TL;DR for CAs
- Default regime is the new tax regime under Section 115BAC.
- Old regime still useful when deductions exceed the break-even threshold.
- Advise clients with Form 10-IEA when opting out of the new regime (business income).
What it is
The Finance Act introduced a concessional slab structure under Section 115BAC. For most salaried taxpayers, the new regime is now the default. The old regime remains available with Chapter VI-A deductions and exemptions.
Who it applies to
Individuals and HUFs. Business/profession income cases need Form 10-IEA to opt out. Salary-only taxpayers can choose at return filing.
Key provisions
- Compare effective tax under both regimes before finalising Form 16 / ITR strategy
- Factor standard deduction, employer NPS, and rebate u/s 87A
- Track HRA, 80C, 80D, home loan interest carefully for old-regime clients
Practical tips for CAs
Run a dual-regime worksheet for every high-deduction client. Document the recommendation in working papers. Revisit annually when slab rates or rebate limits change.
Common mistakes
Ignoring employer benefits that only work in the old regime; missing Form 10-IEA deadlines; assuming new regime is always cheaper for senior citizens with large medical deductions.
For general guidance only. Verify with the latest Finance Act, GST notifications, and ICAI guidance notes before advising clients.