Section 115BAC(2)

Section 115BAC(2) — the law in short

What the courts have decided on section 115BAC(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Statutory position — s.80CCD(1B) and s.80CCD(2): the fifty-thousand NPS deduction that does NOT survive s.115BAC(1A), the employer contribution that does, and the fourteen per cent proviso inserted by Act No. 15 of 2024 CBDT Circulars & InstructionsCuts both ways
  My client is in the default regime under s.115BAC. Can he still claim the extra fifty thousand for NPS, and what is the ceiling on his employer's NPS contribution now?
  No on the first, better news on the second. Section 115BAC(2)(i) computes the total income of a person taxed under s.115BAC(1A) without any deduction under Chapter VI-A other than sub-section (2) of section 80CCD, sub-section (2) of section 80CCH and section 80JJAA — so the additional Rs. 50,000 deduction under s.80CCD(1B) is not available in the default regime, while the employer's contribution deduction under s.80CCD(2) is. On the ceiling: s.80CCD(2) allows fourteen per cent of salary where the contribution is made by the Central Government or a State Government and ten per cent where it is made by any other employer, but a proviso inserted by Act No. 15 of 2024 with effect from 1 April 2025 provides that where the total income is chargeable to tax under s.115BAC(1A), sub-section (2) has effect as if for the words "ten per cent" in clause (b) the words "fourteen per cent" had been substituted.
• Statutory position — s.115BAC(1A): the default personal regime from AY 2024-25 and the single Form 10-IEA opt-out CBDT Circulars & InstructionsCuts both ways
  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.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.