Section 115BAC – All About the New Tax Regime (FY 2023–24)

With the introduction of Section 115BAC, the Indian government offered taxpayers a choice: lower tax rates with fewer deductions or higher rates with full exemptions.

This new tax regime was first introduced in Budget 2020, and later made default from FY 2023–24 (AY 2024–25), unless the taxpayer opts out.

If you're confused about whether to go with the new tax regime or stick with the old, you're not alone. Let’s break it down so you can make the most tax-efficient choice.

✅ What Is Section 115BAC?

Section 115BAC allows individuals and HUFS to opt for concessional income tax rates, provided they forgo most exemptions and deductions like HRA, 80C, 80D, LTA, standard deduction, and more.

The objective? Simplify tax filing and reduce dependency on tax-saving investments.  "

From FY 2023–24 onwards, the new tax regime under 115bac is the default regime. Taxpayers who want to continue with the old regime must opt out while filing their ITR.

📊 New Tax Regime Slab Rates for FY 2023–24 (AY 2024–25)

💡 Under this regime, individuals with income up to ₹7 lakh get a full tax rebate under Section 87A — meaning zero tax.

🚫 Deductions Not Allowed Under New Regime

You cannot claim the following under Section 115BAC:

• Standard deduction of ₹50,000 (available from FY 2023–24 onwards only for salaried individuals under the new regime)
• 80C (LIC, PPF, ELSS, etc.)
• 80D (medical insurance)
• 80TTA / 80TTB (interest on savings account)
• HRA exemption
• LTA (Leave Travel Allowance)
• Home loan interest under Section 24(b) for self-occupied property
• Professional tax and entertainment allowance

However, the employer’s contribution to NPS (Section 80CCD(2)) is still allowed.

✅ Benefits of Choosing the New Regime

• Lower slab rates, especially beneficial if you don’t make many tax-saving investments
• No need for complex paperwork or proof submissions
• Good option for young earners, freelancers, or those with no major deductions

❌ When Not to Opt for the New Regime

• If you claim:
  • ₹1.5L under 80C
  • ₹50K under 80CCD(1B)
  • ₹25K–₹75K under 80D
  • HRA and home loan interest
• If your deductions exceed ₹ 3l , the old regime may save you more tax

📌 Don’t assume—calculate both scenarios before filing your ITR.

🧾 How to Choose Between Old vs New Tax Regime

🧠 People Also Ask

❓ Is 115BAC applicable to senior citizens?

Yes, senior and super senior citizens can also opt for the new tax regime, but they won’t get higher exemption limits like in the old regime.

❓ Can I switch regimes every year?

• Salaried individuals can choose every year while filing their ITR
• Business income taxpayers can switch only once—after that, they need to stick to the selected regime unless business income ceases

❓ Is 80C deduction allowed under 115BAC?

No. Section 80C is not allowed under the new tax regime. You must use the old regime to claim it.

❓ Can I claim home loan interest under 115BAC?

Only if the property is let out. For self-occupied homes, interest deduction under Section 24(b) is not available in the new regime.

⚠️ Common Mistakes to Avoid

• Assuming the new regime is always cheaper
• Forgetting to opt out if you want to stay in the old regime
• Filing under the wrong ITR form
• Missing salary exemptions like HRA or LTA under the old regime by mistake
• Not calculating both regimes before the final submission

🎯 Final Thoughts from a CA’s Desk

“The new regime under 115BAC offers simplicity—but simplicity without planning can lead to silent tax losses.”

Always compare your total tax liability under both regimes, especially if you have home loans, HRA, or medical policies. A ₹1,000 saving now could cost you a ₹20,000 deduction you overlooked.

📞 Confused Between Old vs New Tax Regime? Let Us Help.

At Callmyca, we help:

• Calculate your tax under both regimes
• Choose the most beneficial option
• File accurate, compliant ITRS
• Avoid deduction loss and tax mismatches

👉 Click here to book your tax regime planning and ITR filing with Callmyca