prescribed manner while filing the return of income on or before due date as specified U/s 139(1).

Conditions specified U/s 2 of the said Act.

Regular slab Concessional tax rate U/s 115BAC
Plan A Plan B
Following monetary/non monetary will  be considered Following monetary/non monetary will not be considered
Clause (5) to section 10 – Leave Travel concession Clause (5) to section 10 – Leave Travel concession
Clause (13A) to section 10 – House Rent allowance where lease of (a)HRA, (b) Rent paid in excess of 10% of salary, or (c) 50 per cent of salary is considered as exempt. Clause (13A) to section 10 – House Rent allowance where lease of (a)HRA, (b) Rent paid in excess of 10% of salary, or (c) 50 per cent of salary is considered as exempt.
Clause (14) to section 10 any special allowance / benefits like-

a. Any allowance on transfer from one  city  to another city

b. Children Education allowance

c. Hostel expenditure allowance

Clause (14) to section 10 any special allowance / benefits like-

d. Any allowance on transfer from one  city  to another city

e. Children Education allowance

f. Hostel expenditure allowance

Section 16- deduction –

a. Rs. 50,000 standard deduction;

Profession tax

Section 16- deduction –

b. Rs. 50,000 standard deduction;

c.       Profession tax

Clause (b) to Section 24

Interest on borrowed capital to the extent of Rs. 2,00,000 in case of self occupied house which is allowed upto two house.

Clause (b) to Section 24

Interest on borrowed capital to the extent of Rs. 2,00,000 in case of self occupied house which is allowed upto two house.

Deduction under Chapter VI-A including  sub section (2) to Section 80CCD. Deduction under Chapter VI-A other than sub section (2) to Section 80CCD ie employer contribution to NPS to the extent of 10% of salary
Loss under house property shall  be allowed to set off against any other head of income Loss under house property shall not be allowed to set off against any other head of income
Perquisite value U/s 17(2) will continue. Perquisite value include company owned accommodation/ leased accommodation, car facility provided by the employer, sodexo coupon, gift voucher, etc prescribed under Rule 3. Perquisite value U/s 17(2) will continue. Perquisite value include company owned accommodation/ leased accommodation, car facility provided by the employer, sodexo coupon, gift voucher, etc prescribed under Rule 3.

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