Section 202 of the Income-tax Act, 2025

Section 202 of the Income-tax Act, 2025 is the charging provision for India’s default personal income-tax regime, taxing the total income of an individual, a Hindu undivided family, an association of persons other than a co-operative society, a body of individuals and an artificial juridical person at the slab rates set out in its own sub-section (1) Table, from nil up to Rs. 4,00,000 to 30% above Rs. 24,00,000, unless the person exercises the option in sub-section (4). It came into force on 1 April 2026 and first applies to tax year 2026-27.

The provision is the successor to Section 115BAC of the Income-tax Act, 1961, repealed on 1 April 2026 by Section 536(1) of the Income-tax Act, 2025. The substance carried across almost intact: the same slab ladder, the same default posture, the same broad withdrawal of exemptions and deductions. What changed is the address of every cross-reference inside it. Section 115BAC(2) named Section 10(13A), Section 24 and Chapter VI-A. Section 202(2) names Schedule III, Section 22(1)(b) and Chapter VIII. A figure carried across from a pre-2026 source with its old citation attached is now wrong on the citation even where it is right on the number.

Section 202 is short, at five sub-sections, and is routinely described as though sub-section (1) were the whole of it. Most of the operative work sits in sub-section (2), whose clause (a) runs to twelve sub-clauses, and in sub-section (4), which carries the option machinery in seven lines of which six apply only to a taxpayer with business income. Two further limbs, the loss rules in sub-sections (2)(b) and (3) and the bar on allowances granted under other laws in sub-section (2)(c), are rarely quoted and both bite on a central government employee.

This article reads the provision sub-section by sub-section against the notified text, sets out the twelve sub-clauses of Section 202(2)(a) and what each removes, maps the provisions elsewhere in the Act whose result turns on whether tax is computed under Section 202(1), and works a full computation for a serving central government employee. The regime viewed as a scheme, not as a section, is covered at new tax regime; the deduction list on its own is at deductions allowed in the new tax regime; the rates for the year ahead are at income tax slabs for AY 2027-28.

Placement of the provision within the Act

Section 202 sits in Chapter XIII of the Income-tax Act, 2025, headed “Determination of tax in special cases”, under Part C of that Chapter, headed “New tax regime”. Part C holds Sections 199 to 205.

That grouping is the fastest way to see what the provision is and is not. Part C carries six separate concessional regimes, not one: Section 199 for a manufacturing domestic company at 25%, Section 200 for a domestic company at 22%, Section 201 for a new manufacturing domestic company, Section 202 for individuals and other non-corporate persons, Section 203 for a resident co-operative society at 22%, and Section 204 for a new manufacturing co-operative society. Section 205, headed “Conditions for tax on income of certain companies and co-operative societies”, carries the conditions common to the five company and co-operative society regimes and does not reach Section 202 at all. Of the six regimes, only Section 202 operates by default. Every other regime in Part C applies at the option of the person, and Sections 203(6) and 204(2)(c) make that option irrevocable once taken.

The opening words of Section 202(1) locate it further. The charge applies “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”. Chapter XVII-B is the deduction-of-tax-at-source machinery, so the monthly TDS on salary under Section 392 is not displaced by the regime choice. Part B of Chapter XIII holds the special rates on capital gains, which is why a Section 202 taxpayer with equity gains is taxed at 12.5% under Section 198 on the long-term part and at the slab rates on the rest.

Persons the charge applies to

Section 202(1) names five classes of person, at clauses (a) to (e): an individual; a Hindu undivided family; 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).

A company, a firm, a limited liability partnership, a local authority and a co-operative society are outside the provision entirely. A firm is taxed at a flat 30% under Paragraph C of Part I-B of the First Schedule to the Finance Act, 2026, with no regime choice at all. A co-operative society has its own Part C provisions at Sections 203 and 204.

Residence is not a condition of the charge. A non-resident individual falls within Section 202(1) exactly as a resident does, and is taxed at the same slab rates. Residence does control three of the reliefs that attach to a Section 202 computation: the rebate in Section 156(2) is confined to a resident individual, and the absorption of the unused basic exemption into capital gains under Sections 196(2) and 198(3) is confined to a resident individual and a resident Hindu undivided family.

The slab table in sub-section (1)

The Table to Section 202(1) sets seven rows. These rates are in the Act itself, not in the annual Finance Act, which is the single most common source of confusion about where to look.

Source: Table to Section 202(1), Income-tax Act, 2025 (Act No. 30 of 2025), in force from 1 April 2026.

The ladder is identical, row for row, to clause (iii) of Section 115BAC(1A) of the repealed Act, which the Finance Act, 2025 inserted for assessment year 2026-27. Nothing in the Income-tax Act, 2025 or the Finance Act, 2026 changed a rate or a threshold in moving it across.

The old-regime ladder is elsewhere. Paragraph A of Part I-B of the First Schedule to the Finance Act, 2026 carries it, at three items: item (I) for an individual under 60, taxed nil up to Rs. 2,50,000, 5% to Rs. 5,00,000, then Rs. 12,500 plus 20% to Rs. 10,00,000, then Rs. 1,12,500 plus 30%; item (II) for a resident aged 60 to 79, with the exemption limit at Rs. 3,00,000; and item (III) for a resident aged 80 or above, with the exemption limit at Rs. 5,00,000 and no 5% band at all. Section 3(2)(b) of that Act names the two alternatives side by side. The age bands exist only in the old tax regime; Section 202(1) has one table for every age.

What sub-section (2)(a) removes, sub-clause by sub-clause

Section 202(2)(a) requires total income to be computed “without any exemption or deduction under” twelve named sub-clauses. Six of the twelve reach a salaried taxpayer or a pensioner; six do not.

Sub-clause (i) is the one a serving employee feels. Serial 11 of the Schedule III Table is the house rent allowance exclusion, available where the allowance is specifically granted to meet rent actually paid on residential accommodation the assessee does not own, to the extent prescribed by rule 279 of the Income-tax Rules, 2026. An employee in an X-class city drawing house rent allowance at 30% of basic pay loses the whole of that exclusion in the default regime.

Sub-clause (ii) is the one most often stated too broadly. It does not withdraw serials 12 and 13 outright: it withdraws them “other than those as may be prescribed for this purpose”, and rule 280(3) of the Income-tax Rules, 2026 supplies the prescription. Five survive: travel on tour or transfer, the sum paid for packing and transporting personal effects on transfer, daily allowance on tour and conveyance in the performance of duties where no free conveyance is provided, all at rule 280(1)(a) to (d), plus the transport allowance for a blind, deaf and dumb or orthopaedically handicapped employee at serial 10 of the rule 280(2) Table. Children education allowance, hostel subsidy and dress allowance are not among the survivors and are fully taxable under Section 202(1).

Sub-clause (iv) is the one most often stated too widely in the other direction. It removes serial 1 of the Section 19(1) Table, which is the deduction for tax on employment under Article 276(2) of the Constitution, and no other serial in that Table. Everything from serial 2 downwards survives: the standard deduction, gratuity at serials 3 to 6, commutation of pension at serials 7 and 8, and leave encashment at serials 13 and 14.

Sub-clause (xii) is the widest. Chapter VIII, headed “Deductions to be made in computing total income”, holds Sections 122 to 154, and Section 202(2)(a)(xii) strips all of it except four provisions. Section 124(1) and 124(2) preserve the employer’s contribution to a notified pension scheme, which matters directly to National Pension System and Unified Pension Scheme subscribers. Section 125(2) preserves the deduction for the Central Government contribution to an Agniveer Corpus Fund. Section 146 preserves the additional-employee-cost deduction, an employer’s deduction on business profits that no salaried taxpayer claims.

Exemptions and deductions that survive the default computation

Section 202(2) is a list of what is taken away, so everything it does not name survives. The survivors are more extensive than the frequently repeated line that the new regime leaves “six deductions” suggests.

The whole of Schedule II survives. Section 202(2) withdraws no entry in Schedule II at all. The provident fund exclusions therefore hold in the default regime: serial 3 for a payment from a provident fund to which the Provident Funds Act, 1925 applies, which covers the General Provident Fund, and serial 4 for the accumulated balance of a recognised provident fund, each subject to the taxable-contribution conditions in rule 277 of the Income-tax Rules, 2026.

Every retirement receipt in the Section 19(1) Table survives. A retiring central government employee’s death-cum-retirement gratuity is deductible in full under serial 3 read with Section 19(2)(g), which names the CCS (Pension) Rules, 2021 expressly. The commuted value of pension under the Civil Pensions (Commutation) Rules is deductible in full under serial 7. Leave encashment on retirement from government service is deductible in full under serial 13. None of these is touched by the regime choice.

Five Schedule III serials that matter to service families survive. Serial 4 preserves the 25% partial-withdrawal exclusion from the National Pension System Trust. Serial 9 preserves allowances and perquisites paid outside India by the Government to a citizen of India. Serial 10 preserves the non-monetary perquisite whose tax the employer bears. Serials 14 and 15 preserve pension and family pension of a Param Vir Chakra, Maha Vir Chakra or Vir Chakra recipient, and serial 16 preserves family pension where a member of the armed forces died in the course of operational duties.

The standard deduction survives and rises. Serial 2 of the Section 19(1) Table sets it at Rs. 75,000 or the salary, whichever is less, where income tax is computed under Section 202(1), and at Rs. 50,000 or the salary, whichever is less, in any other case. The “or the salary, whichever is less” limb is part of the entry and is routinely dropped when the figure is quoted. See standard deduction.

The family pension deduction survives and rises. Section 93(1)(d) allows one-third of the family pension or Rs. 25,000, whichever is less, where income tax is computed under Section 202(1), against one-third or Rs. 15,000 in any other case. This deduction sits under the head “Income from other sources”, not in Chapter VIII, which is why sub-clause (xii) does not reach it.

Losses under sub-sections (2)(b) and (3)

Section 202(2)(b) bars two set-offs, and Section 202(3) makes the second bar permanent.

Clause (b)(i) bars set-off of any loss carried forward or depreciation from an earlier tax year where that loss or depreciation is attributable to any of the deductions listed in clause (a). Clause (b)(ii) bars set-off of any loss under the head “Income from house property” against any other head of income.

Section 202(3) then provides that the loss and depreciation so barred “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”. The loss is not deferred; it is extinguished. A person who computes tax under Section 202(1) for a tax year and returns to the old regime the next year cannot revive the house property loss of the intervening year.

The practical reach of clause (b)(ii) is narrower than it appears for most government employees, because sub-clause (a)(v) has usually already removed the deduction that would have created the loss. Section 22(1)(b) allows interest on capital borrowed to acquire, construct, repair, renew or reconstruct a property; Section 202(2)(a)(v) disallows it for a property referred to in Section 21(6), being a house the owner occupies for his own residence or cannot actually occupy. A self-occupied house whose annual value is nil under Section 21(6) and whose interest deduction is disallowed under Section 202(2)(a)(v) generates no loss to set off. Clause (b)(ii) bites on a let-out house, where interest exceeds the net annual value after the 30% standard allowance under Section 22(1)(a) and the resulting loss would otherwise have reduced salary income. See home-loan interest.

One drafting point is worth recording, because it is a product of the renumbering, not a change of policy. Section 202(2)(a)(v) names Section 22(1)(b) only. The pre-construction interest limb, which allows interest for the period before acquisition or construction in five equal instalments, now sits in a separate clause, Section 22(1)(c), which sub-clause (v) does not name. Under the repealed Act both limbs sat inside Section 24(b), the pre-construction rule appearing in the Explanation to it, and Section 115BAC(2)(i) disallowed clause (b) of Section 24, both limbs included, for a property covered by Section 23(2). The Act as it stands carries no clarification on the point, and Section 202(2)(b)(ii) read with Section 202(3) would in any case extinguish any loss the instalments created, so nothing would reach salary.

Allowances granted under other laws, sub-section (2)(c)

Section 202(2)(c) requires total income to be computed “without any exemption or deduction for allowances or perquisite, called by any name, provided under any other law in force”.

This limb is quoted less often than the rest of sub-section (2) and is the one with the broadest reach for a central government employee, whose pay and allowances are fixed not by the Income-tax Act but by the CCS (Revised Pay) Rules, 2016, by 7th Central Pay Commission recommendations as accepted, and by a long series of Department of Expenditure Office Memoranda. Clause (c) closes the argument that an allowance granted by such an instrument carries a tax character from that instrument. It does not. The Office Memorandum notifying dearness allowance at 60% of basic pay with effect from 1 January 2026, F. No. 1/1(i)/2026-E.II(B) dated 22 April 2026, fixes what is paid and says nothing about what is taxable; the exemption, if any, must be found in Schedule II, Schedule III or the Section 19(1) Table of the Income-tax Act, 2025.

The same limb answers a recurring question about state enactments. Professional tax is levied under a state Act and is deductible under serial 1 of the Section 19(1) Table, which sub-clause (a)(iv) removes. A taxpayer cannot then reach past the Income-tax Act to the state Act for a deduction, because clause (c) excludes exemptions and deductions provided under any other law in force.

The option out under sub-section (4)

Section 202(4) displaces the charge in sub-section (1) where the person exercises the option “in such manner as may be prescribed”. The manner is prescribed by rule 136 of the Income-tax Rules, 2026, notified by Notification No. 22/2026, G.S.R. 198(E), dated 20 March 2026: the option under Section 202(4), at serial 4 of the rule 136 Table, “shall be in the return of income to be furnished under section 263(1) for such tax year”.

There is no separate form, and no successor to Form 10-IEA, which Rule 21AGA of the Income-tax Rules, 1962 had prescribed. The election is a field in the return. For a salaried filer this simplifies the position without changing it, because a filer without business income was never required to file Form 10-IEA in the first place.

The option splits on whether the person has income from business or profession.

A salaried employee and a pensioner fall under clause (b). The choice is annual and unconditional: a person may compute under Section 202(1) for tax year 2026-27 and exercise the option for tax year 2027-28 with no consequence beyond that year. See how to switch tax regime for the two-stage mechanics, because the declaration made to the drawing and disbursing officer for monthly TDS purposes under Section 392 is a separate act from the election in the return, and only the second one is the option under Section 202(4).

Withdrawal of the option and the permanent bar

Clause (a) of Section 202(4) imposes three restrictions that clause (b) does not.

Sub-clause (a)(ii) provides that the option, once exercised, applies to subsequent tax years, so a business taxpayer who opts into the old regime stays there without re-electing. Sub-clause (a)(iii) permits withdrawal “only once for a tax year other than the tax year for which it was exercised”. Sub-clause (a)(iv) then bars the person from ever exercising the option under the sub-section again.

The bar carries one escape. Sub-clause (a)(iv) excepts the case “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”. A professional who winds up a practice and thereafter draws only salary and pension moves from the once-and-for-all regime of clause (a) to the annual regime of clause (b). This matters to a retiring government employee who carried consultancy income during service: the permanent bar attaches to the person while the business income exists, and lifts when it ceases.

A government employee with no business income who also holds a small consultancy engagement should note which clause applies before filing. The distinction turns on the existence of income chargeable under the head “Profits and gains of business or profession”, not on the size of it.

The International Financial Services Centre carve-out in sub-section (5)

Section 202(5) modifies sub-section (2) for a person having a Unit in an International Financial Services Centre, to the extent that the deduction under Section 147 is available to that Unit subject to the conditions in that section.

Section 147 carries the deduction for a Unit in an International Financial Services Centre, the successor to Section 80LA of the repealed Act. Without sub-section (5), Section 202(2)(a)(xii) would have removed it along with the rest of Chapter VIII. The carve-out has no application to a central government employee or a pensioner and is set out here because it is the fifth sub-section of the provision and is otherwise absent from most summaries.

Provisions elsewhere in the Act whose result turns on Section 202(1)

Section 202 is not self-contained. Eight provisions outside it produce a different figure depending on whether income tax is computed under Section 202(1), and they are scattered across the Act and the Finance Act, 2026 rather than gathered in one place. The table below is a salary-calculator.in construction, assembled by reading each provision against the cached text of the Act, the Income-tax Rules, 2026 and the Finance Act, 2026 on 21 September 2026.

Section 124(2) rewards the private-sector subscriber, not the government one. Section 124(1)(a) already fixes the ceiling at 14% of salary where the contributing employer is the Central Government or a State Government, in both regimes, so a National Pension System subscriber in central service sees no change. Section 124(2) substitutes 14% for the 10% in clause (1)(b), which applies to every other employer, only where total income is chargeable under Section 202(1). Salary for this purpose is defined by Section 124(13)(b) as basic pay plus dearness allowance where the terms of employment so provide, excluding all other allowances and perquisites.

The Section 156 rebate is the single largest of the eight and is treated at Section 87A rebate and marginal relief. Two limits on it are often missed. Section 156(2) is framed on income chargeable under Section 202(1), so it does not reach income taxed at the special rates in Sections 196, 197 and 198. Section 156(3) caps the deduction at the income tax payable at the Section 202(1) rates, which is a mechanism, not a separate exclusion.

Surcharge, marginal relief and cess

The rates that sit on top of a Section 202 computation come from the annual Finance Act, not from the Income-tax Act, 2025. For tax year 2026-27 the charging section is Section 3 of the Finance Act, 2026 (Act No. 4 of 2026, assented 30 March 2026), which charges tax under the Income-tax Act, 2025; Section 2 of the same Act separately charges assessment year 2026-27 under the repealed Act.

Serial 10 of the Table to Section 3(4)(b) carries the surcharge for a Section 202 case.

Source: Table to Section 3(4)(b), Finance Act, 2026, serial 10. The surcharge on the dividend and capital-gains part is capped at 15% by clause (v) of that entry.

Serial 10 has no row above 25%. Serials 1 and 2 of the same Table, which carry the old-regime surcharge for a person not having income chargeable under Section 202, both run to 37% above Rs. 5,00,00,000. That difference, and not any separate capping provision, is the source of the widely repeated statement that the new regime caps surcharge at 25%. See surcharge on income tax.

Marginal relief on surcharge is in Section 3(5) of the Finance Act, 2026, by the formula Tn = Rn + Sn. Marginal relief on the rebate is a different mechanism entirely, sitting in Section 156(2)(b) of the Act and reaching only the band just above Rs. 12,00,000.

The Health and Education Cess is 4% of income tax and surcharge, under Section 3(15) of the Finance Act, 2026 for the regular charge and Section 3(16) for the deduction-at-source and advance-tax cases. Section 3(17)(i) disapplies the cess to deduction or collection on a payment to a resident or a domestic company, which is why bank interest suffers TDS without cess while Form 16 carries it: the salary case sits in Section 3(10), which Section 3(17) does not exclude.

The amendment made by the Finance Act, 2026

Section 202 has been amended once since the Act received assent on 21 August 2025. Section 56 of the Finance Act, 2026 omitted Section 202(2)(a)(iii) with effect from 1 April 2026. Prior to omission the sub-clause read “section 144”, the deduction for a unit in a Special Economic Zone.

Two consequences follow. The sub-clause is printed blank in the Act, so the numbering of sub-clauses (i) to (xii) is unchanged and a citation to Section 202(2)(a)(iv) still means the employment-tax entry. And the amendment took effect on the same day the Act itself came into force, so Section 202 has never operated with sub-clause (iii) in it. A commentary written between August 2025 and March 2026 that lists a Special Economic Zone deduction among the Section 202 exclusions describes a text that was never in force.

The Act as published carries footnote markers for amendments of this kind. Section 21(5) and Section 22(2) both carry “Sub. by Act No. 4 of 2026” footnotes of their own, and the Section 22(2) substitution genuinely narrows the old regime and is no renumbering artefact. Reading the footnote lines, and not only the section body, is the difference between citing the enacted text and citing the current one.

Tax years governed by the provision

Section 202 first applies to tax year 2026-27, the twelve months beginning 1 April 2026. The return for that year falls due on 31 July 2027 for a salaried filer and a pensioner, under serial 4 of the Table in Section 263(1)(c), which covers “any other assessee”.

Assessment year 2026-27 is not governed by Section 202. Section 536(1) of the Income-tax Act, 2025 repealed the Income-tax Act, 1961, and Section 536(2)(c) preserves the repealed Act for any proceeding pending on 1 April 2026 and for any proceeding initiated on or after that date in respect of a tax year beginning before it. The return filed in July 2026 for the financial year 2025-26 therefore runs on Section 115BAC, with Part I-A of the First Schedule to the Finance Act, 2026 supplying the rates.

Section 536(2)(f) carries elections across. An option exercised under a provision of the repealed Act and in force immediately before 1 April 2026 is deemed to have been exercised under the corresponding provision of the Income-tax Act, 2025. A business taxpayer who opted out of Section 115BAC under Section 115BAC(6) and had not withdrawn that option is treated as having exercised the Section 202(4) option, and carries the withdrawal history with it.

Worked example: a Level 10 officer

The computation below uses Level 10 cell 7 of the pay matrix, basic pay Rs. 67,000 a month, in an X-class city, with dearness allowance at 60% under Department of Expenditure Office Memorandum F. No. 1/1(i)/2026-E.II(B) dated 22 April 2026 and house rent allowance at 30% under Office Memorandum No. 2/5/2017-E.II(B) dated 7 July 2017. Rent paid is taken at Rs. 25,000 a month and the old-regime column assumes Rs. 1,50,000 of Section 123 savings and Rs. 50,000 of additional National Pension System contribution under Section 124(3).

Under Section 202(1), gross salary of Rs. 15,27,600 less the Rs. 75,000 standard deduction at serial 2 of the Section 19(1) Table gives total income of Rs. 14,52,600. Tax on the Table: nil on the first Rs. 4,00,000; Rs. 20,000 at 5% on the next Rs. 4,00,000; Rs. 40,000 at 10% on the next Rs. 4,00,000; and Rs. 37,890 at 15% on the remaining Rs. 2,52,600. Income tax is Rs. 97,890. No rebate arises, because total income exceeds Rs. 12,00,000 and the marginal-relief limb in Section 156(2)(b) applies only where the tax exceeds the amount by which total income exceeds Rs. 12,00,000, which Rs. 97,890 against Rs. 2,52,600 does not. Cess at 4% adds Rs. 3,916. Total liability is Rs. 1,01,806.

Under the old regime, reached by exercising the Section 202(4) option, the house rent allowance exclusion at serial 11 is the least of the allowance received of Rs. 2,41,200, rent paid less 10% of salary of Rs. 1,71,360, and 50% of salary of Rs. 6,43,200, giving Rs. 1,71,360. Gross salary less that exclusion, less the Rs. 50,000 standard deduction, less Rs. 1,50,000 under Section 123 and Rs. 50,000 under Section 124(3), gives total income of Rs. 11,06,240. Tax under item (I) of Paragraph A of Part I-B is Rs. 1,12,500 plus 30% of Rs. 1,06,240, being Rs. 1,44,372. Cess at 4% adds Rs. 5,775. Total liability is Rs. 1,50,147.

The default regime is cheaper by Rs. 48,341 for this officer. The figure is sensitive to rent and to savings: the old regime overtakes the default one only where the deductions it allows exceed the Rs. 75,000 standard deduction by a wide margin, and the crossover is not a single number. The income tax calculator computes both columns from actual inputs, and old versus new tax regime sets out where the crossover falls.

Four recurring misreadings

That the slab rates come from the Finance Act. They come from the Table to Section 202(1) of the Income-tax Act, 2025. The Finance Act, 2026 supplies the old-regime ladder at Paragraph A of Part I-B, the surcharge at Section 3(4)(b) and the cess at Section 3(15), and nothing else on the default-regime rates.

That the new regime allows six deductions. The count reaches six only by looking at Chapter VIII and the Section 19(1) Table. It omits the whole of Schedule II, the five surviving Schedule III serials, the retirement receipts from serial 3 of the Section 19(1) Table downwards, and the family pension deduction in Section 93(1)(d), none of which Section 202(2) names.

That prescribed allowances are withdrawn entirely. Section 202(2)(a)(ii) withdraws serials 12 and 13 of the Schedule III Table “other than those as may be prescribed for this purpose”, and rule 280(3) of the Income-tax Rules, 2026 prescribes five survivors. Rule 280(3) is itself drafted against Section 202(4), the option out, which on a literal reading applies the cut-down list to the old regime. Section 202(2)(a)(ii) is the operative provision and rule 280(3) supplies the list.

That a salaried employee must file something to switch. Rule 136 of the Income-tax Rules, 2026 places the election in the return of income under Section 263(1). Form 10-IEA has no successor, and a filer without business income never had to file it. The declaration given to the drawing and disbursing officer governs monthly deduction under Section 392 and is not the option under Section 202(4).

Related Articles

• New tax regime
• Old tax regime
• Old versus new tax regime
• Section 115BAC
• Income-tax Act, 2025
• Income tax slabs for AY 2027-28
• Deductions allowed in the new tax regime
• Standard deduction
• Section 87A rebate
• Marginal relief
• Surcharge on income tax
• Health and Education Cess
• Form 10-IEA
• How to switch tax regime
• Income tax for government employees
• HRA exemption
• Leave travel concession
• Professional tax
• Home-loan interest
• Children education allowance
• Hostel subsidy
• Transport allowance
• Dress allowance
• Daily allowance on tour
• Family pension
• Gratuity for central government employees
• Leave encashment
• Commutation of pension
• National Pension System
• Unified Pension Scheme
• General Provident Fund
• Agniveer Corpus Fund
• Finance Act, 2026
• Central Board of Direct Taxes
• Advance tax
• TDS on salary
• Form 16
• Form 26AS
• ITR-1 Sahaj
• Belated return
• Section 89 relief
• Capital gains tax
• Dearness allowance
• House rent allowance
• Basic pay
• Pay matrix
• 7th Central Pay Commission
• Central government employees

External references

• Income-tax Act, 2025, full text
• Central Board of Direct Taxes notifications
• Income-tax e-filing portal
• Finance Act, 2026, Gazette of India
• Department of Expenditure, Ministry of Finance
• Department of Personnel and Training

References

1. Income-tax Act, 2025 (Act No. 30 of 2025), assented 21 August 2025 and in force from 1 April 2026: Section 202, Chapter XIII Part C, “New tax regime for individuals, Hindu undivided family and others”.
2. Income-tax Act, 2025, Section 536(1) and (2), repeal of the Income-tax Act, 1961 and savings for tax years beginning before 1 April 2026.
3. Income-tax Act, 2025, Section 19(1) Table serial 2 (standard deduction), Section 93(1)(d) (family pension deduction) and Section 124(1), (2) and (13)(b) (pension scheme contributions).
4. Income-tax Act, 2025, Section 156(1), (2) and (3), rebate of income tax in the case of certain individuals.
5. Income-tax Act, 2025, Schedule II and Schedule III Tables, incomes not to be included in total income, read with Section 11.
6. Income-tax Act, 2025, Sections 21(6), 21(7) and 22(1) and (2), annual value and deductions from income from house property.
7. Income-tax Rules, 2026, notified by Notification No. 22/2026 [F. No. 370142/41/2025-TPL], G.S.R. 198(E), dated 20 March 2026: rule 136 (exercise or withdrawal of option), rule 279 (house rent allowance) and rule 280 (prescribed allowances).
8. Finance Act, 2026 (Act No. 4 of 2026), assented 30 March 2026: Section 3(1), (4)(b) Table serial 10, (5) and (15); Paragraph A of Part I-B of the First Schedule; and Section 56 omitting Section 202(2)(a)(iii).
9. Income-tax Act, 1961, Section 115BAC(1A), (2) and (6), as it stood for assessment year 2026-27 before repeal.
10. Department of Expenditure Office Memorandum F. No. 1/1(i)/2026-E.II(B) dated 22 April 2026, dearness allowance at 60% of basic pay with effect from 1 January 2026.