Is s.115BAC still an option my client has to choose, and which form does he file now?
No. From the assessment year beginning 1 April 2024, s.115BAC(1A) is the default: an individual, Hindu undivided family, association of persons other than a co-operative society, body of individuals or artificial juridical person is taxed under it unless he exercises the option in s.115BAC(6) to be taxed outside it. Opting out is what now requires a form, and that form is Form 10-IEA under Rule 21AGA; Form 10-IE governed the earlier position, for AY 2021-22 to AY 2023-24, when the regime was an option to be opted into.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2024-04-01, reported as Section 115BAC(1A) and section 115BAC(6) with its proviso, Income-tax Act 1961; Form 10-IEA prescribed under Rule 21AGA of the Income-tax Rules 1962. It bears on section 115BAC, section 115BAC(1A), section 115BAC(2), section 115BAC(6), section 139(1) of the Income Tax Act 1961, in Assessment & Scrutiny and Deductions & Disallowances matters.
Every piece of advice framed as 'exercise the option under s.115BAC' is wrong for AY 2024-25 onwards, and the error runs the wrong way — a client who does nothing is now in the new regime and loses his Chapter VI-A deductions. The timing rules for the opt-out are asymmetric and this is where files are lost. A person with income from business or profession must exercise the opt-out on or before the due date under s.139(1); a person without such income exercises it along with the return furnished under s.139(1). Worse, the proviso to s.115BAC(6) allows a person in the first category one withdrawal only: once he has opted out for a year and then withdrawn that option for some other year, he is never again eligible to opt out while he has business or professional income, the sole escape being that if he ceases to have such income he falls into clause (ii) and may opt out with the return each year. A salaried client can change his mind annually; a proprietor cannot.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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Section 115BAC(1A) was inserted by the Finance Act 2023 with effect from 1 April 2024. It provides that notwithstanding anything contained in the Act but subject to the provisions of Chapter XII, the income-tax payable in respect of the total income of a person, being an individual or Hindu undivided family or association of persons (other than a co-operative society), or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, other than a person who has exercised an option under sub-section (6), for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be computed at the rate of tax given in the Table set out in that sub-section. Sub-section (6), inserted by the same Act with effect from the same date, provides the opt-out, exercisable in the prescribed manner, and distinguishes between a person having income from business or profession, who must exercise it on or before the due date under s.139(1) and whose option once exercised applies to subsequent assessment years, and a person not having such income, who exercises it along with the return furnished under s.139(1). For AY 2021-22 to AY 2023-24 the earlier form of s.115BAC operated as an option to be opted into, exercised in Form 10-IE.
Not applicable — statutory position. The operative propositions are: (a) from AY 2024-25 the s.115BAC(1A) regime applies by default and no form is needed to be within it; (b) the act requiring a form is the opt-out under s.115BAC(6), made in Form 10-IEA; (c) a person with income from business or profession must opt out on or before the s.139(1) due date and the opt-out then applies to subsequent years, and a person without such income opts out with each year's return; and (d) by the proviso to s.115BAC(6), an option exercised under clause (i) may be withdrawn only once, for a previous year other than the year in which it was exercised, and thereafter the person shall never again be eligible to exercise the option, unless he ceases to have any income from business or profession, in which case clause (ii) becomes available.
Not applicable — statutory position. The reversal of the default is achieved by the opening words of sub-section (1A), which apply the new rates to every person in the listed classes 'other than a person who has exercised an option under sub-section (6)', so that the regime operates unless displaced, and by sub-section (6), which is drafted as a disapplication of sub-section (1A) rather than as an election into it.
Provided that the option under clause (i), once exercised for any previous year can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise the option under this sub-section, except where such person ceases to have any income from business or profession in which case, option under clause (ii) shall be available.
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Handle my notice → Ask a CA on WhatsAppNo. From the assessment year beginning 1 April 2024, s.115BAC(1A) is the default: an individual, Hindu undivided family, association of persons other than a co-operative society, body of individuals or artificial juridical person is taxed under it unless he exercises the option in s.115BAC(6) to be taxed outside it. Opting out is what now requires a form, and that form is Form 10-IEA under Rule 21AGA; Form 10-IE governed the earlier position, for AY 2021-22 to AY 2023-24, when the regime was an option to be opted into. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 115BAC, section 115BAC(1A), section 115BAC(2), section 115BAC(6), section 139(1) of the Income Tax Act 1961. It is reported as Section 115BAC(1A) and section 115BAC(6) with its proviso, Income-tax Act 1961; Form 10-IEA prescribed under Rule 21AGA of the Income-tax Rules 1962. Every piece of advice framed as 'exercise the option under s.115BAC' is wrong for AY 2024-25 onwards, and the error runs the wrong way — a client who does nothing is now in the new regime and loses his Chapter VI-A deductions. The timing rules for the opt-out are asymmetric and this is where files are lost. A person with income from business or profession must exercise the opt-out on or before the due date under s.139(1); a person without such income exercises it along with the return furnished under s.139(1). Worse, the proviso to s.115BAC(6) allows a person in the first category one withdrawal only: once he has opted out for a year and then withdrawn that option for some other year, he is never again eligible to opt out while he has business or professional income, the sole escape being that if he ceases to have such income he falls into clause (ii) and may opt out with the return each year. A salaried client can change his mind annually; a proprietor cannot. If it applies to you, the first step is this: Establish first whether the client has income from business or profession, because that determines both the deadline for the opt-out and whether it is repeatable.
Section 115BAC(1A) was inserted by the Finance Act 2023 with effect from 1 April 2024. It provides that notwithstanding anything contained in the Act but subject to the provisions of Chapter XII, the income-tax payable in respect of the total income of a person, being an individual or Hindu undivided family or association of persons (other than a co-operative society), or body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, other than a person who has exercised an option under sub-section (6), for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be computed at the rate of tax given in the Table set out in that sub-section. Sub-section (6), inserted by the same Act with effect from the same date, provides the opt-out, exercisable in the prescribed manner, and distinguishes between a person having income from business or profession, who must exercise it on or before the due date under s.139(1) and whose option once exercised applies to subsequent assessment years, and a person not having such income, who exercises it along with the return furnished under s.139(1). For AY 2021-22 to AY 2023-24 the earlier form of s.115BAC operated as an option to be opted into, exercised in Form 10-IE. The matter was decided on 2024-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. Not applicable — statutory position. The operative propositions are: (a) from AY 2024-25 the s.115BAC(1A) regime applies by default and no form is needed to be within it; (b) the act requiring a form is the opt-out under s.115BAC(6), made in Form 10-IEA; (c) a person with income from business or profession must opt out on or before the s.139(1) due date and the opt-out then applies to subsequent years, and a person without such income opts out with each year's return; and (d) by the proviso to s.115BAC(6), an option exercised under clause (i) may be withdrawn only once, for a previous year other than the year in which it was exercised, and thereafter the person shall never again be eligible to exercise the option, unless he ceases to have any income from business or profession, in which case clause (ii) becomes available.
Not applicable — statutory position. The reversal of the default is achieved by the opening words of sub-section (1A), which apply the new rates to every person in the listed classes 'other than a person who has exercised an option under sub-section (6)', so that the regime operates unless displaced, and by sub-section (6), which is drafted as a disapplication of sub-section (1A) rather than as an election into it. In the words reproduced by the source cited on this page: "Provided that the option under clause (i), once exercised for any previous year can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise the option under this sub-section, except where such person ceases to have any income from business or profession in which case, option under clause (ii) shall be available."
It was decided by the CBDT Circulars & Instructions on 2024-04-01 and is reported as Section 115BAC(1A) and section 115BAC(6) with its proviso, Income-tax Act 1961; Form 10-IEA prescribed under Rule 21AGA of the Income-tax Rules 1962. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 115BAC, section 115BAC(1A), section 115BAC(2), section 115BAC(6), section 139(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. Not applicable — statutory position. The operative propositions are: (a) from AY 2024-25 the s.115BAC(1A) regime applies by default and no form is needed to be within it; (b) the act requiring a form is the opt-out under s.115BAC(6), made in Form 10-IEA; (c) a person with income from business or profession must opt out on or before the s.139(1) due date and the opt-out then applies to subsequent years, and a person without such income opts out with each year's return; and (d) by the proviso to s.115BAC(6), an option exercised under clause (i) may be withdrawn only once, for a previous year other than the year in which it was exercised, and thereafter the person shall never again be eligible to exercise the option, unless he ceases to have any income from business or profession, in which case clause (ii) becomes available. It arises in Assessment & Scrutiny and Deductions & Disallowances matters, on section 115BAC, section 115BAC(1A), section 115BAC(2), section 115BAC(6), section 139(1) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. For a client with business or professional income, diarise the opt-out for the s.139(1) due date, not the date of filing the return; a late return carries the opt-out with it into invalidity. Before withdrawing an existing opt-out, count the withdrawals already used — one is all a business or professional assessee gets, and after it the old regime is closed to him for as long as he has such income. For AY 2021-22 to AY 2023-24 look for Form 10-IE, which performed the opposite function of opting into the regime; do not look for Form 10-IEA in those years or for Form 10-IE in later ones. Where a Form 10-IEA has been filed by mistake and the return computes tax under the new regime, see Adit Nilesh Shah v DCIT (ITAT Bangalore, 17 August 2026) before withdrawing the Form — a withdrawal may cost the client his single opt-out.
Still good law. This states the current structure of s.115BAC as printed on the department's own section page. The page's Year stamp is '2024 (No. 1)', so a later amendment to the section cannot be excluded from that page alone; the slab table it prints is in any event superseded and no rates are stated here. I did not check for judicial decisions on the proviso to s.115BAC(6), and none is cited. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The text of s.115BAC(1A) and (6) and the footnotes attributing both to the Finance Act 2023 with effect from 1 April 2024 were read on the department's page at incometaxindia.gov.in/w/section-115bac-4, which carries the Year stamp '2024 (No. 1)'. That is the version as amended up to the Finance (No. 1) Act 2024, not the current year, so the slab table printed in sub-section (1A) on that page is not current — the rates in the table have since been revised and NO RATE OR SLAB IS STATED IN THIS ENTRY. The structural propositions stated here — that (1A) applies unless an option under (6) is exercised, and the terms of (6) and its proviso — are taken from that page and are not affected by later changes to the table, but a reader needing the rates must take them from a current source. The department's page at /w/section-115bac(-2) is on the known-stale list and was not used. Rule 21AGA is the rule under which Form 10-IEA is prescribed; the departmental rule page at incometaxindia.gov.in/Rules/Income-Tax Rules/103520000000098688.htm returned a 404 on this pass and the rule text itself was not read, so the rule number is stated on the strength of the department's own form listing and search index rather than on the rule text. The date in the decided_on field, 1 April 2024, is the date from which s.115BAC(1A) and s.115BAC(6) take effect and is NOT a decision date. Rule 21AGA no longer rests on the department's form listing alone: the department's own PDF of the form, at incometaxindia.gov.in/documents/d/guest/103520000000098689-pdf-1, prints as its header 'FORM No. 10-IEA / [See rule 21AGA] / Application for exercise of option under clause (i) of sub-section (6) of section 115BAC or withdrawal of option under the proviso to sub-section (6) of section 115BAC of the Income-tax Act, 1961'. That is a departmental primary source both for the rule number and for the fact that the same Form serves the exercise of the option and its withdrawal. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Not applicable — statutory position. The operative propositions are: (a) from AY 2024-25 the s.115BAC(1A) regime applies by default and no form is needed to be within it; (b) the act requiring a form is the opt-out under s.115BAC(6), made in Form 10-IEA; (c) a person with income from business or profession must opt out on or before the s.139(1) due date and the opt-out then applies to subsequent years, and a person without such income opts out with each year's return; and (d) by the proviso to s.115BAC(6), an option exercised under clause (i) may be withdrawn only once, for a previous year other than the year in which it was exercised, and thereafter the person shall never again be eligible to exercise the option, unless he ceases to have any income from business or profession, in which case clause (ii) becomes available.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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