The Finance Act 2024 amended the provisions of Section 115BAC to make new tax regime as a default tax regime for the assessee being an individual, HUF, AOP (not being cooperative societies), BOI or Artificial Juridical Person. The assessee has an option to opt out of new tax regime and opt for old tax regime.
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In non-business cases, every year a taxpayer can directly choose the regime (old or new) in the ITR to be filed or before the due date specified u/s 139(1).
For the eligible taxpayers having income from business and profession the new tax regime is the default tax regime. In case the assessee want to opt for old tax regime, they can furnish Form 10-IEA on or before the due date u/s 139(1) for furnishing the return of income.
The most important point to be noted here is that the option to switch to old tax regime and withdraw the option in any subsequent AY is available only once in lifetime for eligible taxpayers having income from business and profession.
Tax rates for Non Resident Individual are as under:
| Old Tax Regime | New Tax Regime u/s 115BAC | ||||
| Income Tax Slab | Income Tax Rate | *Surcharge | Income Tax Slab | Income Tax Rate | *Surcharge |
| Up to ₹ 2,50,000 | Nil | Nil | Up to ₹ 3,00,000 | Nil | Nil |
| ₹ 2,50,001 – ₹ 5,00,000 | 5% above ₹ 2,50,000 | Nil | ₹ 3,00,001 – ₹ 7,00,000 | 5% above ₹ 3,00,000 | Nil |
| ₹ 5,00,001 – ₹ 10,00,000 | ₹ 12,500 + 20% above ₹ 5,00,000 | Nil | ₹ 7,00,001 – ₹ 10,00,000 | ₹ 20,000 + 10% above ₹ 7,00,000 | Nil |
| ₹ 10,00,001- ₹ 50,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | Nil | ₹ 10,00,001 – ₹ 12,00,000 | ₹ 50,000 + 15% above ₹ 10,00,000 | Nil |
| ₹ 50,00,001- ₹ 100,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | 10% | ₹ 12,00,001 – ₹ 15,00,000 | ₹ 80,000 + 20% above ₹ 12,00,000 | Nil |
| ₹ 100,00,001- ₹ 200,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | 15% | ₹ 15,00,001- ₹ 50,00,000 | ₹ 1,40,000 + 30% above ₹ 15,00,000 | Nil |
| ₹ 200,00,001- ₹ 500,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | 25% | ₹ 50,00,001- ₹ 100,00,000 | ₹ 1,40,000 + 30% above ₹ 15,00,000 | 10% |
| Above ₹ 500,00,000 | ₹ 1,12,500 + 30% above ₹ 10,00,000 | 37% | ₹ 100,00,001- ₹ 200,00,000 | ₹ 1,40,000 + 30% above ₹ 15,00,000 | 15% |
| Above ₹ ₹ 200,00,001 | ₹ 1,40,000 + 30% above ₹ 15,00,000 | 25% | |||
*Note: The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112, 112A and Dividend Income. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%, except when the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E.
***Note: Health & Education cess @ 4% to be paid on the amount of income tax plus Surcharge (if any) in both the regimes.
Marginal relief can be claimed from surcharge if the amount of income earned exceeding ₹ 50 lakhs, ₹ 1 crore, ₹ 2 crore or ₹ 5 crores respectively as under:
| Net Income Range | Marginal Relief | |
| Exceeds (Rs.) | Does not exceed (Rs.) | |
| 50 Lakh | 1 Crore | Amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs |
| 1 Crore | 2 Crore | Amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore |
| 2 Crore | 5 Crore | Amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore |
| 5 Crore | – | Amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than the amount of income that exceeds Rs. 5 crore. |
Following deductions will be available to a taxpayer opting for the New Tax Regime u/s 115BAC:
- Section 24(b) – Deduction from Income from House Property on interest paid on housing loan:
| Nature of Property | Purpose of loan | Allowable (Maximum limit) |
| Let Out | Construction or purchase of house property | Actual value without any limit |
Tax deductions in the Old Tax Regime
- Section 24(b) – Deduction from Income from House Property on interest paid on housing loan & housing improvement loan. In case of self- occupied property, the upper limit for deduction of interest paid on housing loan is ₹ 2 lakh. Interest on loan u/s 24(b) allowable is tabulated below:
| Nature of Property | When loan was taken | Purpose of loan | Allowable (Maximum limit) |
| Self-Occupied | On or after 1/04/1999 | Construction or purchase of house property | ₹ 2,00,000 |
| On or after 1/04/1999 | For Repairs of house property | ₹ 30,000 | |
| Before 1/04/1999 | Construction or purchase of house property | ₹ 30,000 | |
| Before 1/04/1999 | For Repairs of house property | ₹ 30,000 | |
| Let Out | Any time | Construction or purchase of house property | Actual value without any limit |
Tax deductions specified under Chapter VIA of the Income Tax Act
Deduction towards payments made to –
- 80C
- Life Insurance Premium
- Provident Fund
- Subscription to certain equity shares
- Tuition Fees
- National Savings Certificate
- Housing Loan Principal
- Other various items
- 80CCC
- Annuity plan of LIC or other insurer towards Pension Scheme
- 80CCD(1)
- Pension Scheme of Central Government
[Combined deduction limit of ₹ 1,50,000]
- Section 80CCD(1B)
- Deduction towards payments made to Pension Scheme of Central Government, excluding deduction claimed under 80CCD (1) : Deduction limit of ₹ 50,000
- Section 80D
- Deduction towards payments made to Health Insurance Premium & Preventive Health check up
- For Self / Spouse or Dependent Children
- ₹ 25,000 (₹ 50,000 if any person is a Senior Citizen)
- ₹ 5,000 for preventive health check up, included in above limit
- For Parents
- ₹ 25,000 (₹50,000 if any person is a Senior Citizen)
- ₹ 5,000 for preventive health check up, included in above limit
- For Self / Spouse or Dependent Children
- Deduction towards Medical Expenditure incurred on a Senior Citizen, if no premium is paid on health insurance coverage
- For Self/ Spouse or Dependent Children : Deduction limit of ₹ 50,000
- For Parents : Deduction limit of ₹ 50,000
- Deduction towards payments made to Health Insurance Premium & Preventive Health check up
- 80E
- Deduction towards interest payments made on loan for higher education of self or relative : Total amount paid towards interest on loan taken
- 80EE
- Deduction towards interest payments made on loan taken for Acquisition of Residential House Property where the loan is sanctioned between 1st April 2016 to 31st March 2017 : Deduction limit of ₹ 50,000 on the interest paid on loan taken
- 80EEA
- Deduction towards interest payments made on loan taken for Acquisition of Residential House Property for the first time where the loan is sanctioned between 1st April 2019 to 31st March 2022 and deduction should not have been claimed u/s 80EE : Deduction limit of ₹ 1,50,000 on the interest paid on loan taken
- 80EEB
- Deduction towards interest payments made on loan for purchase of Electric Vehicle where the loan is sanctioned between 1st April 2019 to 31st March 2023 : Deduction limit of ₹ 1,50,000 on the interest paid on loan taken
- 80G
- Deduction towards donations made to certain funds, charitable institutions, etc.
- Donation are eligible for deduction under the below categories:
- Without any limit : 100% deduction & 50% deduction
- Subject to qualifying limit : 100% deduction & 50% deduction
- Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹2,000/-.
- 80GG
- Deduction towards rent paid for house and applicable only for whom HRA is not part of salary.
- Least of the following shall be allowed as deduction:
- Rent paid reduced by 10% of total income before this deduction
- ₹ 5,000 per month
- 25% of total income before this deduction
- Note: Form 10BA to be filed for claiming this deduction.
- 80GGA
- Deduction towards donations made for Scientific Research or Rural Development.
- Donation are eligible for deduction under the below categories:
- Research Association or University, College or other Institution for:
- Scientific Research
- Social Science or Statistical Research
- Association or institution for
- Rural Development
- Conservation of Natural Resources or for afforestation
- PSU or Local Authority or an association or institution approved by the National Committee for carrying out any eligible project
- Funds notified by Central Government for:
- Afforestation
- Rural Development
- National Urban Poverty Eradication Fund as setup and notified by Central Government
- Research Association or University, College or other Institution for:
- Note: No deduction shall be allowed under this section in respect of donation made in cash exceeding ₹ 2,000 or if gross total income includes income from Profit / Gains from Business / Profession.
- 80GGC
- Deduction towards Donations made to Political party or Electoral Trust : Deduction of total amount paid through any mode other than cash.
- 80IA
- Undertaking engaged in Developing, Maintaining and Operating any Infrastructure Facility (only Indian Company), Industrial Parks (any Undertaking), any Power Undertaking, Reconstruction or Revival of Power Generating Plants (Indian Company) shall be entitled to claim deduction
(subject to certain conditions)- 100% of profit for 10 consecutives AY falling within a period of 15 / 20 AY beginning with the AY in which Assessee develops / begins operating and maintaining infrastructure facility
- No deduction shall be allowed to any enterprise which starts the development or operation and maintenance of the infrastructure facility on or after the 1st April 2017.
- (No deduction shall be allowed if development, operation, etc. started after specified dates for specified business)
- Undertaking engaged in Developing, Maintaining and Operating any Infrastructure Facility (only Indian Company), Industrial Parks (any Undertaking), any Power Undertaking, Reconstruction or Revival of Power Generating Plants (Indian Company) shall be entitled to claim deduction
- 80IAB
- Deduction in respect of Profits and Gains by an Undertaking or an Enterprise engaged in development of Special Economic Zone (subject to certain conditions)
- 100% of profit for 10 consecutives AY out of 15 AY beginning from the year in which a Special Economic Zone has been notified by the Central Government
- No deduction to an Assessee, where the development of Special Economic Zone begins on or after 1st April 2017
- Deduction in respect of Profits and Gains by an Undertaking or an Enterprise engaged in development of Special Economic Zone (subject to certain conditions)
- 80IB
- Deduction towards Profits and Gains from specified business. 100% of profit for 10 years from the AY in which it is approved by prescribed authority (if approved after 31st March 2000 but before 1st April 2007)
- The deduction under this section is available to an Assessee whose gross total income includes any Profits and Gains derived from the business of:
- Industrial Undertaking including an SSI in J&K
- Commercial Production and Refining of Mineral Oil
- Processing, Preservation and Packaging of Fruits or Vegetables, Meat and Meat Products or Poultry or Marine or Dairy Products; Integrated Business of Handling, Storage and Transportation of Food Grains; (Subject to certain conditions)
- Indian Company with scientific and industrial research and development as its main object and approved by prescribed authority shall be entitled to claim deductions
- 100% / 25% of profit for 5 / 10 / 7 years as per conditions specified for different types of undertakings from the AY in which it is approved by prescribed authority (if approved before 1st April 1999)
- 80IBA
- Profit and Gains derived from Developing and Building Housing Projects : 100% of profit subject to various conditions specified
- 80IC
- Deduction in respect of certain Undertakings in Himachal Pradesh, Sikkim, Uttaranchal and North-Eastern states (subject to certain conditions) : 100% of profits for first 5 AY and 25% (30% for a Company) for next 5 AY to manufacture or produce specified article or thing
- 80IE
- Deduction to certain Undertakings set up in North – Eastern states (subject to certain conditions) : 100% of profits for 10 AY subject to various conditions specified
- 80JJA
- Deduction in respect of Profits and Gains from Business of Collecting and Processing of Biodegradable Waste (subject to certain conditions) : 100% of profits for 5 AY where the Gross Total Income of an Assessee includes any Profits and Gains derived from the Business of Collecting and Processing or treating of Biodegradable Waste
- 80JJAA
- Deduction in respect of Employment of New Workers / Employees, applicable to Assessee to whom Section 44AB applies (subject to certain conditions). : 30% of additional employee cost for 3 AY, subject to certain conditions
- 80TTA
- Deduction on interest received on Saving Bank Accounts by Individual (other than Senior Citizen) / HUF. : Deduction limit of ₹ 10,000/-
Updated as on 28-May-2025
Source: Income tax portal
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