115bac of Income Tax Act came into existence through the Financial Act of 2020. It is also known as the new tax regime. This section was inserted after Section 115 BAB and became effective in fiscal year 2020-21. It has substantial repercussions for the fiscal year 2024-25, therefore taxpayers should be fully aware of them. Many folks have questions concerning this sub clause BAC of section 115 of the Income Tax Act of 1961, so we’ve written this article to clarify. If you’re curious, continue reading to find out more.
what is 115bac of Income Tax act of 1961?
Sub clause BAC of section 115 of the Income-tax Act establishes a new tax structure for individuals and Hindu undivided families, commencing April 1, 2021. Under this framework, taxpayers have the option of computing their income tax at specific rates, subject to certain circumstances. The total income is taxed using a predetermined table ranging from nil to thirty percent, without taking into account the numerous exclusions and deductions granted by other provisions of the Act. Taxpayers must use this option before the deadline date for filing their income tax returns. Once chosen, the regime applies to subsequent assessment years, with prohibited options for withdrawal.
Decoding Section 115 BAC of the Income Tax Act of 1961
As the language of the section BAC is little technical it is not easy to understand it, that is the reason many people who do not have expertise in the same misinterpreted the same. Hence its decoding is very essential to understand it with the perspective of a layman. Some of the key essential or we can say important points of the section 115(BAC) of the taxation laws are:
- 1st of April 2021 is the official date from which this came into effect
- Exemptions and deductions are not applicable on this particular section
- This must be exercised by taxpayers by the deadline for filing income tax returns.
- Financial Act of 2020 is the law through which it came into existence before that it was not in the existence
- If you opted it once then it will be automatically applied on the next assessment year with the limitation of the withdrawal options
- The newly added section involves the new tax regime for individuals as well as the Hindu Undivided Family, also known as HUF.
- Total income computation excludes certain deductions and set-offs mentioned in sub clause BAC of section 115.
- Loss and depreciation deductions are deemed to have been fully utilized under this regime.
- Exemptions and deductions permitted by other parts of the Income Tax Act are exempt from this section.
- The option to avail this regime applies to taxpayers with business income or without it.
- Withdrawal of the option is limited and subject to specific conditions.
Various Tax Rates under the Sec 115 BAC of the Income Tax
Tax rates under sub clause BAC of section 115 range from nil to 30%, based on total income, all of them are given below in the table:
Old Tax Regime for 2022-23
| S.No. | Total Income (in Lakhs) | Tax Rate |
| 1. | Up to 2.5 | Exempted |
| 2. | 2.5 – 5 | 5% |
| 3. | 5 -7.5 | 10% |
| 4. | 7.5 -10 | 15% |
| 5. | 10 – 12.5 | 20% |
| 6. | 12.5-15 | 25% |
| 7. | Above 15 | 30% |
New Tax Regime 2024-25
| S.No. | Total Income (in Lakhs) | Tax Rate |
| 1. | Up to 3 | Exempted |
| 2. | 3-6 | 5% |
| 3. | 6-9 | 10% |
| 4. | 9-12 | 15% |
| 5. | 12-15 | 20% |
| 6. | Above 15 | 30% |
Effect of Section 115 BAC on the Different Income Group
In the table given below the effect of the new tax regime has been compared with the older one for the better understanding of the sec 115 bac of the Income Tax Act of 1961.
| Annual Income | Old Regime Tax | New Regime Tax | New Regime Tax Savings |
| Up to Rs 7.5 Lakhs | 65,000 | 31,200 | 33,800 |
| Up to Rs 10 Lakhs | 117,000 | 62,400 | 54,600 |
| Up to Rs 12.5 Lakhs | 195,000 | 1,04,000 | 65,000 |
| Up to Rs 15 Lakhs | 273,000 | 1,56,000 | 1,17,000 |
Conclusion
If you have understood section 115 bac of the Income Tax Act properly, you came to know about the advantages of the new tax regime. Once you understand them you will automatically get the clarity over whether you should opt for it or not. Also keep in mind that in order to take the various benefits of the mentioned section, you have to opt for this because this will not be applicable automatically. This new tax regime has various advantages in comparison to the old tax regime. In case you want to opt for the same but confused, then feel free to contact us, our team of professionals will try to make your every issue resolve on just one phone call.
FAQS
- How can I assess whether Sec 115 BAC is beneficial for me?
As a layman it is a little difficult to understand its benefits, but you can determine them by comparing your current tax liability with respect to the old regime to the new one. The best way to assess the benefits of the mentioned section is to take expert advice on the same.
- What documentation or procedures are required to opt for Sec 115 BAC?
To opt for sub clause BAC of section 115, individuals need to submit Form 10-IE declaring their intent to claim concessional tax rates, calculate tax liability without deductions, and file their income tax return accordingly. Some of the key documents required to avail the above mentioned section includes income details, list of exemptions and deductions, investment proofs, Form 10-IE, previous year tax returns, bank statements and any other relevant documents
- Where can I find more information or guidance on 115 BAC?
One can find more information regarding the mentioned section by simply opening the document of the Finance Act of 2020 which is available on the official website of the Ministry of Law and Justice. In its Clause 53 this section has been given with its full detail.
- Can Startupfino provide resources and tools to simplify tax calculations and planning under Section 115 BAC?
Yes, startupfino provide resources and tools to simplify tax calculations and planning under this 115(bac) of taxation law. They have a team of experts in the field of finance who can guide you regarding all these things.
- Does Startupfino offer guidance on investment strategies aligned with tax benefits under Section 115(BAC)?
Yes, Startupfino provides guidance on investment strategies that align with tax benefits under sub clause BAC of section 115, helping individuals optimize their tax planning and financial goals effectively.
- Where can I find more information about Startupfino’s services related to 115 BAC tax
You can find more information about Startupfino’s services related to Section 115(BAC) tax on their official website, through their customer service representatives, or by contacting them directly via email (hello@startupfino.com) or phone (8298291011). They may also offer informational resources or consultations to address specific queries regarding tax planning under sub clause BAC of section 115.
