Proper tax planning puts together an individual’s financial goals, together with minimising tax liabilities. Following the adoption of Sec 115BAC as part of the Income Tax Act, the taxpayers will now be able to enjoy the simplification of their tax structures as well as an opportunity to reduce their taxes.
What is Section 115BAC of the Income Tax Act?
Key features of Sec 115BAC include revised tax slab rates, higher basic tax exemption limit of Rs. 3 lakhs and rationalised income tax rates ranging from 0% to 30% based on slabs. By making prudent investments, proper expense planning and focusing on compliance under Sec 115BAC, individuals and HUFs can restructure finances, increase savings and avail greater tax efficiency allowed under the simplified structure of this regime.
Sec 115BAC Slab Rates: Tax Rates Under the New Regime
The tax rates under the new regime are as follows:
| Annual Income Slab | Income Tax Rate |
| Rs. 0 Rs. 3,00,000 | Nil |
| Rs. 3,00,001 Rs. 6,00,000 | 0.05 |
| Rs. 6,00,001 Rs. 9,00,000 | Rs. 15,000 + 10% of total income over Rs. 6,00,000 |
| Rs. 9,00,001 Rs. 12,00,000 | Rs. 45,000 + 15% of total income over Rs. 9,00,000 |
| Rs. 12,00,001 Rs. 15,00,000 | Rs. 90,000 + 20% of total income over Rs. 10,00,000 |
| Above Rs. 15,00,000 | Rs. 150,000 + 30% of total income over Rs. 15,00,000 |
Surcharge Rates for FY 23-24 (AY 24-25)
The surcharge rates for FY 2023-24 are given below:
| Annual Taxable Income Range | Surcharge Rate |
| Rs. 50 Lakhs to Rs. 1 Crore | 0.1 |
| Rs. 1 Crore to Rs. 2 Crore | 0.15 |
| Rs. 2 Crore to Rs. 5 Crore | 0.25 |
| Rs. 5 Crore to Rs. 10 Crore | 0.25 |
| Rs. 10 Crore & Above | 0.25 |
Comparing the New and Old Regime Tax Slab Rates
Here are both the tax structures compared:
New Regime under Section 115BAC of the Income Tax Act:
- Provides revised tax slab rates for simplified calculations & lower tax liability
- Offers higher basic exemption limit of Rs. 3 lakhs
- Tax rates range from 0% to 30% based on income slabs
- No deductions or exemptions allowed
Old Tax Regime:
- Allows various exemptions and deductions under different IT Act sections
- Tax rates range from 5% to 30%
- Exemptions for allowances like HRA, LTA
- More complex with detailed compliance requirements
Taxpayers must evaluate loss of deductions against lower tax rates under 115BAC to determine the best regime for higher savings and efficiency.
Eligibility Criteria for the New Tax Regime
The new tax regime is available for the following class:
- Individuals including senior citizens
- Hindu Undivided Families
- Association of Persons excluding cooperative societies, bodies of individuals and artificial judicial persons
- Body of Individuals
- Artificial Juridical Persons
- Salaried employees
Once opted for, appropriate tax rates will apply based on the total taxable income slab. Careful consideration needed based on loss of exemptions.
Can I Change Between the New Regime U/S Section 115BAC and the Old Regime?
Taxpayers may switch between regimes under certain conditions:
- Salaried individuals inform their employer of choice at the start of financial year
- Non-salaried taxpayers choose when filing income tax returns
- Non-salaried with business income can switch back to old regime only once
- For non-salaried, moving back to new regime allowed only when business income ceases
- Change to the needed regime possible to save taxes
- Comparison of tax savings under both regimes needed
- Advisable to choose regime offering better savings and stability based on income and life stage
So while some flexibility is permitted, taxpayers must evaluate all factors carefully before changing tax regimes every year.
Can I Still Get Claim Deductions Under Section 80C and 80D in The New Regime U/S 115BAC?
A thorough comparison on the tax impact along with some changes is required before opting for the new tax regime.
- No deductions allowed under Sections 80C and 80D in the new tax regime
- Taxpayers must let go these deductions in exchange for lower tax rates
- Section 80D offers deduction on health insurance premiums
- Loss of these tax-saving deductions to be evaluated
- Create an optimal investment portfolio even without 80C
- Shift to cost-effective health plans if losing 80D benefits
- Balance loss of deductions against lower tax outgo under 115BAC
New Regime Vs. Old Regime
Given below is a comparison between the old and new tax regime for better understanding:
| Annual Taxable Income (After Standard Deduction) | Tax Under the Old Regime | Tax Under the New Regime | Tax Savings Under the New Regime |
| Up to Rs. 7,50,000 | Rs. 65,000 | Rs. 31,200 | Rs. 33,800 |
| Up to Rs. 10,00,000 | Rs. 117,000 | Rs. 62,400 | Rs. 54,600 |
| Up to Rs. 12,50,000 | Rs. 195,000 | Rs. 1,04,000 | Rs. 65,000 |
| Up to Rs. 15,00,000 | Rs. 273,000 | Rs. 1,56,000 | Rs. 1,17,000 |
Getting Started with StartupFino’s Services for Tax Planning under Section 115BAC
Start the process of efficient tax planning by contacting StartupFino’s customer support or visiting our website to schedule a free consultation. Our advisors will assess your eligibility for the new tax regime under Sec 115BAC based on employment status, income sources and financial goals.
You can opt for our specialised tax planning services where we identify deductions, rebates and structure finances efficiently under 115BAC.
Benefits of StartupFino’s Services
The main benefits of using StartupFino’s services for your tax planning with the new tax regime are:
- Expert Guidance
- Get personalised advice for your unique financial situation and goals
- Experienced advisors provide guidance on optimising tax savings under Sec 115BAC
- Comprehensive Solutions
- Comprehensive support in assessing eligibility, claiming deductions, managing compliance
- Tax planning, e-filing, investment advisory for minimising tax liability
- Efficiency and Convenience
- Simplified process with easy documentation and dedicated advisor
- Cloud-based tools for efficient tracking and payments
- Compliance support
- Ensure tax rules and deadlines are met, avoiding penalties
- Advisors assist with notice responses and litigation support
- Be assured that your taxes are managed by professionals
Final Thoughts
Efficient financial planning is a must for managing the income and the outflows of companies as possible. The adoption of Sec 115BAC is an effective regime that would make individuals pay lower taxes by repealing previous rates and scrapping exemptions through rationalising the existing taxation rates. Yet the process is not an easy task.
StartupFino helps taxpayers start their taxing process with the provision of comprehensive solutions and specifically personalised benefits as per their individual needs to enjoy tax benefits. StartupFino can be trusted as a tax planning partner to help taxpayers with a stable platform that will enable them to benefit for better economic development.
FAQs
1. How does Section 115BAC impact my tax liability?
Section 115BAC offers a new type of simplified tax regime with revised slab rates, which gives you an opportunity to lower your tax liability.
2. How can I switch between the old and new tax regimes?
Yes, you can switch between the 2 regimes. Salaried individuals can inform their employer at the start of the financial year, while non-salaried taxpayers can choose when filing income tax returns.
3. What are the benefits of choosing StartupFino’s tax planning services under Sec 115BAC?
StartupFino offers expert guidance and solutions with efficiency, convenience, and compliance support for efficient tax planning.
