Madhur Gandhi
The Income tax benefits under the New income tax scheme has 6 slabs as against 3 slabs under the old scheme. Section 115 BAC takes away 70 exemptions and deductions allowed, whereas the deduction/exemption allowed under this section are limited to:
| Deduction u/s 80CCD(2) (employer's contribution to your pension account) | Deduction u/s 80JJAA (additional employee cost) | Transport Allowance for Differently Abled Employees (Divyang) |
| Conveyance Allowance for Performance of Office Duties | Any Allowance for the Cost of Travel/ Tour/ Transfer | Daily Allowance given to Employees under Certain Conditions |
Therefore, assume you have opted for the new scheme, then you will not be able to claim these exemptions/deductions namely
| Major Deductions under Chapter VIA (u/s 80C, 80CCC, 80CCD, 80DD, 80DDB, 80E, 80EE, 80EEA, 80G, 80IA, etc) | House Rent Allowance (HRA) u/s 10(13A) | Home Loan Interest u/s 24(b) |
| Standard Deduction | Leave Travel Allowance u/s 10(5) | Deduction for Donation or Expenditure on Scientific Research |
| Allowances u/s 10(14) | Deduction for Entertainment Allowance and Employment/Professional Tax u/s 16 | Depreciation u/s 32(iia) |
| Deductions u/s 32AD, 33AB, 33ABA, 35AD, 35CCC | Exemption for SEZ unit u/s 10AA | Deduction from Family Pension u/s 57(iia) |
Therefore, if opting for new scheme then you will not be able to claim
1) Deduction for Interest on housing loan as well as Deduction of Principal home loan amount under section 80C, and
2) Standard Deduction on salary of Rs. 50,000/- will not be allowed to persons opting for new scheme.
3) Rebate under section 87A which is if your taxable income is less than Rs. 5,00000/- then no tax is payable ; will still be available under the new scheme.
4) No Carry forward losses and unabsorbed depreciation will be allowed to be set off or carry forward after one opts for going into the new scheme.
The new slabs of this scheme are
| Annual Income | New Income Tax Slab Rate |
| Nil to Rs. 2.5 lakh | Exempt |
| Above Rs. 2.5 lakh to Rs. 5 lakh | 5% |
| Above Rs. 5 lakh to Rs. 7.5 lakh | 10% |
| Above Rs. 7.5 lakh to Rs. 10 lakh | 15% |
| Above Rs. 10 lakh to Rs. 12.5 lakh | 20% |
| Above Rs. 12.5 lakh to Rs. 15 lakh | 25% |
| Above Rs. 15 lakh | 30% |
Whereas under old scheme, slab was as follows
| Income Tax Slab | Individuals Below The Age Of 60 Years – Income Tax Slabs |
|---|---|
| Up to Rs 2.5 lakhs | NIL |
| Rs. 2.5 lakh -Rs. 5Lakhs | 5% |
| Rs 5 .00 lakh – Rs 10 lakhs | 20% |
| > Rs 10.00 lakh | 30% |
Surcharge and Cess rates are common under both schemes.
Now, here a question arises as to whether if one opts for the new scheme at the start of the year and at the time of filing the ITR (Income tax return) he opts out of the new scheme. Is this allowed? Yes, this is allowed as the consent time is at the time of filing of ITR. Now, next year when he (Salaried employee) has decided to opt for the new scheme and then next time he decides to go into the old scheme this can be done but thereafter he will lose this option of going into the new scheme.
Also, whenever after opting for new scheme, the concerned assessee violates any of the conditions mentioned in Section 115 BAC, i.e. He has any income under 'PGBP' Profits and gains from business or profession, then also he loses this option of entering into the new scheme for that Financial year.
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