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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:

Income

Tax Liability under New Tax Regime of Section 115BAC

Tax Liability under Old Tax Regime

Net Tax
Saving

6,00,000

23,400

-

-23,400

6,50,000

28,600

-

-28,600

7,00,000

33,800

-

-33,800

7,50,000

39,000

-

-39,000

8,00,000

46,800

-

-46,800

8,50,000

54,600

-

-54,600

9,00,000

62,400

-

-62,400

9,50,000

70,200

-

-70,200

10,00,000

78,000

23,400

-54,600

10,50,000

88,400

33,800

-54,600

11,00,000

98,800

44,200

-54,600

11,50,000

1,09,200

54,600

-54,600

12,00,000

1,19,600

65,000

-54,600

12,50,000

1,30,000

75,400

-54,600

13,00,000

1,43,000

85,800

-57,200

13,50,000

1,56,000

96,200

-59,800

14,00,000

1,69,000

1,06,600

-62,400

14,50,000

1,82,000

1,17,000

-65,000

15,00,000

1,95,000

1,32,600

-62,400

15,50,000

2,10,600

1,48,200

-62,400

16,00,000

2,26,200

1,63,800

-62,400

16,50,000

2,41,800

1,79,400

-62,400

17,00,000

2,57,400

1,95,000

-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

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 Tax Amendments in Finance Bill 2020 Tax Treatment of Employer’s Contribution to the account of an Employee from Assessment Year 2021-22 (Financial Year 2020-21)
Income Tax Slab for Financial Year 2020-21 (AY : 2021-22)



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