Section 115BAC- Tax Implications for ‘Individuals’ or ‘HUFs’

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The Finance minister in her budget speech highlighted that  tax burden on a person earning Rs. 15 lakhs shall be reduced by  Rs. 78,000. However, this situation will rarely arise as a tax saving  of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have  analysed the following situation to understand the implications  of this New Tax Regime of Section 115BAC:

Nature of Deduction
available in the Current Tax Regime
Break-
even Point
When it Is beneficial to opt for the New Regime of Section 115BAC ?Reference
(See Table below)
No Deduction is allowableAlwaysTable 1
Deduction allowable under Section 80C8,50,000Income In excess of
Break-even
Table 2
Deduction allowable under :Section 80C, Section 80D12,25,000Income In excess of
Break-even
Table 3
Deduction allowable under :Section 80C, Section 80D, Section 16 (Standard Deduction)15,00,000NeverTable 4
Deduction allowable under :Section 80C, Section 80D, Section 16 (Standard Deduction), Section 24(b) (Interest on Housing Loan)NeverTable 5

Table-1 : Implications of this New Tax Regime of Section 115BAC in case of ‘Individuals’ or ‘HUFs’ Not eligible for any Deduction from the Assessment Year 2021-22

The Finance minister in her budget speech highlighted that  tax burden on a person earning Rs. 15 lakhs shall be reduced by  Rs. 78,000. However, this situation will rarely arise as a tax saving  of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have  analysed the following situation to understand the implications  of this New Tax Regime of Section 115BAC:

The given table shows that it is beneficial to opt for the New Tax Regime of Section 115BAC if Individual is not eligible for any Deduction.

IncomeTax Liability under New Tax Regime of Section 115BACTax liability
under Old Tax Regime
Net Tax
Saving
6,00,00023,40033,80010,400
7,00,00033,80054,60020,800
8,00,00046,80075,40028,600
9,00,00062,40096,20033,800
10,00,00078,0001,17,00039,000
11,00,00098,8001,48,20049,400
12,00,0001,19,6001,79,40059,800
12,50,0001,30,0001,95,00065,000
13,00,0001,43,0002,10,60067,600
14,00,0001,69,0002,41,80072,800
15,00,0001,95,0002, 73,00078,000

Table-2 : Implications of this New Tax Regime of Section 115BAC in case of ‘Individuals’ or ‘HUFs’ if eligible for Deduction U/s 80C from Assessment Year 2021-22

The Finance minister in her budget speech highlighted that  tax burden on a person earning Rs. 15 lakhs shall be reduced by  Rs. 78,000. However, this situation will rarely arise as a tax saving  of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have  analysed the following situation to understand the implications  of this New Tax Regime of Section 115BAC:

The given table shows that it is beneficial to opt for the New Tax Regime of Section 115BAC if your Income is more than Rs.8,50,000 with your eligible Deduction under 80C.

IncomeTax Liability under New Tax Regime of Section 115BACTax liability
under Old Tax Regime
Net Tax
Saving
6,00,00023,400-23,400
6,50,00028,600-28,600
7,00,00033,80023,400-10,400
7,50,00039,00033,800-5,200
7,75,00042,90039,000-3,900
7,90,00045,24042,120-3,120
8,00,00046,80044,200-2,600
8,50,00054,60054,600
9,00,00062,40065,0002,600
9,10,00063,96067,0803,120
9,20,00065,52069,1603,640
9,25,00066,30070,2003,900
9,50,00070,20075,4005,200
10,00,00078,00085,8007,800

The selection of New Tax Regime of Section 115BAC is not advisable up to your income Rs.8,50,000 in case the Assessee is eligible for Deduction under Section 80C.

Table-3 : Implications of this New Tax Regime of Section 115BAC in case of ‘Individuals’ or ‘HUFs’ if eligible for Deduction under Section 80C and 80D from Assessment Year 2021-22

The Finance minister in her budget speech highlighted that  tax burden on a person earning Rs. 15 lakhs shall be reduced by  Rs. 78,000. However, this situation will rarely arise as a tax saving  of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have  analysed the following situation to understand the implications  of this New Tax Regime of Section 115BAC:

The given table shows that it is beneficial to opt for the New Tax Regime of Section 115BAC if your Income is more than Rs. 12,25,000 with your eligible Deduction under 80C and Section 80D (it has been assumed that Deduction of Rs.50,000 shall be Claimed under Section 80D).

IncomeTax Liability under New Tax Regime of Section 115BACTax Liability under Old Tax RegimeNet Tax Saving
6,00,00023,400-23,400
6,50,00028,600-28,600
7,00,00033,800-33,800
7,50,00039,00023,400-15,600
8,00,00046,80033,800-13,000
8,50,00054,60044,200-10,400
9,00,00062,40054,600-7,800
9,50,00070,20065,000-5,200
10,00,00078,00075,400-2,600
10,50,00088,40085,800-2,600
11,00,00098,80096,200-2,600
11,50,0001,09,2001,06,600-2,600
12,00,0001,19,6001,17,000-2,600
12,25,0001,24,8001,24,800
12,30,0001,25,8401,26,360520
12,40,0001,27,9201,29,4801,560
12,50,0001,30,0001,32,6002,600

The selection of New Tax Regime of Section 115BAC is not advisable up to your income Rs. 12,00,000 in case the Assessee is eligible for Deduction under Section 80C and 80D.

Table-4 : Implications of this New Tax Regime of Section 115BAC in case of ‘Individuals’ or ‘HUFs’ if eligible for Deduction under Section 80C, 80D and Standard Deduction U/s 16 from the Assessment Year 2021-22

The Finance minister in her budget speech highlighted that  tax burden on a person earning Rs. 15 lakhs shall be reduced by  Rs. 78,000. However, this situation will rarely arise as a tax saving  of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have  analysed the following situation to understand the implications  of this New Tax Regime of Section 115BAC:

IncomeTax Liability under New Tax Regime of Section 115BACTax Liability under Old Tax RegimeNet Tax
Saving
6,00,00023,400-23,400
7,00,00033,800-33,800
8,00,00046,80023,400-23,400
9,00,00062,40044,200-18,200
10,00,00078,00065,000-13,000
11,00,00098,80085,800-13,000
12,00,0001,19,6001,06,600-13,000
13,00,0001,43,0001,32,600-10,400
14,00,0001,69,0001,63,800-5,200
15,00,0001,95,0001,95,000
16,00,0002,26,2002,26,200
17,00,0002,57,4002,57,400
18,00,0002,88,6002,88,600

It is NOT advisable to opt New Tax Regime of Section 115BAC if the Assessee is eligible for Deduction U/s 80C and 80D (it has been assumed that Deduction of Rs.50,000 shall be Claimed under Section 80D) and Standard Deduction U/s 16 from the Assessment Year 2021-22

Table-5: Implications of this New Tax Regime of Section 115BAC in case of ‘Individuals’ or ‘HUFs’ if eligible for Deduction U/s 80C , 80D , Standard Deduction U/s 16 and Deduction for Interest on Housing Loan U/s 24(b) from the Assessment Year 2021-22

The Finance minister in her budget speech highlighted that  tax burden on a person earning Rs. 15 lakhs shall be reduced by  Rs. 78,000. However, this situation will rarely arise as a tax saving  of Rs. 78,000 arises only when the assessee has not been availing any exemption or deduction in the current regime. We have  analysed the following situation to understand the implications  of this New Tax Regime of Section 115BAC:

IncomeTax Liability under New Tax Regime of Section 115BACTax Liability under Old Tax RegimeNet Tax
Saving
6,00,00023,400-23,400
6,50,00028,600-28,600
7,00,00033,800-33,800
7,50,00039,000-39,000
8,00,00046,800-46,800
8,50,00054,600-54,600
9,00,00062,400-62,400
9,50,00070,200-70,200
10,00,00078,00023,400-54,600
10,50,00088,40033,800-54,600
11,00,00098,80044,200-54,600
11,50,0001,09,20054,600-54,600
12,00,0001,19,60065,000-54,600
12,50,0001,30,00075,400-54,600
13,00,0001,43,00085,800-57,200
13,50,0001,56,00096,200-59,800
14,00,0001,69,0001,06,600-62,400
14,50,0001,82,0001,17,000-65,000
15,00,0001,95,0001,32,600-62,400
15,50,0002,10,6001,48,200-62,400
16,00,0002,26,2001,63,800-62,400
16,50,0002,41,8001,79,400-62,400
17,00,0002,57,4001,95,000-62,400

It is NOT advisable to opt New Tax Regime of Section 115BAC if the Assessee is eligible for Deduction U/s 80C and 80D (it has been assumed that Deduction of Rs.50,000 shall be Claimed under Section 80D) , Standard Deduction U/s 16  and Deduction for Interest on Housing Loan U/s 24(b)  from the Assessment Year 2021-22

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