Income Tax Reform: Section 115BAC of the Income Tax Act, 1961

Income Tax Reform and Circular Details

The circular, dated 09.10.2023, issued by the Directorate General of the Central Public Works Department in Nirman Bhawan, New Delhi, highlights the introduction of Section 115BAC of the Income Tax Act, 1961, through the Finance Act 2020. This new section introduces a significant change in the tax slab rates, giving taxpayers the option to choose between the old tax regime, which allows deductions and exemptions, and the new tax regime with lower tax rates but without exemptions.

Directorate General
Central Public Works Department
Nirman Bhawan, New Delhi
(Cash Section)

Dated 09.10.2023

CIRCULAR

Section 115BAC of the Income Tax Act, 1961 inserted by the Finance Act 2020 has introduced a new income tax regime that comprises a significant change in the tax slabs rates. Taxpayers have been provided with an option whether they want to pay taxes according to the existing regime.

1. Old Tax Regime:

Under the Old regime, the tax shall be calculated considering all deductions and exemptions allowed under Income Tax Act, 1961, which were hitherto available. The slab rates are mentioned in table below.

2. New Tax Regime:

Under the New Tax Regime, tax shall be calculated as per the slab rates as mentioned in table below. In this regime, the tax rates are kept lower but no exemptions/deductions are allowed.

Option under Income Tax Section 115BAC – Tax Slab Table Old vs. New Tax Regime

Table

All officials working in this Directorate are requested to furnish their option whether they want to compute their taxes as per Option 1 (Old Tax Regime) or Option 2 (New Tax Regime) by 20t October, 2023. If the required option is not furnished by due date, Income Tax will be calculated on the basis of Old Tax Regime.

(L FIMATE)
DDO/SO CASH