October 10, 2025
7 mins read
To file your taxes with less stress and paperwork Section 115BAC could be the simpler route for you. It was introduced to offer individuals and Hindu Undivided Families (HUFs) a no-fuss way to compute their tax. With lower slab rates and fewer deductions, it aims to cut down the complexity of filing returns. But is it right for you? Let’s break it down step-by-step.
Section 115BAC is part of India’s Income Tax Act, introduced through the Finance Act, 2020. It offers an alternative method of calculating income tax for individual taxpayers and Hindu Undivided Families (HUFs). This regime applies lower slab rates but removes many common deductions and exemptions.
The main goal behind this change was to simplify tax filing. Instead of managing multiple tax-saving investments or claiming allowances, taxpayers can choose a cleaner system with fewer components. From FY 2023–24, this new regime has been made the default option for taxpayers.
This section is available to:
Individual taxpayers (residents and non-residents)
Hindu Undivided Families (HUFs)
Both salaried and self-employed individuals can use this system. However, it does not apply to companies or partnership firms.
For salaried individuals, this option can be chosen every financial year while filing the return. But for those who have income from a business or profession, switching regimes is allowed only once. After that, the old regime cannot be selected again unless the business income stops.
The new tax regime provides a different set of income slabs and corresponding rates. These rates are meant to reduce the tax burden but remove most exemptions.
Annual Income (₹) | Tax Rate |
Up to ₹3,00,000 | 0% |
₹3,00,001 – ₹6,00,000 | 5% |
₹6,00,001 – ₹9,00,000 | 10% |
₹9,00,001 – ₹12,00,000 | 15% |
₹12,00,001 – ₹15,00,000 | 20% |
Above ₹15,00,000 | 30% |
From FY 2023–24, the government also introduced a standard deduction of ₹50,000 under this regime. Additionally, individuals with income up to ₹7 lakh get full tax relief through a rebate under Section 87A.
(Source: Union Budget 2023, Ministry of Finance)
Choosing this new regime means giving up many exemptions and deductions available in the old system. This is a key difference between the two methods.
House Rent Allowance (HRA)
Leave Travel Allowance (LTA)
Section 80C (Investments in PPF, ELSS, etc.)
Section 80D (Medical insurance premiums)
Home loan interest under Section 24(b)
Standard deduction (not available before FY 2023–24)
Children education and hostel allowances
Interest on savings account under Section 80TTA
These deductions play a big role in the old regime. Their removal is what allows the lower slab rates under the new tax structure.
(Source: Income Tax Department Circulars & FAQs)
Additional Read: Section 194IC TDS of Income Tax Act
Despite its restrictions, some deductions are still permitted under the new tax rules.
Standard deduction of ₹50,000 (available from FY 2023–24)
Employer contribution to NPS (Section 80CCD(2))
Rebate under Section 87A for income up to ₹7 lakh
Deduction under Section 80JJAA (for businesses creating new jobs)
These few exemptions aim to retain essential benefits while keeping the system simple. Most other personal tax benefits are excluded to streamline the structure.
Section 115BAC offers a new way of computing personal income tax. By giving up a range of exemptions, taxpayers can benefit from reduced slab rates and a simplified process. Since April 2023, this method is set as the default, although the option to choose the old regime still remains.
The decision to pick between the two depends on a person’s financial profile, income composition, and deductions claimed. For some, the new regime might be beneficial due to its simplicity. For others with high deductions, the old structure may work better.
For up-to-date details, one should rely on trusted sources like the Income Tax India portal or the official budget announcements by the Ministry of Finance.
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No, it is not compulsory. While it is the default option from FY 2023–24, you can choose the old regime while filing your return.
You can select it while filing your Income Tax Return (ITR) on the official tax portal. The choice must be made before submitting your return.
From the financial year 2023–24 onwards, a standard deduction of ₹50,000 is allowed even under the new regime.
Yes. Salaried taxpayers can switch every year. Those with business or professional income can change only once.
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