1. Introductory background of New regime:
Budget 2020 introduced new section 115BAC. This section says about alternate tax regime. In this system of tax computing tax payer will have to sacrifice certain deductions & exemptions to avail this scheme. For this scheme tax slabs are different then normal slabs. Alternate tax regime is applicable for Individuals /HUFs and Co-Operative Societies.
| Sl. No. | Total income | Rate of tax As per Old Regime | Rate of tax As per New Regime |
| (1) | (2) | (3) | (4) |
| 1. | Up to Rs. 2,50,000 | Nil | Nil |
| 2. | From Rs. 2,50,001 to Rs. 5,00,000 | 5 % | 5 % |
| 3. | From Rs. 5,00,001 to Rs. 7,50,000 | 20% | 10 % |
| 4. | From Rs. 7,50,001 to Rs. 10,00,000 | 20% | 15 % |
| 5. | From Rs. 10,00,001 to Rs. 12,50,000 | 30% | 20 % |
| 6. | From Rs. 12,50,001 to Rs. 15,00,000 | 30% | 25 % |
| 7. | Above Rs. 15,00,000 | 30% | 30 % |
2. Senior Citizens in Old Regime Vs. New Regime:
• In case of Senior citizens (above 60 years) there is basic exemption Limit of Rs. 3 Lakhs & In case of Super Senior citizens (above 80 years) there is basic exemption limit of Rs. 5 Lakhs.
• Under new regime basic exemption limit is Rs. 2,50,000/- for all assesses there is no different exemption limits for senior citizens.
3. Rebate U/s 87A is intact:
• Rebate u/s.87A is available (If Total Income is less then 5 lakhs, rebate of maximum of Rs.12,500 is available)
4. Income tax at Special rates, Surcharge & Education cess:
• Income taxable at special rates to be taxed at special rates.
• Surcharge and education cess applicable at same rates as per existing tax regime, depending on total income.
5. Conditions to satisfy for Alternative Tax Regime:
• Certain basic Exemptions / deductions like Allowances, HRA, Housing loan, LIC premium, Mediclaim premium are not allowed.
• No set off of losses, No brought forward of losses or depreciation brought forward if such loss or depreciation is related to any of the deductions which are not allowed as per section of 115BAC
• No additional depreciation allowed.
• Set off of loss under the head House Property is not allowed, it can be carried forward for set off under same head.
• Return of Income should be filed within due date.
6. How to opt for New Regime:
For persons having only Salary, House property, Capital gains & Other sources income.
• Can exercise this Option every year along with the Return of Income to be furnished u/s.139(1)
• In Part-A (General Information) the taxpayer is required to choose whether he is opting for the alternative tax regime of Sections 115BAC or not.
For person having Business or Professional income.
• Option to be exercised by filing Form 10IE on or before the due date for filing return of income – digitally or EVC as per Rule 21AG
• Its not mandatory to exercise option in A.Y. 2021-22, it can be exercised in any subsequent A.Y.
• Once option is exercised it is valid for all the subsequent years
• Option exercised can be withdrawn only once in any subsequent year. Unless the withdrawal is on account of no income from business or profession
Disclaimer:
Please note information here is not exhaustive, there are changes from FY 23-24 this article is only for educational purpose showing glimpse on new tax regime. For advise & detail consultation contact details are given below.
