What is Section 115BAC of the Income Tax Act?

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Section 115BAC

Starting in 2020, a new tax system was introduced (Section 115BAC) that gives you a choice. You can either stick with the existing system with its deductions and exemptions, or you can opt for the new system with lower tax rates. The catch? The new system has fewer deductions and exemptions you can claim. This article will focus on what deductions are still allowed under the new system.

What is Section 115BAC: New Tax Regime

Section 115BAC, the new tax regime, was implemented starting FY 2020-21 (AY 2021-22). It offers concessional tax rates with limited deductions and exemptions. The Budget 2023 further amended Section 115BAC, making the new regime the default from FY 2023-24. Taxpayers who prefer the old regime must file Form 10-IEA before the ITR filing deadline.

Section 115BAC: Tax Rates Under the New Regime

The Budget 2023 introduced revised income tax slabs for the new tax regime. The updated tax slabs for FY 2023-24 (AY 2024-25) and FY 2022-23 (AY 2023-24) are detailed in the table below. Meanwhile, please note that the income tax slabs and rates under the old tax regime remain unchanged.

Income SlabsTax Rates Under New Regime (FY23-24)
Up to ₹3,00,0000%
₹3,00,001 to ₹6,00,0005%
₹6,00,001 to ₹9,00,00010%
₹9,00,001 to ₹12,00,00015%
₹12,00,001 to ₹15,00,00020%
Above ₹15,00,00030%

Old vs New: Which Regime to Choose Under Section 115BAC?

Section 115BAC introduced the new tax regime, offering a tempting alternative with lower tax slabs. But is it the right choice for everyone? The answer depends on your financial situation, including income sources, investments, and deductions you utilize.

Let's break down the key differences between the old and new tax regimes:

FeatureOld Tax RegimeNew Tax Regime
Tax RatesGenerally higher tax ratesLower tax rates
Deductions & ExemptionsWide range of deductions and exemptions available (like HRA, LTA)Limited deductions and exemptions

Income Bracket


Tax Rates (in % p.a.)
Old Tax Regime (FY 2023-24)

New Tax Regime

(FY 2022-23)

New Tax Regime 

(FY 2023-24)

For Individuals/ HUFs 

(aged less than 60 years)

For Individuals/ HUFs 

(aged 60 or less than 80 years)

For Individuals/ HUFs

(aged 80 or more)

₹0 to ₹2,50,0000%0%0%0%0%
₹2,50,001 to ₹3,00,0005% 0%0%5% 0%
₹3,00,001 to ₹5,00,0005% 5% 0%5% 5%
₹5,00,001 to ₹6,00,00020%20%20%10%5%
₹6,00,001 to ₹7,50,00020%20%20%10%5%
₹7,50,001 to ₹9,00,00020%20%20%15%10%
₹9,00,001 to ₹10,00,00020%20%20%15%15%
₹10,00,001 to ₹12,00,00030%30%30%20%15%
₹12,00,001 to ₹12,50,00030%30%30%20%20%
₹12,50,001 to ₹15,00,00030%30%30%25%20%
Above ₹15,00,00030%30%30%30%30%

Section 115BAC: Are You Eligible for the New Regime Deduction?

Individuals and Hindu Undivided Families (HUFs) can choose the new tax slab rates under Section 115BAC, but there are some key requirements to meet for your annual income:

  1. Income from business or profession must be excluded from the total income.
  2. The total income should be calculated without utilizing deductions/exemptions from sections such as Chapter VIA (except Section 80CCD and Section 80JJAA), Sections 24(b), 10, 32, 35, etc.
  3. Consider exclusions specified in Clause (5), (13A), (14), (17), and (32) of Section 10, as well as Section 10AA and Section 16.
  4. Past losses due to claiming the specified deductions or owning a house should not be offset.
  5. No exemptions or deductions for allowances or perks are allowed.
  6. Depreciation under Section 32(IIA) is not claimable when calculating total income under Section 115BAC.

To be eligible under Section 115BAC, your total income calculation excludes any past losses from the mentioned deductions or real estate ownership.

Section 115BAC New Tax Regime: What You Can't Claim

Under Section 115BAC, both Hindu Undivided Families (HUFs) and individuals can opt to be taxed under revised tax slab rates. However, eligibility hinges on meeting certain criteria regarding the composition of total income for the financial year:

Basic SalaryStandard deduction to simplify your tax filingNo flat deduction of ₹50,000 (as of FY 2022-23)
Salary PerksAllowances that might come with your jobCan't deduct entertainment allowances, professional tax on salary, or helper allowances
Travel & HousingAllowances for travel and housing expensesCan't claim benefits like Leave Travel Allowance (LTA) or House Rent Allowance (HRA)
Family SupportDeductions for family-related expensesCan't deduct special allowances for children's education or income from minor children
Real EstateInterest paid on home loansInterest on loans for self-occupied or vacant properties isn't deductible
Investment Deductions (Limited)Tax benefits for investments (except specific ones)Most deductions under Chapter VI-A are unavailable, except for specific Sections like contributions to NPS (Section 80CCD(2)) and benefits for resident individuals (Section 80JJAA)
Donations & ContributionsDeductions for charitable donations and personal contributionsCan't deduct donations to trusts or political parties, or your own contributions to NPS


Ultimately, the choice between the old and new tax regimes boils down to your individual deduction needs. If you utilize a lot of deductions, the old regime might offer a bigger tax advantage. However, the new regime's lower tax slabs can be appealing to those with minimal deductions.

Remember: Consulting a tax advisor to analyze your specific situation is always recommended. They can help you determine which regime offers the most tax benefit for your unique circumstances.


  • Can I opt out of 115BAC (New Tax Regime) after the due date?

  • How many times can a salaried person change his tax regime?

  • What are the rules under Section 115BAC?

  • What falls under Section 115BAC?