While filing ITR, it’s asking if I want to exercise the option under section 115BAC(6). Not sure what that means. Should I leave it as ‘No’ or select ‘Yes’?”
Hi, this is something that confuses a lot of people while filing their ITR. Let’s break it down.
What is Section 115BAC?
Section 115BAC introduced the new tax regime in Budget 2023, which offers lower slab rates but removes most deductions and exemptions (like 80C, 80D, HRA, LTA).
From AY 2024-25 (i.e. FY 2023-24) onwards, the new regime is the default for all individuals & HUFs. That means, unless you actively opt out, your income will be taxed under the new regime by default.
What does this question mean?
For everyone filing their return, this question appears under the ‘Filing Status’ section of Part A - General Information in the ITR form.
It’s basically asking: whether you want to opt out of the new regime or continue with the old regime?
- Select ‘No’ if you want to stay with the new regime.
- Select ‘Yes’ if you want to opt out and be taxed as per old regime.
What should you choose?
There’s no one-size-fits-all answer, and it actually depends on your income sources and deductions.
- For most people who don’t have many deductions, the new regime is likely more beneficial.
- But if you have major deductions like HRA and home loan interest, old regime might help you save more.
Read this guide to decide which regime works better for you.
Happy tax filing!
The Income Tax Act introduces the first optional tax regime for individuals and HUFs in Section 115BAC. This regime offers lower tax rates without any exemptions and deductions. According to their preferences, taxpayers can choose between the old and new tax regimes.