The Finance Act 2020 has introduced s. 115BAC in the Income Tax Act 1961 w.e.f AY 2021 – 2022. As per the said section, an individual or a HUF having income other than business or profession may exercise the option in respect of a PY to be taxed at concessional rates provided in the said section along with filing of Return of Income. The concessional rates provided in s. 115BAC is subject to the condition that total income shall be computed without specific exemption or deduction, set off of loss and additional depreciation.
Representations had been received in regards TDS to be deducted that an employer wouldn’t know if a person being an employee would opt for s. 115BAC or not and TDS is to be deducted by the employer considering the provisions of s. 115BAC or not. In order to mitigate such hardship, it is clarified that an intimation shall be made to the deductor only for the purpose for deducting the TDS and shall intimation shall not be construed of an intimation to be filed along with the Return of Income.
Also, it is clarified for a person having income under ‘Profits and Gains for Business and Profession’ an option under s. 115BAC once exercised cannot be changed in subsequent years except in certain circumstances. Accordingly, the above clarifications would apply to such a person with a modification that the intimation to the employer in his case for his case in subsequent years should not deviate from option under s. 115BAC of the Act.