Section 115BAC in Budget 2020

- From F.Y. 2020-21, pay income tax under an optional new tax regime.
- Available for individuals and HUFs.
- Tax Rates under new regime :

Income Slabs Tax Rate

upto Rs. 2.50 Lakh Nil
2.50 Lakh to 5.00 Lakh 5%
5.00 Lakh to 7.50 Lakh 10%
7.50 Lakh to 10.00 Lakh 15%
10.00 Lakh to 12.50 Lakh 20%
12.50 Lakh to 15.00 Lakh 25%
Above 15.00 Lakh 30%
Exemptions and deductions not claimable under the new tax regime :

1. The standard deduction under Section 80TTA/80TTB, professional tax and entertainment
allowance on salaries
2. Leave Travel Allowance (LTA)
3. House Rent Allowance (HRA)
4. Minor child income allowance
5. Helper allowance
6. Children education allowance
7. Other special allowances [Section 10(14)]
8. Interest on housing loan on the self-occupied property or vacant property (Section 24)
9. Chapter VI-A deduction (Section 80C, 80D, 80E and so on, except Section 80CCD(2) and
Section 80JJAA)
10. Exemption or deduction for any other perquisites or allowances.
11. Deduction from family pension income.
In case an employee does not choose the new tax regime at the beginning of the financial
year, the employer will deduct tax (TDS) under the existing tax regime. Hence, a salaried
taxpayer can opt in and opt out every year. That means you can choose the new tax regime in
one year and choose the regular tax regime in another year.

A non-salaried taxpayer has to choose the new regime when filing the tax return. They need
not declare or intimate their choice to anyone during the year. However, a non-salaried
taxpayer (taxpayers with an income from business or profession) cannot opt-in and opt-out of
the new tax regime every year. Once a non-salaried opts out of the new tax regime, they
cannot opt-in again for the new tax regime in the future.

If you have let out house property, you can claim a deduction for interest paid on the housing
loan. Note that the new tax regime restricts the deduction to the taxable rent received from
the property against the old regime. In the new regime, you cannot set off the loss arising from
the house property due to excess interest paid over the rental income. Also, you cannot carry
forward the loss from house property to future years for set off.
Deductions are not allowed against business income under the new
regime:

1. Additional depreciation under section 32

2. Investment allowance under section 32AD
3. Sector-specific business deductions under section 33AB and 33ABA
4. Expenditure on scientific research under section 35
5. Capital expenditure under section 35AD
6. Exemption under section 10AA for SEZ units

Unabsorbed depreciation and business loss under the new 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.

The deductions are not available under the new regime to the extent they relate to
deductions/exemptions withdrawn