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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:

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

23,400

-15,600

8,00,000

46,800

33,800

-13,000

8,50,000

54,600

44,200

-10,400

9,00,000

62,400

54,600

-7,800

9,50,000

70,200

65,000

-5,200

10,00,000

78,000

75,400

-2,600

10,50,000

88,400

85,800

-2,600

11,00,000

98,800

96,200

-2,600

11,50,000

1,09,200

1,06,600

-2,600

12,00,000

1,19,600

1,17,000

-2,600

12,25,000

1,24,800

1,24,800

-

12,30,000

1,25,840

1,26,360

520

12,40,000

1,27,920

1,29,480

1,560

12,50,000

1,30,000

1,32,600

2,600

The above 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).

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.

Implications of this New Tax Regime of Section 115BAC in case of ‘Individuals’ or ‘HUFs’ if eligible for Deduction under Section 80C from the Assessment Year 2021-22 Tax Amendments in Finance Bill 2020 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
Income Tax Slab for Financial Year 2020-21 (AY : 2021-22)



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