Clarification in respect of option under section 115BAC of the Income-tax Act, 1961

Last updated: 14 April 2020

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This notification provides clarification regarding the option available under Section 115BAC of the Income Tax Act, 1961. Introduced by the Finance Act, 2020, this section allows individuals and HUFs to opt for concessional tax rates. This option can be exercised when filing the income tax return for each year, provided the income is not from business or profession. However, opting for this concessional rate means the total income will be computed without certain exemptions, deductions, set-offs of losses, and additional depreciation.

F. No. 370142/13/2020-TPL

Government of India

Ministry of Finance

Department of Rcvenue

Central Board of Direct Taxes

New Delhi, April 13,2020

Clarification in respect of option under section IISBAC of the Income-tax Act, 1961

Section IISBAC of the Income-tax Act, 1961 (the Act), inserted by the Finance Act, 2020 wef the assessment year 202 1-22, infer alia, providcs that a person, being an individual or a Hindu undivided family having income other than income from business or profession", may exercise option in respect of a previous year to be taxed under the said section IISBAC alongwith his return of income to be furnished under sub-section (I) of section 139 of the Act for each year. The concessional rate providcd under section IISBAC of the Aet is subject to the condition that the total income shall be computed without specified exemption or deduction, setoff of loss and additional depreciation.

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FAQ :

Section 115BAC, inserted by the Finance Act, 2020, allows individuals and Hindu Undivided Families (HUFs) to opt for concessional tax rates on their income, provided it's not from business or profession.

Individuals and Hindu Undivided Families (HUFs) with income other than from business or profession can exercise this option.

The option can be exercised in respect of a previous year along with the return of income to be furnished under sub-section (1) of section 139 of the Act for each year.

The concessional tax rate is subject to the condition that the total income shall be computed without specified exemptions or deductions, set-off of loss, and additional depreciation.

Section 115BAC was inserted by the Finance Act, 2020, and is effective from the assessment year 2021-22.