# Default Tax Regime — Section 115BAC

From A.Y. 2024-25 onwards, Section 115BAC is the default regime for Individuals, HUFs, AOPs, BOIs and Artificial Juridical Persons (AJP). It offers concessional slab rates but requires forgoing many exemptions and deductions. The assessee may opt out into the regular regime (normal rates with full deductions).

## A. Concessional slab rates (Default Regime) — A.Y. 2025-26

Income slab	Tax rate
Up to ₹4,00,000	NIL
₹4,00,001 – ₹8,00,000	5%
₹8,00,001 – ₹12,00,000	10%
₹12,00,001 – ₹16,00,000	15%
₹16,00,001 – ₹20,00,000	20%
₹20,00,001 – ₹24,00,000	25%
Above ₹24,00,000	30%

These rates apply on total income excluding income taxed at special rates under Chapter XII (e.g., 111A, 112, 112A, 115BB, 115BBJ).

## B. Conditions — deductions/exemptions NOT allowed [115BAC(2)]

Salaries: 10(5) LTC, 10(13A) HRA, 10(14) special allowances (except prescribed), Sec 16 entertainment allowance & professional tax.
House Property: Sec 24(b) interest on loan for self-occupied property.
PGBP: Sec 32(1)(iia) additional depreciation, Sec 35 contributions, Sec 35AD, Sec 10AA (SEZ holiday).
Other Sources: 10(17) MP/MLA allowance, 10(32) minor child income exemption (₹1,500).
Chapter VI-A: Sec 80C to 80U disallowed, EXCEPT:
80CCD(2) — employer's NPS contribution
80CCH(2) — Agnipath Scheme (Central Govt contribution)
80JJAA — additional employee cost

## Other restrictions

Losses: No set-off/carry forward of losses or depreciation relating to the above disallowances; House Property loss cannot be set off against other heads.
Depreciation: Max 40% on WDV of any block (even if eligible for higher); additional depreciation not allowed.
Allowances/Perquisites: No exemptions under any other law (e.g., the ₹50/meal perquisite exemption is not allowed).
Unabsorbed additional depreciation as on 1.4.2023 → added back to WDV of the block (since it can't be set off).

## Time limit to opt out of the default regime

	No business/profession income	With business/profession income
Time limit	Along with return u/s 139(1)	On or before due date u/s 139(1)
Flexibility	Can switch every year	Once opted out, applies to subsequent years
Withdrawal	N/A	Can withdraw option only once
Re-eligibility	N/A	Cannot opt in again unless business income ceases

## AMT

If the assessee stays in the default regime, no AMT under Section 115JC and no AMT credit.

Worked example

### Example 1

Example (unabsorbed additional depreciation): Mr. X has unabsorbed depreciation as on 1.4.2023 that includes additional depreciation u/s 32(1)(iia). For A.Y. 2024-25 he opts for the default regime u/s 115BAC. He cannot set off the unabsorbed additional depreciation against current income; instead, the WDV of the asset block on 1.4.2023 is increased by the amount that cannot be set off.

### Example 2

Example (allowed Chapter VI-A deductions): A salaried employee under the default regime cannot claim 80C, 80D etc., but can still claim 80CCD(2) for the employer's NPS contribution — making salary structuring through employer NPS attractive even in the new regime.

⚠️ Common exam mistakes

Forgetting that 80CCD(2), 80CCH(2) and 80JJAA remain allowed even under the default regime, while the rest of Chapter VI-A is disallowed.
Allowing Section 24(b) interest on a self-occupied house under the default regime — it is disallowed (only let-out property interest survives, restricted to taxable HP income).
Missing the differing time limits: business-income assessees must opt out by the due date u/s 139(1), and once they opt out they get only one withdrawal.
Forgetting that depreciation is capped at 40% and additional depreciation is fully disallowed under 115BAC.
Assuming AMT applies — under the default regime there is no AMT liability and no AMT credit.

Reference: Section 115BAC — Income-tax Act, 1961

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Default Tax Regime under Section 115BAC for Individuals/HUF/AOP/BOI/AJP

Worked example

⚠️ Common exam mistakes