## Default Tax Regime under Section 115BAC

Section 115BAC is now the default regime. Most allowance/perquisite exemptions and deductions are NOT available. The assessee may opt for the old regime if beneficial.

### Allowances NOT Exempt under 115BAC

House Rent Allowance (HRA) exemption — disallowed
Most other allowance exemptions — disallowed
Allowed exemptions: Travelling allowance, Daily allowance, Conveyance allowance, Transport allowance (for disabled employees)

### Perquisite Exemptions NOT Available

Leave Travel Concession (LTC) exemption
₹ 50 per meal (food coupon) exemption

### Deductions u/s 16 NOT Available

Entertainment Allowance deduction
Professional Tax deduction
✓ Standard Deduction of ₹ 75,000 IS allowed (note: higher than old regime's ₹ 50,000)

### Big Picture

The new regime trades off most exemptions/deductions in exchange for lower slab rates and a higher standard deduction. Compute tax under both regimes before deciding.

Worked example

### Example 1

Comparison: Mr. R has Basic ₹ 10,00,000 + HRA exemption claimable ₹ 1,20,000 + Professional Tax ₹ 2,500.

Old regime: Gross = 10,00,000; less HRA 1,20,000 = 8,80,000; less Std Ded 50,000; less PT 2,500 = Taxable Salary ₹ 8,27,500

New regime (115BAC): Gross = 10,00,000 (no HRA exemption); less Std Ded 75,000 = ₹ 9,25,000

Choice depends on resulting tax at applicable slabs.

⚠️ Common exam mistakes

Claiming HRA exemption under 115BAC — not allowed.
Using old standard deduction of ₹ 50,000 under new regime — it is ₹ 75,000.
Forgetting that 115BAC is the DEFAULT — assessee must opt out to use old regime.

Reference:

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Default / New Tax Regime — Section 115BAC

Worked example

⚠️ Common exam mistakes