Section 115BAC: New Tax Regime

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Laxmi Navlani

Income Tax
Income Tax Filing
New Tax Regime
Section 115BAC
Last updated on January 11th, 2024

In the 2020 budget, Finance Minister Nirmala Sitharaman introduced a new tax regime under section 115BAC of the Income Tax Act, 1961. This revised tax structure applies exclusively to individuals and Hindu Undivided Families (HUF). The updated regime features lower income tax slab rates while eliminating various rebates, exemptions, and deductions.

Despite the introduction of lower slab rates, a significant number of taxpayers continued to file their Income Tax Returns (ITR) under the old tax regime. To enhance ease of compliance and encourage more taxpayers to choose the new regime, the Finance Minister, adjusted the tax slabs and rates under the new regime. Consequently, the new regime was declared as the default tax structure for taxpayers starting from the financial year 2023-24.

New Tax Slab Rates

The below table shows the new income tax slabs and rates under the new regime for FY 2023-24/AY 2024-25 onwards:

Tax Slab Tax Rate
Up to INR 3,00,000 Nil
INR 3,00,001 – 6,00,000 5%
INR 6,00,001 – 9,00,000 10%
INR 9,00,001 – 12,00,000 15%
INR 12,00,001 – 15,00,000 20%
Above INR 15,00,000 30%

Modifications in the New Regime as per Budget 2023

Changes in Deductions and Exemptions under section 115BAC

According to the announcement made in the Budget 2020, there have been major removal of tax exemptions and deductions under the new tax regime. This has made tax compliance less tedious. Here’s a list of deductions that have been removed as per clause (i) of sub-section (2) of section 115BAC:

  1. Leave travel concession as per section 10(5);
  2. House rent allowance as per section 10(13A);
  3. Official and personal allowances (other than those as may be prescribed) as per section 10(14);
  4. Allowances to MPs/MLAs as per section 10(17);
  5. Allowance for income of minors as per section 10(32);
  6. Exemption for SEZ unit as per section 10AA;
  7. The standard deduction, the deduction for entertainment allowance and employment/professional tax as per section 16;
  8. Interest under section 24 in respect of self-occupied or vacant property as per section 23(2).
  9. Additional depreciation under clause (iia) of sub-section (1) of section 32;
  10. Deductions u/s 32AD, 33AB, 33ABA;
  11. Various deductions for donation or expenditure on the scientific research are available in section 35;
  12. Deduction u/s 35AD or section 35CCC;
  13. Deduction from family pension under clause (iia) of section 57;
  14. Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA,etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of the employee in notified pension scheme), 80CCH investment in agni veer fund, and section 80JJAA (for new employment) can be claimed.

Set-off of Losses and Unabsorbed depreciation as per section 115BAC

As per section 115BAC of the Income Tax Act, losses from house property can only be set off against other income from house property. Moreover, losses from income from house property cannot be carried forward in the new income tax regime.

In the case of a business income, an individual or HUF cannot claim set-off of the brought forward business loss or unabsorbed depreciation and also cannot carry forward the same to the extent they relate to deductions/exemptions withdrawn in clause (i) of sub-section (2) of section 115BAC.

Opting for the new scheme

As per the income tax laws, an individual having business income shall submit form 10-IE before the due date of filing ITR i.e. July 31 under non-audit cases and 31st October under audit applicable cases on IT Portal.

For individuals not having any income from Business and Profession, filing of Form 10-IE is not mandatory.
For individuals not having any income from Business and Profession, filing of Form 10-IE is not mandatory.

Income Tax Slab and Rates under New Regime for FY 2022-23

Income Tax Slab Tax Rate
Up to INR 2,50,000 Nil
INR 2,50,001 – 5,00,000 5%
INR 5,00,001 – 7,50,000 10%
INR 7,50,001 – 10,00,000 15%
INR 10,00,001 – 12,50,000 20%
INR 12,50,001 – 15,00,000 25%
Above INR 15,00,000 30%

Switching between Old Tax Regime & New Tax Regime


Can we change the tax regime from what we have declared to the employer?

Individuals have the option to choose between the old and new tax regimes when filing their income tax returns (ITR). If an individual has opted for the old tax regime with their employer for TDS on salary, plan to opt new tax regime when filing ITR.

Is standard deduction on salary u/s 16 available under the new tax regime?

Standard deduction on salary u/s 16 is available under the new tax regime from FY 2023-2024. The standard deduction is of INR 50,000.

How to inform the IT Department which tax regime is selected?

The new regime is the default regime from the FY 2023-2024. However, taxpayers can select the old regime while filing an ITR. In the case of business/professional income, Form 10IEA has to be filed.