Close ILTakeCare Suggestion
IL TakeCare app – For all your insurance & wellness needs

Policy purchase, claims, renewal & more

 

What is 115BAC of the Income Tax Act?

New tax regime! Understand Section 115BAC of the Income Tax Act and its implications on tax liabilities and regime options.

  • 12 Mar 2024
  • 2 min read
  • 75 views

To provide individuals with flexibility in tax planning, the Finance Act 2020 introduced a new provision called Section 115BAC under the Income Tax Act. This provision gives taxpayers the choice between the old and the new concessional tax regime. Understanding how Section 115BAC affects your taxes will empower you to make informed decisions about your tax planning strategies while staying compliant with laws and maximising your potential savings.

 

Let’s take a look at what Section 115BAC entails and how it affects taxpayers.

Section 115BAC of the Income Tax Act

 

  • Optional Tax Regime: Under Section 115BAC, individuals can choose between sticking to the existing tax regime, which includes all exemptions and deductions, or opting for a new concessional tax regime.

 

  • Tax Rates: The introduction of this concessional tax regime brings lower tax rates compared to those in the existing system. By selecting this option, individuals can potentially reduce their tax liabilities and enjoy a higher take-home pay.

 

  • Exclusions: Certain exemptions and deductions (such as HRA, education loan interest, etc.) related to investments, allowances, and expenditures are not available under the concessional tax regime. However, deductions for specified donations and contributions towards funds and health insurance premiums remain applicable.

 

It's important to note that premiums in health insurance policy can still be deducted under Section 80D of the Income Tax Act, regardless of which tax regime you choose. Taxpayers can claim deductions for premiums paid towards health insurance policies for themselves, their spouses, children and parents within specified limits.

 

Also read:

Conclusion

 

To conclude, Section 115BAC of the Income Tax Act allows taxpayers to choose between an existing and a new concessional tax regime. While the new regime offers tax rates, it does come with exemptions and deductions compared to the existing one. Therefore, individuals should carefully assess their circumstances and goals before deciding.

 

Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.

  • Looking for tailored advice?

    Schedule a call with our insurance advisors

  • OR
  • Call us:

    1800 2666
Please enter valid name
Please enter a valid mobile number
Please select the Category

Subscribe to our newsletter

Understand insurance better by reading our helpful guides, articles, blogs and other information.

Please enter valid name
Please enter valid Email

Error message here