Section 202 — Individual HUF New Regime | ITA 2025

Section 202 — - NEW REGIME SIMPLIFIED RATES FOR NON-CORPORATE ASSESSEES

Section 202 is the substantive equivalent of 1961 s. 115BAC -- THE NEW SIMPLIFIED RATE REGIME for individuals / HUFs / AOPs / BOIs (other than co-ops) / firms / LLPs. Introduced FA 2020 as opt-in alternative; FA 2023 made it the DEFAULT regime; FA 2024 / FA 2025 progressively expanded slabs and rebate (s. 156). Trade-off: lower rates + higher slab thresholds vs forgoing major Chapter VIII deductions (HRA / 80C / 80D / housing-loan interest etc.). FA 2025 SLABS (resident individuals): 0-INR 4L NIL; INR 4L-8L 5%; INR 8L-12L 10%; INR 12L-16L 15%; INR 16L-20L 20%; INR 20L-24L 25%; >INR 24L 30%. Plus s. 156 INR 60K rebate up to INR 12L makes effective tax NIL for resident individuals at INR 12L. Practitioner-grade rule: every individual return must model both regimes (old vs new); FA 2023 default-shift means new regime applies UNLESS opt-out via Form 10-IEA. Strategic decision-driver: deduction availability.

Statutory text — Income-tax Act, 2025

Marginal note -- Tax on income of individual / HUF / AOP / BOI / firm (new regime)

(1) Irrespective of anything contained in this Act other than Chapter XVII-B but subject to Parts A, B, E and this Part of this Chapter, the income-tax payable by a person, being—

(a) an individual; or

(b) a Hindu undivided family; or

(c) an association of persons (other than a co-operative society); or

(d) a body of individuals, whether incorporated or not; or

(e) an artificial juridical person referred to in section 2(77)(g), in respect of the total income for a tax year, shall, unless the person exercises the option in the manner provided under sub-section (4), be computed at the rate of tax given in the following Table:—

TABLE

Sl. No. Total income Rate of tax

A B C

1. Upto ` 400000 Nil

2. From ` 400001 to ` 800000 5%

3. From ` 800001 to ` 1200000 10%

4. From ` 1200001 to ` 1600000 15%

5. From ` 1600001 to ` 2000000 20%

6. From ` 2000001 to ` 2400000 25%

7. Above ` 2400000 30%

(2) For the purposes of sub-section (1), the total income of the assessee shall be computed—

(a) without any exemption or deduction under—

(i) Schedule III (Table: Sl. No. 5 or 6 or 7 or 8 or 11 or 17);

(ii) Schedule III (Table: Sl. No. 12 or 13) (other than those as may be prescribed for this purpose);

(iii) 25[***]

(iv) section 19(1) (Table: Sl. No. 1);

(v) section 22(1)(b), in respect of properties referred to in section 21(6)6;

(vi) section 33(8);

(vii) section 48;

(viii) section 49;

(ix) section 45(3)(a) or (b) or (c);

(x) section 46;

(xi) section 47(1)(a); and

(xii) Chapter VIII other than the provisions of section 124(1) and 124(2), or 125(2) or 146; and

(b) without set off of—

(i) any loss carried forward or depreciation from any earlier tax year, if such loss or depreciation is attributable to any of the deductions referred to in clause (a); or

(ii) any loss under the head “Income from house property” with any other head of income; and

25. Omitted by the Finance Act, 2026, w.e.f. 1-4-2026. Prior to its omission, sub-clause (iii) read as under : “(iii) section 144;”

(c) without any exemption or deduction for allowances or perquisite, called by any name, provided under any other law in force.

(3) The loss and depreciation referred to in sub-section (2)(b) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year.

(4) Nothing contained in sub-section (1) shall apply to a person, where an option is exercised by such person under this section, in such manner as may be prescribed, for any tax year, and such option is exercised,—

(a) in case of a person having income from business or profession,—

(i) on or before the due date specified under section 263(1) for fur- nishing the returns of income for such tax year15;

(ii) such option, once exercised, shall apply to subsequent tax years;

(iii) such option, once exercised, may be withdrawn only once for a tax year other than the tax year for which it was exercised; and

(iv) after such withdrawal, the person shall never be eligible to exercise the option under this sub-section, except where such person ceases to have any income from business or profession, and in such a case the option under clause (b) shall be available;

(b) in case of a person not having income from business or profession, along with the return of income to be furnished under section 263(1) for the tax year.

(5) In case of a person, having a Unit in the International Financial Services Centre, the provisions of sub-section (2) shall be modified to the extent that deduction under section 147 shall be available to such Unit subject to fulfilment of the conditions contained in that section. Tax on income of certain resident co-operative societies.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 -- s. 202	INCOME-TAX ACT, 1961 -- s. 115BAC
Sub-s. (1) -- new regime simplified rates	1961 s. 115BAC(1) / 115BAC(1A)
FA 2023 default-shift	1961 s. 115BAC(6) [FA 2023]
FA 2025 enhanced slabs (0/5/10/15/20/25/30)	1961 s. 115BAC(1A) [FA 2025]
Form 10-IEA opt-out for old regime	1961 s. 115BAC(6) [FA 2023]
Conditions: forfeit Chapter VIII deductions / loss-attributable	1961 s. 115BAC(2) read with negative list
No standard deduction except FA 2024 INR 75K salary preserved	1961 s. 115BAC(2)(i) Proviso
NPS employer (s. 124(2)) preserved	1961 s. 115BAC(2)(i) Proviso

FA 2025 SLAB STRUCTURE (RESIDENT INDIVIDUALS)

UNIFIED SLAB (no senior-citizen / very-senior-citizen distinction under new regime): 0 - INR 4,00,000: NIL; INR 4L - 8L: 5%; INR 8L - 12L: 10%; INR 12L - 16L: 15%; INR 16L - 20L: 20%; INR 20L - 24L: 25%; Above INR 24L: 30%. Plus s. 156 REBATE: 100% rebate of income-tax payable OR INR 60,000 (whichever less) for total income up to INR 12L; marginal relief between INR 12L and approximately INR 12.75L. EFFECTIVE: NIL tax up to INR 12L (rebate); gradual phase-in up to ~INR 12.75L; full slab application thereafter. Plus surcharge: 10% on INR 50L-1cr / 15% on INR 1cr-2cr / 25% on >INR 2cr (capped under new regime per FA 2023 -- pre-FA 2023 had 37% surcharge for >INR 5cr; FA 2023 capped at 25%). Plus 4% health and education cess on aggregate.

FORGONE DEDUCTIONS AND EXEMPTIONS

New regime FORFEITS many Chapter VIII / Chapter IV deductions: (I) CHAPTER VIII (general 80-deductions): (a) s. 122 (LIC / PPF / EPF / ELSS / ULIP / etc. INR 1.5L general 80C); (b) s. 123 (NPS Tier-1 employee contribution; 80CCC); (c) s. 124(1) (NPS employee contribution INR 50K above s. 122); s. 124(2) [employer NPS] PRESERVED; (d) s. 126 (80D health insurance premium); (e) s. 127 (disabled dependant 80DD); (f) s. 128 (specified disease 80DDB); (g) s. 129 (education loan 80E); (h) s. 130 (housing loan 80EE / 80EEA); (i) s. 131 (EV loan 80EEB); (j) s. 132 (housing loan EV); (k) s. 133 (donations 80G except certain charity); (l) s. 134 (rent 80GG); (m) s. 135 (R&D donations 80GGA); (n) ss. 136-148 (industrial / housing / SEZ / IFSC / inter-corp); (o) ss. 149-150 (co-op society / federal co-op); (p) ss. 151-152 (royalty); (q) s. 153 (interest on deposits 80TTA / 80TTB); (r) s. 154 (self-disability 80U). (II) SECTION 19 SALARY DEDUCTIONS (limited preservation): (a) s. 19(1)(a) standard deduction -- FA 2024 RETAINED at INR 75,000 (was INR 50,000 pre-FA 2024); for family pension RETAINED at INR 25,000 (was INR 15,000); (b) Other s. 19 deductions FORFEITED. (III) HRA / LTA EXEMPTIONS (s. 16 / 1961 s. 10(13A)) -- FORFEITED. (IV) HP HEAD: (a) Self-occupied HP interest deduction FORFEITED (s. 22 / 1961 s. 24(b)); (b) Let-out HP interest still deductible (against rental income only); (c) HP loss DOES NOT off-set against other heads (Sch. negative list). (V) SALARY-LOSS / HP-LOSS RESTRICTIONS: New regime restricts loss-set-off across heads in specified scenarios. RETAINED IN NEW REGIME: (a) Standard deduction INR 75K (salary) / INR 25K (family pension); (b) Employer NPS contribution u/s 124(2) up to 14%; (c) Section 156 rebate (FA 2025 INR 60K / INR 12L); (d) Section 154 self-disability (FA 2025 partial restoration for some categories); (e) Marginal relief slope between INR 12L-12.75L.

OPT-OUT MECHANISM (FORM 10-IEA)

FA 2023 made new regime DEFAULT; old regime now requires explicit OPT-OUT via FORM 10-IEA filed before s. 263 due date for the relevant year. ELIGIBLE TO OPT-OUT: individuals / HUFs (NOT firms / LLPs / AOPs which are forced into new regime). Form 10-IEA filed online via e-filing portal. ONCE-FILED LOCK: opt-out for SALARIED individual valid for that and future years until withdrawal; opt-out for BUSINESS-INCOME individuals can be withdrawn ONCE in lifetime (post that, locked into new regime). Practitioner: time the Form 10-IEA filing carefully; non-filing means new regime defaults.

PLANNING NOTES (THIRTEEN AREAS)

(i) DEFAULT-VS-OPT-OUT -- post FA 2023, new regime DEFAULT; old regime requires Form 10-IEA before s. 263 due date. (ii) DUAL-MODELING DISCIPLINE -- compute tax under both regimes for every individual / HUF return; choose lower. (iii) BREAK-EVEN ANALYSIS -- for individuals with INR 4L+ Chapter VIII deductions (e.g., 80C 1.5L + 80D 50K + housing loan 2L = INR 4L+), old regime often optimal. (iv) SENIOR CITIZENS -- senior-citizen old-regime higher exemption (INR 3L slab pre-FA 2025 / now INR 4L new) plus s. 153 INR 50K interest deduction often competes well; modeling required. (v) HUF / FIRM / LLP -- limited deduction availability; new regime usually optimal. (vi) RESIDENT-INDIVIDUAL SHIELDING -- s. 156 rebate INR 60K + INR 12L threshold means INR 12L total income = NIL tax under new regime; INR 12L break-even for low-deduction individuals. (vii) HOUSING-LOAN INTEREST -- self-occupied loss deduction lost in new regime; let-out loss preserved; consider self-occupy vs let-out structuring. (viii) HRA-DEPENDENT EMPLOYEES -- HRA exemption (1961 s. 10(13A)) lost; if HRA is a major component, old regime favours; document basic-vs-HRA breakup. (ix) LIC / PPF / EPF MAXIMISERS -- INR 1.5L 80C lost; old regime favours if maximised. (x) HEALTH INSURANCE / DISABILITY / DISEASE -- ss. 126/127/128 preserved-only-old-regime; if substantial, old regime favours. (xi) SURCHARGE CAP -- new regime caps surcharge at 25% (vs old's 37%); HNI individuals (>INR 5cr income) prefer new regime for surcharge saving alone. (xii) NPS STRATEGY -- s. 124(2) employer NPS preserved across regimes; salary structure with 14% employer NPS contribution always tax-efficient. (xiii) FORM 10-IEA -- before s. 263 due date; failure = new regime default (irreversible for that year).

CROSS-REFERENCES

Section 156 -- Rebate (FA 2025 INR 60K / INR 12L; marginal relief).
Section 122 -- GTI / total income.
Sections 122-148 -- Chapter VIII deductions (most forgone under new regime).
Section 19 -- Salary deductions (standard deduction INR 75K preserved).
Section 124(2) -- Employer NPS (preserved).
Section 153 -- Interest on deposits (preserved-only-old-regime).
Section 154 -- Self-disability (FA 2025 partial restoration).
Section 263 -- Return / Form 10-IEA opt-out.
Form 10-IEA -- old-regime opt-out.
Schedule III -- New-regime negative list.

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