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Section 202 Income Tax Act 2025: What Are the New Tax Regime Slabs?

Section 202 of the Income-tax Act, 2025 prescribes the default new tax regime for individuals, Hindu undivided families and specified other persons. It sets out progressive tax slabs, restrictions on deductions and the procedure for opting out.

Current law: Section 202 applies under the Income-tax Act, 2025 effective from 1 April 2026. This guide follows the Act as amended by the Finance Act, 2026. Rates below are slab rates; rebate, surcharge and cess are governed by separate provisions.

Who is covered by Section 202?

Section 202(1) applies by default to an individual, a Hindu undivided family (HUF), an association of persons (other than a co-operative society), a body of individuals (whether incorporated or not) and an artificial juridical person referred to in Section 2(77)(g). Its operation is subject to the statutory provisions identified in Section 202(1), including Chapter XVII-B and relevant parts of the Chapter.

What are the income tax slabs under Section 202(1)?

The following rates apply progressively to total income under the default new regime for tax year 2026-27 onwards, subject to the applicable law:

Total income (Rs.)	Rate
Up to 4,00,000	Nil
4,00,001 to 8,00,000	5%
8,00,001 to 12,00,000	10%
12,00,001 to 16,00,000	15%
16,00,001 to 20,00,000	20%
20,00,001 to 24,00,000	25%
Above 24,00,000	30%

Illustration: For ordinary slab-taxed total income of Rs. 10,00,000, tax before any rebate, surcharge or cess is Rs. 40,000: 5% of Rs. 4,00,000 plus 10% of Rs. 2,00,000. The final tax payable may differ because of other statutory provisions, including rebates and special-rate income.

Which deductions and losses are restricted?

Section 202(2): Computation conditions

Taxable income under this regime is calculated without the specified exemptions and deductions listed in Section 202(2)(a). These include specified entries in Schedule III, Section 19(1) (Table: Sl. No. 1), Section 22(1)(b) for specified properties, Sections 33(8), 48, 49, 45(3)(a) to (c), 46 and 47(1)(a), and Chapter VIII except Sections 124(1), 124(2), 125(2) and 146. The exact scope of each restriction depends on the relevant provision.

Section 202(2)(b) also disallows set-off of earlier-year losses or depreciation attributable to the listed deductions, and set-off of house-property loss against income under another head. Section 202(2)(c) disallows exemptions or deductions for allowances or perquisites under other laws.

Section 202(3): Treatment of restricted carry-forward amounts

Loss and depreciation covered by Section 202(2)(b) are deemed to have been given full effect, and no further deduction for those amounts is permitted in a later year.

Can taxpayers choose the old tax regime?

Yes. Under Section 202(4), eligible persons may opt out of the default regime in the prescribed manner.

Business or professional income: Exercise the option on or before the return-filing due date under Section 263(1). The option ordinarily continues for subsequent tax years. It may be withdrawn once in a later year, after which it cannot generally be exercised again while business or professional income continues.
No business or professional income: Exercise the option along with the return under Section 263(1) for the relevant tax year.

Taxpayers should consider the deductions actually available, the prescribed filing procedure and the consequences of their choice before opting out.

Special rule for IFSC units - Section 202(5)

For a person having a unit in an International Financial Services Centre, Section 202(5) modifies the deduction restrictions so that the deduction under Section 147 remains available to that unit, subject to the conditions of that section.

Relevant statutory definitions

Tax year - Section 3: The twelve-month period of the financial year beginning on 1 April, subject to special rules in that section.

Person - Section 2(77): An inclusive statutory expression covering individuals, HUFs, companies, firms, associations of persons, bodies of individuals, local authorities and artificial juridical persons.

Assessee - Section 2(11): Includes a person by whom tax or another sum is payable under the Act and persons covered by the additional limbs of that definition.

International Financial Services Centre - Section 2(61): Has the meaning assigned under Section 2(q) of the Special Economic Zones Act, 2005.

Frequently asked questions

Is the new regime compulsory?

No. It is the default regime for persons covered by Section 202, but Section 202(4) provides a prescribed option to opt out.

Does income up to Rs. 12 lakh automatically attract no tax?

Not under the slab table alone. Any zero-tax outcome above the nil-rate slab depends on a separate rebate provision and its eligibility conditions, including the nature of income. Section 202 itself sets out rates, not a universal Rs. 12 lakh exemption.

Can a person with business income switch regimes every year?

No. Section 202(4)(a) places continuing-effect and withdrawal restrictions on the opt-out election for business or professional income.

What was the corresponding provision in the Income-tax Act, 1961?

Section 115BAC addressed the new tax regime under the earlier Act. The Income-tax Act, 2025 governs tax years beginning from 1 April 2026, subject to transition provisions.

Official legal sources

Income-tax Act 2025 (amended text)Income Tax Department: Act and Rules Income Tax e-Filing Portal

Last reviewed: 11 November 2026. This article is general legal information and should be read with the applicable Act, rules and notifications.