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Frequently Asked Questions (FAQ)

about New & Old Tax Regime
Dear All, I have created Q & A format of 115 BAC and pleased to submit for your kind ready reference.

1) What is the section 115BAC ?

Budget 2020 introduced New Tax Regime u/s. 115BAC which offers lower income tax rate

2) Who are eligible to avail this scheme ?

Individual and Hindu Undivided Family (HUF) irrespective of their residential status (i.e)
Resident aswellas NRI are eligible to avail this scheme.

3) What is the existing (OLD) Income Tax Slab Rate ?

Based on Income As on 31st March

(Net Taxable Income
after all Deductions) Individual Age Senior Citizen Age Super Senior Age
From To
upto 59 years Reached 60 & upto 79 80 Years & above
(Rs.) (Rs.)
0 2,50,000 Nil Nil Nil
2,50,001 3,00,000 5% Nil Nil
3,00,001 5,00,000 5% 5% Nil
5,00,001 10,00,000 20% 20% 20%
10,00,001 Above 30% 30% 30%

👉
u/s.87A upto Rs.12,500/- tax Rebate / relief available, if taxable income is upto Rs.5 Lakh
4% Health & Education Cess applicable + Surcharge applicable if total taxable income exceed Rs.50 Lakh

4) What is the (NEW) Income Tax Slab Rate u/s.115BAC introduced from FY: 2020-21?

Based on Income As on 31st March

(Net Taxable Income
after all Deductions) Individual Senior Citizen Super Senior
From To
upto 59 years Reached 60 & upto 79 80 Years & above
(Rs.) (Rs.)
0 2,50,000 Nil Nil Nil
2,50,001 5,00,000 5% 5% 5%
5,00,001 7,50,000 10% 10% 10%
7,50,001 10,00,000 15% 15% 15%
10,00,001 12,50,000 20% 20% 20%
12,50,001 15,00,000 25% 25% 25%
15,00,001 Above 30% 30% 30%

u/s.87A upto Rs.12,500/- tax Rebate / relief available, if taxable income is upto Rs.5 Lakh
👉 4% Health & Education Cess applicable + Surcharge applicable if total taxable income exceed Rs.50 Lakh
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5) What is the difference between (NEW) and (OLD) Income Tax Slab Rate ?

Based on Income OLD TAX RATE NEW TAX RATE

Individual / Senior
Net Taxable Income Individual Senior Super
Citizen / Super
after all Deductions (Age) Citizen Senior
 Senior Citizen
From To Upto 59 yrs 60 to 79 Yrs 80 and Above Any Age / All Age
(Rs.) (Rs.) 
0 2,50,000 Nil Nil Nil Nil
2,50,001 3,00,000 5% Nil Nil Vs. 5%
3,00,001 5,00,000 5% 5% Nil 5%
5,00,001 7,50,000 20% 20% 20%  10%
7,50,001 10,00,000 20% 20% 20% 15%
10,00,001 12,50,000 30% 30% 30%  20%
12,50,001 15,00,000 30% 30% 30% 25%
15,00,001 Above 30% 30% 30% 30%
If the net taxable income is upto Rs.5,00,000 /- (Rupees Five Lakh only), then maximum upto
Rs.12,500 /- tax relief / rebate available under section 87A for Both New & Old Tax Regime
👉 4% Health & Education Cess applicable + Surcharge applicable if total taxable income exceed Rs.50 Lakh

6) Who will benefit, if they choose (NEW) Income Tax Slab Rate ?

Those who have taxable net income from Rs.5,00,001 /- upto Rs.15,00,000 /- and if they
are not investing any tax saving investments like 80C, 80D, 80E, 24B and so-on, then they
could avail lower tax rate percentage of either 10/15/20/25 according to their income slab.

Based on Income OLD TAX RATE NEW TAX RATE

Individual / Senior
Net Taxable Income Individual Senior Super
 Citizen / Super
after all Deductions (Age) Citizen Senior
Senior Citizen
To 
From (Rs.) Upto 59 yrs 60 to 79 Yrs 80 and Above Any Age / All Age
(Rs.)
 0 2,50,000 Nil Nil Nil Nil
 2,50,001 3,00,000 5% Nil Nil
Vs. 5%
 3,00,001 5,00,000 5% 5% Nil 5%

 5,00,001 7,50,000 20% 20% 20% 10%
 7,50,001 10,00,000 20% 20% 20%  15%
 10,00,001 12,50,000 30% 30% 30% 20%
 12,50,001 15,00,000 30% 30% 30% 25%
 15,00,001 Above 30% 30% 30% 30%

7) Can I choose (NEW) Income Tax Slab Rate in this FY: 2020-21 Filing and Later can I
change (Existing) Old Tax Regime in future Assessment Years ?

If you are not doing any Business (or) Professional then you can choose any tax regime as
per your wish. In other words, If you are either Salaried Employee / Pensioner, then you
can choose and Change either New / Old Tax Regime in Each and Every Assessment
Year even though earlier if you submitted Form-12BB to your employer into contrary.
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8) I am Professional (or) doing trade / business / running factory. Like Individual Employees
and Pensioners, can I change NEW (or) OLD Income Tax regime during every AY ?

NO. After choosing / availing Section 115BAC by applying online Form No: 10IE through
“other Forms” in Income Tax Portal and Filed their IT return under New Tax Regime, if
Professionals and Business people want to change the existing (old) Tax Regime, then
they have the opportunity to withdraw the New Tax Regime only once in their life time.

Once they withdraw by filing online Form-10IE, then they can continue to file their Income
Tax Return under OLD tax regime only and they will not be permitted to avail NEW tax
regime. In other words we can say that Person earning business income has to file Form
10-IE twice (i.e) First at the time of switching to the new tax regime and second when
switching back to the Old scheme. That’s All.

But this restriction is not available for Pensioners, Private / Public Employees, whose
income is NOT covered under Profession (or) business / trade. Pensioners and Salaried
People can Enter (or) Exit and Change the OLD and NEW tax regime as per their wish any
number of upcoming Assessment Years as per their wish, unless otherwise, they are not
doing any business / trade (or) Professions like Medical Profession, Chartered Accountant,
Company Secretary, Lawyers, Engineers and so-on.

9) What are the exemptions/deductions are available under New Tax Regime u/s.115 BAC ?

Although most of tax deductions and exemptions cannot be claimed under the new tax
regime, the following deductions are STILL PERMITTED under new tax regime.

100% Exemption pertaining to payment of Gratuity U/s. 10(10) for Central & State Govt.
Employees and upto Rs.20 Lakhs only for PSU, Bank Employees & Non-Govt. Employees.
Exemption pertaining to Commutation of pension U/s. 10(10A)

Exemption pertaining to Leave Encashment U/s. 10(10AA)

Exemption pertaining to Retrenchment Compensation Scheme U/s. 10(10B)

Exemption pertaining to payment scheme of voluntary retirement / separation U/s. 10(10C)
Exemption pertaining to tax paid by the employer on non-monitory perks U/s. 10(10CC)

Exemption pertaining to payment received under Life Insurance Policy U/s. 10(10D)
Exemption pertaining to interest and withdrawal from RPF U/s. 10(12)

Exemption on lump sum amount received on maturity from National Pension Scheme A/c
/ Exemption pertaining to payment including withdrawal from NPS U/s. 10(12A) / (12B)
Employer's contribution to (NPS) Pension Account u/s.80CCD(2) with condition that
deduction cannot exceed 10% of employees salary.
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Exemption pertaining to payment from Super Annuation Fund U/s. 10(13)

Exemption pertaining to Employer Contribution of EPF

Exemption pertaining to Education Scholarship

Exemption pertaining to Payments of awards instituted in public interest
Interest on Public Provident Fund & Final payment on maturity of PPF u/s.10(1) are allowed
Interest from Sukanya Samridhi withdrawal (or) Final amount u/s.10(11A)

Gift from Employer

Conveyance / Travelling / Tour / Transfer Allowance received by the employees to meet
the expenditure incurred as part of the employment to perform office duties
Interest received on post office savings account under Section 10(15)(i) of the Income Tax
Act for up to INR 3,500 per individual during the FY and upto Rs.7,000 for Joint Account
[ read with the Gazette notification number S.O 1296(E), Dated 03-June-2011 ]
Daily allowance given to employee if his place of work is different from normal place of duty
Transport allowance permitted ONLY to differently-abled employees (i.e) Blind / deaf / dumb
/ orthopedically handicapped employees only upto Rs.3200 per month u/s.10(14) to travel
between his/her home to office (i.e) To meet the expenditure for the purpose of commuting
between place of residence and place of duty
Rebate u/s.87A: If NET taxable income does not exceed Rs.5 Lakh, then Upto Rs.12,500 /-
tax rebate is permissible as like as OLD tax regime.

👉 Additional Deductions available for Business men / Traders opting NEW tax regime

Deductions upto 30% salary of new employment / additional employee cost u/s.80JJAA

If SEZ unit located in International Financial Service Centre, then deduction Section
80LA(1A) shall be available subject to fulfilment of the conditions contained in that section.
In case of Depreciation allowance that is made with respect to a block of assets that has not
been given full effects to prior to the assessment year that is going to begin from April 1,
2021, then the corresponding adjustment shall have to be made to a written down value of
such block of assets as on April 1, 2020, in a prescribed manner; however, if the option of
the new tax regime has been implemented for a previous year that is relevant to
assessment year beginning from April1, 2021.
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10) What are the exemptions/deductions are NOT available under New Tax Regime ?

👉 Deductions / Exemptions are NoT available

Standard Deductions of Salary / Pension such as Rs.50,000 /- u/s. 16(i)a

Entertainment Allowance u/s. 16(ii)

Tax on Employment (i.e) Professional Tax u/s. 16(iii)

Interest on Home Loan upto Rs.2,00,000 /- u/s. 24(b)

Leave Travel Allowance u/s. 10(5)

Housing Rent Allowance u/s. 10(13)A

Special Allowance / Exemption of Any other Allowance u/s. 10(14)

Allowance to MPs / MLAs u/s. 10(17)

Income Received from Minor Child for Clubbing u/s.10(32)

Except 80CCD(2) & 80JJA, almost all other Deductions of Chapter-VIA under 80C to
80U suchas LIC / Private insurance premium paid, Equity Linked Savings Schemes
(ELSS), EPF, PPF and NSC, Education Loan, Home Loan Principal Paid, Children
Education Fee / Tuition Fee paid, Medical Treatment, Medical Check-up, Medical
Insurance / Donation etc.
SB Interest from Banks / Post Office / Co-operative Society upto Rs.10,000 /-
(Applicable in the age group upto 59 years) u/s. 80TTA
FD + SB Interest from Banks / P.O / Co-Ope. Society upto Rs.50,000
(Applicable in the age group of 60 years and more) u/s. 80TTB
Family pension upto Rs.15,000 /- u/s.57(ii)a

Deduction for Scientific Research u/s.35

Amount paid (in any mode other than cash) by an individual or HUF to LIC or other
insurers to effect or keep in force an insurance on the health u/s.80D
Deduction in respect of maintenance including medical treatment of a dependant who is
a person with a disability u/s. 80DD
Expenses actually paid for medical treatment of specified diseases/ailments u/s.80DDB
Amount paid out of income chargeable to tax by way of payment of interest on loan
taken from financial institution/approved charitable institution for pursuing higher
education u/s.80E
Interest payable on loan taken up to Rs. 35 lakhs by the taxpayer from any financial
institution, for the purpose of acquisition of a residential house property whose value
doesn’t exceed Rs. 50 lakhs u/s.80EE
Interest payable on loan taken by an individual from any financial institution during the
period beginning from 01/04/2019 and ending on 31/03/2023 to purchase an electric
vehicle u/s.80EEB
Rent paid for furnished/unfurnished residential accommodation (Subject to certain
conditions suchas those who are NOT receiving HRA etc.) u/s.80GG
Deduction in respect of donations to certain funds, charitable institutions etc. u/s.80G
Deduction in respect of certain donations for scientific research or rural development
u/s.80GGA
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Deduction in respect of contributions given by any person to political parties u/s.80GGC

Deduction in respect of profits and gains from business of collecting and processing of
bio-degradable waste u/s.80JJA
Royalty income of authors of a certain specified category of books other than text books
u/s.80QQB
Royalty in respect of patents registered on or after 01.04.2003 (subject to certain
conditions) u/s.80RRB
A resident individual who, at any time during the previous year, is certified by the
medical authority to be a person with a disability u/s.80U (upto Rs.75,000 /- (or) upto
Rs.1,25,000 /- if severe Disability)
Allowances (Under Sec.10(14)) like Travelling/Transfer Allowance, Conveyance
Allowance, Helper Allowance, Research Allowance or Uniform Allowance
Any allowance granted to meet the expenditure incurred on a helper where such helper
is engaged for the performance of the duties of an office or employment of profit;
Any allowance granted for encouraging the academic, research and training pursuits in
educational and research institutions;
Any allowance granted to meet the expenditure incurred on the purchase or
maintenance of uniform for wear during the performance of the duties of an office or
employment of profit.
Any Special Compensatory Allowance in the nature of [Special Compensatory (Hilly
Areas) Allowance] or High Altitude Allowance or Uncongenial Climate Allowance or
Snow Bound Area Allowance or Avalanche Allowance
Any Special Compensatory Allowance in the nature of Border Area Allowance, Remote
Locality Allowance or Difficult Area Allowance or Disturbed Area Allowance
Special Compensatory (Tribal Areas/Schedule Areas/Agency Areas) Allowance
Any allowance granted to an employee working in any transport system to meet his
personal expenditure during his duty performed in the course of running of such
transport from one place to another place provided that such employee is not in receipt
of daily allowance
Any allowance granted to an employee to meet the hostel expenditure on his child

Compensatory Field Area Allowance

Compensatory Modified Field Area Allowance

Any special allowance in the nature of counter-insurgency allowance granted to the
members of armed forces operating in areas away from their permanent locations
Underground Allowance granted to an employee who is working in uncongenial,
unnatural climate in underground mines
Any special allowance in the nature of high altitude (uncongenial climate) allowance
granted to the member of the armed forces operating in high altitude areas
Any special allowance granted to the members of the armed forces in the nature of
special compensatory highly active field area allowance
Any special allowance granted to the member of the armed forces in the nature of Island
(duty) allowance
Status of Losses of previous years / Set off loss / Status & Depreciation for current
period and The accumulated AMT credit will be lapsed and assess cannot carry forward
the same for set-off u/s.115JC and Carry forward and set off of AMT credit u/s.115JD

 : Disclaimer :   : Author : 
This write up is for Education purpose only and author is not responsible for any error / incorrectness / incompleteness in the
Kasthuri Rangan
above. You are advised to act after referring / confirm from the Income Tax Act, 1961, Rules, notices & amendments only ! B.Sc, LL.M, PGDCA, PGDIB
Advocate, Trivandrum