Clause 53 of the Bill seeks to insert new sections 115BAC in the Income-tax Act relating to tax on income of individuals and Hindu undivided family. These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-2021 and subsequent assessment years.

New section 115BAC – Tax on income of individuals and Hindu undivided family (HUF)

‘115BAC. (1) Notwithstanding anything contained in this Act but subject to the provisions of this Chapter, the income-tax payable in respect of the total income of a person, being an individual or a Hindu undivided family, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, shall, at the option of such person, be computed at the rate of tax given in the following Table, if the conditions contained in sub-section (2) are satisfied, namely:—

Sl. No Total income Rate of tax
1 Upto Rs 2,50,000 Nil
2 From Rs 2,50,001 to Rs 5,00,000 5 per cent.
3 From Rs 5,00,001 to Rs 7,50,000 10 per cent.
4 From Rs 7,50,001 to Rs 10,00,000 15 per cent.
5 From Rs 10,00,001 to Rs 12,50,000 20 per cent.
6 From Rs 12,50,001 to Rs 15,00,000 25 per cent.
7 Above Rs 15,00,000 30 per cent.:

Provided that where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of 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:

Provided further that where the option is exercised under clause (i) of sub-section (5), in the event of failure to satisfy the conditions contained in sub-section (2), it shall become invalid for subsequent assessment years also and other provisions of this Act shall apply for those years accordingly.

(2) For the purposes of sub-section (1), the total income of the individual or Hindu undivided family shall be computed,—

(i) without any exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32), of section 10 or section 10AA or section 16 or clause (b) of section 24 (in respect of the property referred to in sub-section (2) of section 23) or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA), of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any of the provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA;

(ii) without set off of any loss,—

(a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i);

(b) under the head “Income from house property” with any other head of income;

(iii) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed; and

(iv) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.

(3) The loss and depreciation referred to in clause (ii) of sub-section (2) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year:

Provided that where there is a depreciation allowance in respect of a block of assets which has not been given full effect to prior to the assessment year beginning on the 1st day of April, 2021, corresponding adjustment shall be made to the written down value of such block of assets as on the 1st day of April, 2020 in the prescribed manner, if the option under sub-section (5) is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2021.

(4) In case of a person, having a Unit in the International Financial Services Centre, as referred to in sub-section (1A) of section 80LA, which has exercised option under sub-section (5), the conditions contained in sub-section (2) shall be modified to the extent that the deduction under section 80LA shall be available to such Unit subject to fulfillment of the conditions contained in the said section.

Explanation.—For the purposes of this sub-section, the term “Unit” shall have the meaning assigned to it in clause (zc) of section 2 of the Special Economic Zones Act, 2005.

(5) Nothing contained in this section shall apply unless option is exercised in the prescribed manner by the person,—

(i) having business income, on or before the due date specified under sub-section (1) of section 139 for furnishing the returns of income for any previous year relevant to the assessment year commencing on or after the 1st day of April, 2021, and such option once exercised shall apply to subsequent assessment years;

(ii) having no business income, alongwith the return of income to be furnished under sub-section (1) of section 139 for a previous year relevant to the assessment year:

Provided that the option under clause (i), once exercised for any previous year can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise option under this section, except where such person ceases to have any business income in which case, option under clause (ii) shall be available.

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9 Comments

  1. ANSHUMAN says:

    At the beginning of previous year I opted new tax regime as salaried employee (for giving details to my company),So my form – 16 will be received as per new tax regime but i want to file my return as per old tax regime because i have many deduction for claiming whether it is possible….?

  2. manish says:

    Hi,

    Can you guide me, is uniform reimbursement, phone reimbursement & entertainment reimbursement is remain same as it is part of CTC as per new tax regime.

  3. P.Srinivasulu says:

    It would be helpful if the choice between the two rates of income tax for Fy 2020-21 is given to the assesses at the end of the financial year after knowing the total income for the whole year!! in a country like ours, it is better to promote savings for retirement and that s why sec 80c,80d etc were introduced earlier, If that is taken away in the name of tax reduction, young people will do away with a saving plan for the future. Which are the exemptions/deductions now allowed under the new rate??? Is sec 80G allowed? PM has recently announced the PM CARES” Scheme in which it is said that the donation is exempt from I.T. Is it exempt even if new rates followed? If so, are we not bringing new exceptions to the preset rules-thereby complicating the calcualtions of IT? Pl clarify.

  4. P.Srinivasulu says:

    The difference in income tax between 2 persons -one having a net income of Rs 4,99000 and another 5,00,0001 (diff in net income is just Rs.2) is
    Rs 12,500/-. Is this a rational approach? It would have been better if the tax benefit under sec 87A
    is tapered down from Rs 12500 to zero for marginal net incomes aboue 500000 to overcome this anamoly!! This is continuing ever since sec 87A was introduced!!!

  5. Pulkit Garg says:

    Can Rebate u/s 87A be claimed if I am opting for new slabs as provided u/s 115BAC. Please clarify since the section has provided an over riding effect to entire Income Tax Act except Chapter-XII

    1. mehtagaurav2301 says:

      Hi Pulkit,

      Rebate u/s 87A would be available under both options i.e., Old rates and New rates.

      You can claim tax rebate under section 87A, if you meet the following conditions:
      1. You must be a RESIDENT INDIVIDUAL; and
      2. Your Total Income after Deductions (under Section 80) doesn’t exceed Rs 5 lakh.
      3. The rebate is limited to Rs 12,500.

      This means that if the total tax payable is lower than Rs 12,500, then that amount will be the rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess (4%).

      As per Section 115BAC, you should not avail benefit of deduction as specified in section.

      Therefore where the total income without deduction is not exceeding 5 lakhs, the resident individual can avail the benefit of rebate u/s 87A under new regime of slab rate.

      1. Pulkit says:

        Okay Gaurav,

        But the section has on over riding effect over the entire Income Tax Act, so I had a doubt still whether the same should be allowed

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