The provisions of the new tax regime outlined in Section 115BAC of the Income-Tax Act, 1961 will move to Section 202 in the new Income-Tax Bill 2025, which will take effect from April 1, 2026.
The new bill aims to simplify various provisions of the Income-Tax Act, 1961. While there are no changes to the policy regarding slabs and rates, the bill introduces a dedicated section for the new tax regime applicable to individual taxpayers, domestic companies, cooperative societies, and other eligible taxpayers.
Income-tax slabs and rates under Section 202
| Total incomeRate of tax | |
|---|---|
| Up to ₹4,00,000 | Nil |
| From ₹4,00,001 to ₹8,00,000 | 5% |
| From ₹8,00,001 to ₹12,00,000 | 10% |
| From ₹12,00,001 to ₹16,00,000 | 15% |
| From ₹16,00,001 to ₹20,00,000 | 20% |
| From ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
The tax slabs and rates under section 202 are the same as the rates proposed for the new tax regime by Finance Minister Nirmala Sitharaman in Budget 2025. The basic exemption limit will be ₹4 lakh income while income over ₹24 lakh will be taxed at a 30% rate. The new tax regime doesn’t offer all the deductions and exemptions available under the old tax regime.
Further, there is also a rebate of up to 60,000 which will make normal incomes up to ₹12 lakh tax-free for taxpayers in the new regime. This rebate is provided separately under section 156 of the new bill. In the Income-tax Act 1961, this rebate is provided under section 87A.
What Section 156 says for the tax rebate in new tax regime
- If the total income of a resident individual assessee is chargeable to tax under the new tax regime, then from income-tax (computed before allowing the deduction) following deductions shall be allowed, if —
- the income does not exceed ₹12 lakh, 100% of the income-tax payable or ₹60,000, whichever is less;
- the income exceeds ₹12 lakh, the income-tax payable on the total income, reduced by total income which is in excess of ₹12 lakh