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 allowable |
- |
Always |
Table 1 |
Deduction allowable under Section 80C |
8,50,000 |
Income In excess of
Break-even |
Table 2 |
Deduction allowable under :
|
12,25,000 |
Income In excess of
Break-even |
Table 3 |
Deduction allowable under :
- Section 80C
- Section 80D
- Section 16 (Standard Deduction)
|
15,00,000 |
Never |
Table 4 |
Deduction allowable under :
- Section 80C
- Section 80D
- Section 16 (Standard Deduction)
- Section 24(b) (Interest on Housing Loan)
|
- |
Never |
Table 5 |
Table-1 : Impact of Section 115BAC if Individual Not eligible for any Deduction
| Income |
Tax Liability under New Tax Regime of Section 115BAC |
Tax liability
under Old Tax Regime |
Net Tax
Saving |
6,00,000 |
23,400 |
33,800 |
10,400 |
7,00,000 |
33,800 |
54,600 |
20,800 |
8,00,000 |
46,800 |
75,400 |
28,600 |
9,00,000 |
62,400 |
96,200 |
33,800 |
10,00,000 |
78,000 |
1,17,000 |
39,000 |
11,00,000 |
98,800 |
1,48,200 |
49,400 |
12,00,000 |
1,19,600 |
1,79,400 |
59,800 |
12,50,000 |
1,30,000 |
1,95,000 |
65,000 |
13,00,000 |
1,43,000 |
2,10,600 |
67,600 |
14,00,000 |
1,69,000 |
2,41,800 |
72,800 |
15,00,000 |
1,95,000 |
2, 73,000 |
78,000 |
Note : In this situation always opt for the New Tax Regime of Section 115BAC if the Assessee is not eligible for any Deduction.
Table - 2 : Impact of Section 115BAC if Individual eligible for Deduction under Section 80C
| 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 |
23,400 |
-10,400 |
7,50,000 |
39,000 |
33,800 |
-5,200 |
7,75,000 |
42,900 |
39,000 |
-3,900 |
7,90,000 |
45,240 |
42,120 |
-3,120 |
8,00,000 |
46,800 |
44,200 |
-2,600 |
8,50,000 |
54,600 |
54,600 |
- |
9,00,000 |
62,400 |
65,000 |
2,600 |
9,10,000 |
63,960 |
67,080 |
3,120 |
9,20,000 |
65,520 |
69,160 |
3,640 |
9,25,000 |
66,300 |
70,200 |
3,900 |
9,50,000 |
70,200 |
75,400 |
5,200 |
10,00,000 |
78,000 |
85,800 |
7,800 |
Note :
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.8,50,000 with your eligible Deduction under 80C.
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 : Impact of Section 115BAC if Individual eligible for Deduction under Section 80C & 80D
| 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 |
Note :
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.
Table - 4 : Impact of Section 115BAC if Individual eligible for Deduction under Section 80C, 80D and Standard Deduction U/s 16
| 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 |
7,00,000 |
33,800 |
-- |
-33,800 |
8,00,000 |
46,800 |
23,400 |
-23,400 |
9,00,000 |
62,400 |
44,200 |
-18,200 |
10,00,000 |
78,000 |
65,000 |
-13,000 |
11,00,000 |
98,800 |
85,800 |
-13,000 |
12,00,000 |
1,19,600 |
1,06,600 |
-13,000 |
13,00,000 |
1,43,000 |
1,32,600 |
-10,400 |
14,00,000 |
1,69,000 |
1,63,800 |
-5,200 |
15,00,000 |
1,95,000 |
1,95,000 |
- |
16,00,000 |
2,26,200 |
2,26,200 |
- |
17,00,000 |
2,57,400 |
2,57,400 |
- |
18,00,000 |
2,88,600 |
2,88,600 |
- |
Note :
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 : Impact of Section 115BAC if Individual eligible for Deduction under Section 80C, 80D, Standard Deduction U/s 16 and Deduction for Interest on Housing Loan U/s 24(b)
| 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 |
Note :
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 |
