Section 115BAC New Tax Regime: Slabs, Deductions, Exemptions and Benefits

Section 115BAC is the provision that governs the new tax regime for individuals and Hindu Undivided Families, offering lower slab rates in exchange for giving up most deductions and exemptions available under the old regime. It has been the default tax regime since FY 2023-24, meaning it applies automatically unless a taxpayer actively opts out.

No. Section 80C deductions for investments in PPF, ELSS, life insurance premiums, and similar instruments are not available under the new tax regime. This is one of the most significant trade-offs of choosing Section 115BAC over the old regime.

No. House Rent Allowance exemption is not available under Section 115BAC. Salaried employees who pay significant rent and would otherwise claim a large HRA exemption often find the old regime more beneficial specifically because of this.

Income up to Rs 4 lakh is taxed at nil, Rs 4-8 lakh at 5%, Rs 8-12 lakh at 10%, Rs 12-16 lakh at 15%, Rs 16-20 lakh at 20%, Rs 20-24 lakh at 25%, and income above Rs 24 lakh at 30%, under Section 115BAC.

Up to Rs 12 lakh in taxable income is effectively tax-free for any resident individual because of the Section 87A rebate of up to Rs 60,000. Salaried individuals get a further Rs 75,000 standard deduction, pushing their effective tax-free gross salary to Rs 12.75 lakh.

Marginal relief prevents a taxpayer whose income crosses Rs 12 lakh by a small amount from owing a disproportionately large tax bill. For a taxable income of Rs 12,10,000, for example, the normal slab calculation gives Rs 61,500 in tax before cess, but marginal relief caps the tax at Rs 10,000, the exact amount by which income exceeds Rs 12 lakh, so the final tax with 4% cess works out to just Rs 10,400.

The new tax regime allows the standard deduction of Rs 75,000 for salaried individuals and pensioners, employer contribution to NPS under Section 80CCD(2) up to 14% of salary, the Agniveer Corpus Fund deduction under Section 80CCH(2), a family pension deduction of Rs 25,000, interest on a home loan for let-out property under Section 24 with no upper limit, and a few specific allowances such as transport allowance for specially-abled employees.

Most Chapter VI-A deductions are disallowed, including Section 80C, 80D, 80E, 80G, and 80TTA/80TTB. House Rent Allowance, Leave Travel Allowance, interest on a home loan for a self-occupied property under Section 24, professional tax, and the employee's own contribution to NPS are also not deductible under Section 115BAC.

Yes. Hindu Undivided Families are eligible for Section 115BAC on the same terms as individuals, with the same slab rates, rebate eligibility, and deduction restrictions.

Salaried individuals with no business income simply select the old regime while filing their return each year, with no separate form required. Taxpayers with business or professional income must file Form 10-IEA to opt out of the new regime, and once filed, can only switch back to the new regime once in their lifetime.

No, not unless they have business or professional income. A purely salaried taxpayer opts for the old regime directly on the ITR form each year without filing Form 10-IEA at all; the form is mandatory only for those with income from business or profession.

Only for a let-out property, where interest under Section 24 remains fully deductible with no cap under Section 115BAC. Interest on a home loan for a self-occupied or vacant property cannot be claimed at all under the new regime, unlike the old regime's Rs 2 lakh limit.

Yes. Since FY 2024-25, the deduction for an employer's contribution to an employee's NPS account under Section 80CCD(2) increased from 10% to 14% of salary plus dearness allowance, following an announcement in the 2024 Budget. This remains one of the few substantial deductions still available under Section 115BAC.

Section 202 of the Income Tax Act, 2025 carries forward the exact same new tax regime provisions currently under Section 115BAC of the 1961 Act, just renumbered. Section 202 takes effect from April 1, 2026, but only applies from the tax season covering income earned in FY 2026-27 onward; the current AY 2026-27 filing season, covering income up to March 31, 2026, still falls under the 1961 Act and Section 115BAC.

A 4% Health and Education Cess applies on top of the tax computed at the new regime slab rates, the same cess rate that applies under the old regime. Cess is calculated after the Section 87A rebate and any marginal relief has already been applied.

Surcharge under the new tax regime is capped at a maximum of 25%, for income exceeding Rs 2 crore, compared with a 37% maximum surcharge under the old regime. This lower surcharge ceiling is one reason very high earners sometimes prefer the new regime despite losing most deductions.

No. Unlike the old regime, which raises the basic exemption limit for senior and super senior citizens, Section 115BAC applies the identical slab structure to every resident individual regardless of age. The age-based exemption benefit exists only in the old regime.

It depends entirely on how many deductions you actually claim. A taxpayer with minimal deductions, no home loan, and modest HRA generally saves more under the new regime's lower slabs; someone with a home loan on a self-occupied property, an active Section 80C investment routine, and high HRA often does better under the old regime. Comparing both regimes with your exact numbers on the Old vs New Tax Regime Calculator is the only reliable way to know for certain.

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