Quick answer: Section 115BAC of the old Income Tax Act, 1961 — the section that introduced the new tax regime — is now Section 202 in the new Income Tax Act, 2025. The new regime itself continues as the default option, with the same slab rates and the same limited deductions. Only the section number has changed.
What Section 115BAC Was
Section 115BAC was added to the old Act in Budget 2020. It gave taxpayers an option: pay tax at lower slab rates but give up most deductions and exemptions (like 80C, 80D, and HRA).
Over the years, the new regime became more attractive:
- Budget 2023 made it the default regime — you had to opt out to use the old regime.
- The rebate under the new regime went up to Rs. 7 lakh (effectively tax-free income up to Rs. 7 lakh).
- Standard deduction of Rs. 50,000 was allowed for salaried taxpayers.
- Budget 2025 raised the rebate further — income up to Rs. 12 lakh effectively tax-free (Rs. 12.75 lakh for salaried with standard deduction).
What Changed in the New Act
The new tax regime provision is now Section 202 of the Income Tax Act, 2025. The regime continues as the default, and the slab structure carries over:
| Income slab | Tax rate (new regime) |
|---|---|
| Up to Rs. 4 lakh | Nil |
| Rs. 4 lakh – Rs. 8 lakh | 5% |
| Rs. 8 lakh – Rs. 12 lakh | 10% |
| Rs. 12 lakh – Rs. 16 lakh | 15% |
| Rs. 16 lakh – Rs. 20 lakh | 20% |
| Rs. 20 lakh – Rs. 24 lakh | 25% |
| Above Rs. 24 lakh | 30% |
The rebate, standard deduction, and the list of allowed vs. disallowed deductions remain the same in substance.
What Stays the Same
- The new regime is still the default — you must actively opt for the old regime if you want it.
- Most deductions (80C, 80D, HRA) are still not available under the new regime.
- Standard deduction of Rs. 75,000 for salaried individuals continues (as per Budget 2025).
- The rebate structure making income up to Rs. 12 lakh effectively tax-free continues.
- Business taxpayers who opt out of the new regime cannot easily opt back in — that restriction continues.
Old vs New Regime: A Quick Comparison
Here is how the two regimes differ in practice:
| Feature | New regime (Sec 202) | Old regime |
|---|---|---|
| 80C deduction (Rs. 1.5 lakh) | Not allowed | Allowed |
| 80D health insurance | Not allowed | Allowed |
| HRA exemption | Not allowed | Allowed |
| Standard deduction | Rs. 75,000 | Rs. 50,000 |
| Tax-free income (with rebate) | Up to Rs. 12 lakh | Up to Rs. 5 lakh |
| Slab rates | Lower at most levels | Higher, but with deductions |
Example: Rohan earns Rs. 15 lakh salary. Under the new regime, he pays roughly Rs. 1.05 lakh in tax (after standard deduction and rebate calculation). Under the old regime with Rs. 3 lakh in deductions (80C + 80D + HRA), he might pay around Rs. 1.2 lakh. The new regime wins here.
But if Rohan had Rs. 6 lakh in deductions (big HRA, home loan interest, 80C, 80D, NPS), the old regime could drop his tax below the new regime figure. The break-even point is usually around Rs. 4-5 lakh of total deductions.
Who Should Pick Which Regime?
- New regime suits: Salaried people with few deductions, freelancers, those who do not want the hassle of tracking investments for tax purposes.
- Old regime suits: People with large HRA, home loan interest, heavy 80C/80D/NPS investments — typically those with total deductions above Rs. 4-5 lakh.
There is no one-size-fits-all answer. Run the numbers every year.
Practical Impact for You
1. Choosing your regime: Every year at the start, compare both regimes with your actual salary, deductions, and investments. For most salaried people without big 80C/80D claims, the new regime (Section 202) works out better.
2. Form 10-IEA: If you want the old regime, you may need to file the opt-out form. Under the new Act, the form number may change, but the process stays similar. Check the e-filing portal for the updated form.
3. TDS by employer: Tell your employer which regime you want at the start of the financial year so they deduct TDS correctly. You can still choose differently when filing your return.
4. Old vs new every year: The choice is not permanent (except for business income with certain conditions). Re-evaluate each year as your income and investments change.
Frequently Asked Questions
Is the new tax regime still the default?
Yes. Under Section 202 of the new Act, the new regime continues as the default option. You need to specifically opt for the old regime if it suits you better.
Can I still claim 80C under the new regime?
No. The new regime does not allow 80C, 80D, HRA, and most other deductions. Only a few items like the standard deduction and employer NPS contribution are allowed.
Which regime is better for me?
It depends on your deductions. If you claim more than roughly Rs. 4-5 lakh in deductions, the old regime may win. Otherwise, the new regime usually gives lower tax. Use a tax calculator or ask your CA.
Do I need to inform my employer every year?
Yes, it is good practice. Your employer asks for your regime choice at the start of each financial year for TDS purposes. Your final choice is made when you file your return.
Official Sources
- Income Tax Department — official source for verification
- India Code — official source for verification
Reviewed by Asuthod Rathod, CA. Last updated: 10 October 2026. Slab rates and rebate limits are as per Budget 2025 and the Income Tax Act, 2025. Check incometax.gov.in for the latest updates.
Rohan has been writing about Indian income tax for over 5 years. He breaks down complex tax rules into simple language that anyone can understand. His guides focus on practical filing tips, deduction strategies, and keeping up with the new Income Tax Act 2025.