New Tax Regime w.e.f. AY 2024-25

Section 115BAC(1A) provides rate of tax applicable to New Tax Regime w.e.f 01-04-2024 i.e. FY 2023-24 (AY 2024-25). Below table compares the tax rates between New Tax Regime & Old Tax Regime: 

New Tax Regime u/s 115BAC(1A)		Old Tax Regime
Total Income	Tax Rate	Total Income	Tax Rate
Upto 3 Lacs	0%	Upto 2.5 Lacs	0%
Above 3 Lacs - Upto 6 Lacs	5%	Above 2.5 Lacs - Upto 5 Lacs	5%
Above 6 Lacs - Upto 9 Lacs	10%	Above 5 Lacs - Upto 10 Lacs	20%
Above 9 Lacs - Upto 12 Lacs	15%	Above 10 Lacs	30%
Above 12 Lacs - Upto 15 Lacs	20%
Above 15 Lacs	30%

List of deductions not available under New Tax Regime:

• Leave Travel Allowance u/s 10(5)
• House Rent Allowance u/s 10(13A)
• Prescribed Allowances u/s 10(14) with few exceptions
• Allowances to MP/MLA u/s 10(17)
• Deduction u/s 10(32) of Rs. 1,500/- in respect of Minor's Income
• Deductions to SEZ units u/s 10AA
• Entertainment Allowance to Government Employees u/s 16(ii)
• Tax on Employment / Professional Tax u/s 16(iii)
• Interest on Housing Loan in respect of Self Occupied Property or Vacant Property u/s 24(b) r.w. Section 23(2)
• Additional Depreciation u/s 32(1)(iia)
• Deduction u/s 32AD in respect of Investment in new plant or machinery in notified backward areas in certain States
• Deductions u/s 33AB & 33ABA
• Deductions in respect of scientific expenditure u/s 35(2AA), 35(1)(ii), 35(1)(iia) or 35(1)(iii)
• Deductions in respect of specified business u/s 35AD
• Rural Development Allowance u/s 35CCC
• Deductions under Chapter VIA, like:
• Employee's own contribution to NPS
• Health insurance premium u/s 80D
• Interest on education loan u/s 80E
• Donations to political party or trusts
• PPF Contributions, ELSS Investment, Life Insurance premiums paid, Tuition fees of children, 5 Year Tax Saver FDs, NSC, etc. u/s 80C
• Savings Interest u/s 80TTA or 80TTB
• Interest on electric vehicle loan u/s 80EEB
• Deduction available to disabled individual u/s 80U
• All other Chapter VIA deductions with few exceptions like 80CCD(2), 80CCH(2) and 80JJAA
• Set off or carry forward of any losses brought forward or unabsorbed depreciation attributable to deductions u/s 115BAC(2)(i) 
• Set off of house property losses with income from any other head

List of some of the prominent deductions available under New Tax Regime:

• Standard Deduction of Rs. 50,000/-
• Interest on Home Loan in case of let-out property
• Family Pension Deduction
• Employer's Share in Contribution of NPS u/s 80CCD(2)
• Central Government's Contribution to Agniveer Corpus Fund of Employee u/s 80CCH(2)
• Deduction in respect of employment of new employees u/s 80JJAA
• Gifts upto Rs. 50000/-
• Daily allowance received to meet the ordinary regular charges or expenditure one incurs on account of absence from his regular place of duty
• Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment
• Any compensation received to meet the cost of travel on tour or transfer
• Transport Allowance in respect of a specially-abled person
• Perquisites in respect of official purposes
• Gratuity exemption u/s 10(10)
• Leave encashment exemption u/s 10(10AA)
• Exemption in respect of voluntary retirement u/s 10(10C)

How to opt for New or Old Tax Regime:

Prior to FY 2023-24 (AY2024-25), your default tax regime was old tax regime and if you wanted to go with the new tax regime you were required to file a declaration in Form 10IE. 

W.e.f. 01-04-2024 i.e. FY 2023-24 (AY 2024-25), New Tax Regime has been made the default tax regime, meaning, you need not opt for new tax regime while filing your ITR, instead if you want to go with old tax regime then you will have to specifically opt for it by filing a declaration in Form 10IEA. 

• In case of Assessees not having income from business or profession:
• they can opt for new or old tax regime while filing their Income Tax Return on or before due date under Section 139(1).
• they can switch between new or old tax regime every year based on whichever  regime benefits them the most
  
  
• In case of Assessees having income from business or profession:
• they will be required to file a declaration in Form 10IEA to opt for old tax regime
• such declaration to be filed on or before due date under section 139(1) 
• such declaration once filed, will be valid for subsequent assessment years
• once such an option (switch to old tax regime) is exercised for any previous year, it can be withdrawn only once in future years and thereafter the person shall never be eligible to exercise the said option unless such person ceases to have business or profession income.

To make new tax regime more lucrative, Government has introduced many changes to new tax regime in Budget 2023. To read more about them, please read:

https://fcamayur.blogspot.com/2023/02/india-budget-2023-overview-of-important.html