Section 115BAC

Section 115BAC — the law in short

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

• Ravi Agrawal v Union of India Supreme CourtHelps departmentSuperseded by amendment
  My client took a Jeevan Aadhar policy for his disabled child and claimed s.80DD, but the policy pays nothing while he is alive. Is that condition open to challenge?
  The Supreme Court held it is not. Section 80DD(2)(a), which allowed the deduction only where the scheme provided for payment of the annuity or lump sum on the death of the subscriber, was held to rest on a reasonable classification with a rational objective and could not be struck down under Article 14; the Court said it cannot direct Parliament to amend a provision in a specified manner. It disposed of the writ petition by urging the Union to have a relook and explore suitable amendments — and Parliament then did amend the section.
• Sumit Maloo v ITO, Kishangarh ITATHelps taxpayerNo later treatment found
  The Assessing Officer has disallowed my whole Chapter VI-A block — 80C, 80D, 80G — and my HRA, saying I filed no documentary evidence. I did file it. What do I do?
  The Jaipur Tribunal restored almost all of it, holding that where the assessee has actually placed the evidence on record the Assessing Officer and the CIT(A) cannot disallow "arbitrarily" without discussing those documents. On s.80D in particular the Tribunal allowed Rs 50,000 of medical expenditure incurred on a dependent father who was a senior citizen suffering from Parkinson's, on the strength of a doctor's prescription, the father's Aadhaar showing his age, and bank entries evidencing the spend — with no insurance policy at all.
• Adit Nilesh Shah v Deputy Commissioner of Income Tax ITATHelps taxpayerNo later treatment found
  My consultant filed Form 10-IEA opting me out of the new regime by mistake, but my return was computed under s.115BAC(1A). The CPC has processed me under the old regime. Can the return prevail over the form?
  Yes, on these facts. The Bangalore Tribunal directed the CPC to process the return for AY 2025-26 under the new regime under s.115BAC(1A) as opted in the return, holding that a bona fide procedural mistake in filing Form 10-IEA should not subject the assessee to a regime contrary to the choice clearly reflected in the return filed afterwards. It rejected the Commissioner (Appeals)' view that digital verification of the Form made it conclusive.
• Manmohan Singh v ITO ITATHelps taxpayerNo later treatment found
  I filed my return under the new regime by default, then filed a revised return within time switching to the old regime and claiming my exemptions and Chapter VI-A deductions. The CPC has processed it under the new regime saying the regime cannot be changed in a revised return. Can it?
  On this order, yes, for a salaried assessee with no business or professional income. The Tribunal held that a revised return filed in time under s.139(5) supersedes the original, that the proviso to s.115BAC(6) restricting the number of times the option may be exercised does not apply where there is no business or professional income, and that the filing of Form 10-IEA is procedural — the delay in filing it was condoned and the fact of filing it satisfied the requirement. The Assessing Officer was directed to process the revised return under the old regime with the exemptions and deductions claimed.
• Hirabhai Karshanbhai Solanki v ITO, Rajkot ITATHelps taxpayerNo later treatment found
  In a s.147 reassessment the Assessing Officer has thrown out my s.80U disability deduction along with 80C and 80TTA because I produced nothing during the assessment. Can I still prove it in appeal?
  Yes, on this order. The Rajkot Tribunal deleted the whole Chapter VI-A disallowance where the assessee produced LIC premium receipts and notified mutual fund receipts for s.80C, and for s.80U produced a disability certificate issued by the competent medical authority — the assessee also appearing personally before the Tribunal — holding that "such evidence cannot be ignored".
• Abhishek Rajeshbhai Karia v ITO, Ahmedabad ITATCuts both waysNo later treatment found
  My s.148 reassessment started over a political donation but the Assessing Officer has disallowed my 80D and 80DDB for my parents' medical expenses as well. Are those safe?
  On this order the s.80D claim of Rs 75,000 for health insurance premium and medical expenditure incurred for the assessee's parents was allowed outright, the Tribunal holding the disallowance unjustified because the expenditure was incurred for his parents and is deductible under s.80D. The s.80DDB claim of Rs 87,000 for a father diagnosed with cancer was NOT allowed: it went back to the Assessing Officer because eleven documents called for had never been produced either before him or before the CIT(A).
• Ankit Kabra v ITO ITATHelps departmentNo later treatment found
  My client's total income is under Rs 7 lakh but it includes a small crypto gain, and the CPC has knocked out his Rs 25,000 rebate under section 87A. Is that right?
  On this decision, yes. The Surat Bench held that where the tax on VDA income is computed under s.115BBH, the case is not covered by s.115BAC and the rebate under the proviso to s.87A — which is expressed to apply where the total income is chargeable to tax under s.115BAC(1A) — is therefore not available against it. The appeal was dismissed and the disallowance of the Rs 25,000 rebate for AY 2024-25 was upheld.
• Dr. Rangasamy Sudha v ITO, Erode ITATHelps taxpayerNo later treatment found
  I meant to stay in the new regime but a wrong Form 10-IE put me back in the old one, and CPC has taxed me under the old regime with no Chapter VI-A deductions because I claimed none in the return. Can I claim them now?
  Yes. The Chennai Tribunal held that a fresh claim of deduction made for the first time before the first appellate authority has to be entertained, and directed the Assessing Officer to recompute the income allowing Rs 2,00,000 of Chapter VI-A deductions — Rs 1,50,000 under s.80C and Rs 50,000 under s.80TTB — that had never been claimed in the return. If CPC has processed the return on the old regime, the assessee is entitled to the old regime's deductions.
• K.R. Madhusudhan (HUF) v ACIT (CPC) ITATHelps taxpayerNo later treatment found
  CPC has denied my HUF the s.80GG deduction for rent paid, saying only an individual can claim it. Is that right?
  The Bangalore Tribunal held it is not. Section 80GG speaks only of an "assessee" and does not confine the deduction to an individual, so the deduction cannot be refused on that ground alone — but the Tribunal made the relief conditional on the assessee filing Form No. 10BA under Rule 11B, and remitted the matter to the Assessing Officer for that purpose.
• Smt. Vandana Manoj Shah v ITO, Ahmedabad ITATHelps taxpayerNo later treatment found
  The Assessing Officer has withdrawn my s.80E deduction by a s.154 rectification, saying the education loan was taken by my major married son and not by me. Can he do that under s.154?
  No, on this order. The Ahmedabad Tribunal held that deciding the nature of the loan and who took it would require a long drawn process of hearing, that the question is debatable, and that it therefore cannot be the subject matter of s.154 proceedings — and deleted the disallowance. The Tribunal did not decide the underlying question whether the deduction was in fact available.
• Statutory position — s.57(iia): the family pension deduction, and the higher figure under s.115BAC from AY 2025-26 CBDT Circulars & InstructionsCuts both ways
  My client receives a family pension. What deduction can she take, and is the higher figure under the new regime available from AY 2024-25?
  The deduction under s.57(iia) is one-third of the family pension or Rs 15,000, whichever is less. A proviso substitutes Rs 25,000 for Rs 15,000 where income-tax is computed under clause (ii) of sub-section (1A) of s.115BAC — and that proviso takes effect from 1 April 2025, so the higher figure is available from AY 2025-26 and not from AY 2024-25.
• 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.
• CBDT Circular No. 3/2025 - salary TDS for FY 2024-25 CBDT Circulars & InstructionsCuts both ways
  Is there one document that tells the payroll department how to deduct on salary for the year?
  Yes. The Board issues an annual circular under s.192 and this is the one for financial year 2024-25. It consolidates the rates, the amendments made by the Finance Acts of 2023 and 2024, and the mechanics of the employer's deduction, and states that where no amendment has been made the position in the earlier circular for financial year 2022-23 continues.
• Statutory position — s.192: the employer deducts at the average rate on his own estimate of the year's salary, and the declarations exist to correct the estimate CBDT Circulars & InstructionsCuts both ways
  I run payroll. Section 192 has no threshold and no percentage in it like every other TDS section does — so how much am I supposed to deduct, and which of my employee's declarations am I actually obliged to act on?
  Section 192 does not work like the rest of Chapter XVII-B: there is no threshold below which you need not deduct and no flat percentage to apply. You deduct, at the time of payment, "at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year" — that is, you build the employee's whole year's salary, work out the tax on it at the slab rates, divide that tax by that salary, and apply the resulting rate to each payment. Everything else in the section exists to make that estimate accurate: sub-section (2) lets the employee bring in salary from another employer in Form 12B, (2A) lets him bring in relief under section 89 in Form 10E, (2B) lets him bring in other income, other tax deducted or collected and a house property loss in Form 12BAA, (2D) obliges you to collect evidence of his claims in Form 12BB, and (2C) obliges you to give him back a statement of his perquisites in Form 12BA. Sub-sections (1A) and (1B) let you choose to pay the tax on a non-monetary perquisite yourself instead of deducting it, and section 115BAC(1A) is the default regime from assessment year 2024-25, so your estimate is made under it unless the employee tells you otherwise. This is the section as it stood after Act No. 15 of 2024 with effect from 1 October 2024; it governs salary paid up to 31 March 2026, after which section 392 of the Income-tax Act, 2025 takes over.
• 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.
• Statutory position — s.194P: the specified senior citizen, the declaration, and relief from filing CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My client is 78, has only pension and interest from the same bank, and does not want to file a return. Does s.194P get him out of filing, and what does the bank need from him?
  Yes, but only if every condition is met, and the relief is a consequence of the bank's deduction and not of the client's age. Section 194P(2) provides that s.139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which tax has been deducted under sub-section (1) — so if the bank does not compute and deduct, the return obligation remains. Sub-section (1) requires a 'specified bank' to compute the total income after giving effect to Chapter VI-A deductions and the s.87A rebate and to deduct tax on that total income at the rates in force, and the Explanation confines a 'specified senior citizen' to a resident individual aged seventy-five or more at any time during the previous year, whose income consists of pension and no other income except interest received or receivable from an account maintained by him in the SAME specified bank in which he receives his pension, and who has furnished the prescribed declaration to that bank.
• Statutory position — partial integration: agricultural income is exempt under the Income-tax Act but is aggregated for RATE purposes, and that aggregation is enacted by the annual Finance Act, not by the Income-tax Act CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My client's agricultural income is exempt, so why has the system charged tax at a higher rate on his non-agricultural income, and where in the Act is that written?
  It is not written in the Income-tax Act at all, and that is the point. Section 10(1) excludes agricultural income from total income and the Income-tax Act contains no provision aggregating it; the aggregation is enacted afresh every year by section 2 of the annual Finance Act, which is the Central Act contemplated by section 4(1) of the Income-tax Act as fixing the rate. Sub-section (2) of that section applies where Paragraph A of Part I of the First Schedule applies and the assessee has, in the previous year, net agricultural income exceeding FIVE THOUSAND RUPEES in addition to total income, and the total income exceeds the basic exemption amount named in that sub-section. Where it applies, the net agricultural income is taken into account only for the purpose of charging income-tax on the total income, and the computation is: aggregate the total income and the net agricultural income and work out the tax on the aggregate at the Paragraph A rates; then increase the net agricultural income by the basic exemption sum and work out the tax on that figure at the same rates; the second amount is deducted from the first, and what is left is the tax on the total income.

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.