115BAC Of Income Tax Act: All About Section 115BAC New Tax Regime

The Budget 2023-24 has proposed changes in the new tax regime introduced under Section 115BAC of Income Tax Act. The tax structure in the new personal income tax regime, introduced in 2020 with 6 income slabs, has been changed by reducing the number of slabs to 5 and increasing the tax exemption limit to Rs. 3 lakh from Rs 2.50 lakh earlier.

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115BAC of the Income Tax Act

In the Union Budget 2020, finance minister, Nirmala Sitharaman introduced Section 115BAC to the Income Tax Act, to provide individual/HUFs with an alternate tax regime. The new tax regime, under 115BAC to the Income Tax Act, allows taxpayers to pay taxes at lower rates, albeit after letting go of certain deductions and exemptions allowed under the old tax regime.

The benefits of 115BAC are not meant for those earning their income from profession or business.

See also: Know more about taxation of cooperative housing society

New tax rate under 115BAC

Total Income (Rs)	Rate
Up to Rs 3 lakh	Nil
From Rs 3 lakh to Rs 6 lakh	5%
From Rs 6 lakh to Rs 9 lakh	10%
From Rs 9 lakh to Rs 12 lakh	15%
From Rs 12 lakh to 15 lakh	20%
Above 15 lakh	30%

See also: Know all about income tax slab

Read about : Income tax new portal E filing 2.0

Old income tax slab

Income tax slabs for individuals aged below 60 years and for HUF

Income	Rate under old tax regime slab
Up to Rs 2.50 lakhs	Nil
From Rs 2.50 lakhs to Rs 5 lakhs	5%
From Rs 5 lakhs to Rs 7.50 lakhs	20%
From Rs 7.5 lakhs to Rs 10 lakhs	20%
From Rs 10 lakhs to Rs 12.50 lakhs	30%
From Rs 12.50 lakhs to Rs 15 lakhs	30%
Above Rs 15 lakhs	30%

Income tax slabs for individuals aged between 60-80 years

Income	Old tax regime slab
Up to Rs 3 lakhs	Nil
From Rs 3 lakhs to Rs 5 lakhs	5%
From Rs 5 lakhs to Rs 10 lakhs	20%
Over Rs 10 lakhs	30%

Income tax slabs for individuals aged over 80 years

Income	Old tax regime slab
Up to Rs 5 lakhs	Nil
From Rs 5 lakhs to Rs 10 lakhs	20%
Above Rs 10 lakhs	30%

See also: Income tax slab for FY 2022-23 and FY 2021-22

New tax regime vs old tax regime

Income	Old tax regime			New tax regime
Income	Age up to 60 years	Age 60-80 years	Age over 80 years	All age groups
Up to Rs 2.50 lakhs	Nil	Nil	Nil	Nil
From Rs 2.50 lakhs to Rs 3 lakhs	5%	Nil	Nil	Nil
From Rs 3 lakhs to Rs 5 lakhs	5%	5%	Nil	5%
From Rs 5 lakhs to Rs 7.50 lakhs	20%	20%	20%	10%
From Rs 7.50 lakhs to Rs 10 lakhs	20%	20%	20%	15%
From Rs 10 lakhs to Rs 12.50 lakhs	30%	30%	30%	20%
From Rs 12.50 lakhs to Rs 15 lakhs	30%	30%	30%	25%
Above Rs 15 lakhs	30%	30%	30%	30%

Deductions allowed under 115BAC

Transport allowance for specially-abled.
Conveyance allowance for conveyance expenditure incurred as part of employment.
Compensation received to meet the cost of travel on tour or transfer.
Daily allowance received to meet the regular charges or expenditure incurred on account of absence from the regular place of duty.
Deduction for employer’s contribution to NPS account.
Deduction for additional employee cost.

See also: All about NPS login

Old vs new tax regime

Old tax regime	New tax regime
Four tax slabs	Six tax slabs
30% income tax for income above Rs 15 lakhs	30% income tax for income above Rs 15 lakhs
Savings-centric	Spending-centric

Deductions that are not allowed under 115BAC

Chapter VI-A deduction (Section 80C, 80D, 80E, 80EEA, etc.).
Standard deduction.
Professional tax.
Entertainment allowance.
Leave travel allowance (LTA).
House rent allowance (HRA).
Children education allowance.
Minor child income allowance.
Helper allowance.
Other special allowances.
Interest on housing loan under Section 24.
Deduction from family pension income.

Section 115BAC: Success so far

The new tax regime has been more popular among non-resident Indians than resident Indians in spite of lower tax rates. This is because most taxpayers in India use various tax saving instruments and do not find the new tax regime as beneficial as the old one.