Option under Income Tax Section 115BAC – Old vs. New Tax Regime

Option under Income Tax Section 115BAC – Old vs. New Tax Regime

 Section 115BAC of the Income Tax Act, 1961 inserted by the Finance Act 2020 has introduced a new income tax regime that comprises a significant change in the tax slabs rates. Taxpayers have been provided with an option whether they want to pay taxes according to the existing regime.

1. Old Tax Regime:

Under the Old regime, the tax shall be calculated considering all deductions and exemptions allowed under Income Tax Act, 1961, which were hitherto available. The slab rates are mentioned in table below.

2. New Tax Regime:

Under the New Tax Regime, tax shall be calculated as per the slab rates as mentioned in table below. In this regime, the tax rates are kept lower but no exemptions/deductions are allowed.

Option under Income Tax Section 115BAC – Tax Slab Table Old vs. New Tax Regime Table

Tax Slab	Earlier Rate	New Rate
Upto 2.50 lakh	Nil	Nil
2.50 to 5.00 lakh	5%	5%
5.00 to 7.50 lakh	20%	20%
7.50 to 10.00 lakh		15%
10.00 to 12.50 lakh	30%	20%
12.50 to 15.00 lakh		25%
Above 15.00 lakhs		30%