Section 202: New Tax Regime for Individuals, HUFs and Others

Section 202 of the Income-Tax Bill, 2025 is a revamped and simplified version of Section 115BAC of the Income-Tax Act, 1961, introducing a streamlined new tax regime for individuals, Hindu Undivided Families (HUFs), and other specified taxpayers. The new tax regime is a simpler regime which aims to ease compliance, lower tax rates, and eliminate complexities by removing most deductions and exemptions. In this article, we will discuss in detail the new tax regime under Section 202 of the Income Tax Bill, 2025.

What is Section 202 of the Income Tax Bill, 2025?

Section 202 will take effect from April 1, 2026, once the bill is passed by both Houses of Parliament and receives the President’s assent, officially becoming the Income-Tax Act, 2025. This section introduces the new tax regime applicable to Individuals, Hindu Undivided Families (HUFs), and other specified taxpayers. It will still be the default tax regime, meaning taxpayers who wish to continue under the old regime must explicitly opt out.

What are the Tax Rates Under the New Tax Regime of the Income Tax Bill, 2025?

The income tax slabs for the new regime are as follows:

Rebate:

In the new tax regime rebate of up to Rs. 60,000 is available if your income is upto Rs. 12,00,000. This means you will have zero tax liability if your income is less than or equal to Rs. 12,00,000. You also have the benefit of marginal relief which ensures that the tax payable does not excessively surpass the incremental income earned.

Who are Eligible to File Under the New Tax Regime?

The provisions of this section apply to the following categories of taxpayers:

• Individuals
• Hindu Undivided Families (HUFs)
• Associations of Persons (AOPs) other than co-operative societies
• Bodies of Individuals (BOIs), whether incorporated or not
• Artificial Juridical Person

Exemptions and Deductions Not Available Under the New Tax Regime

The following are the exemptions and deductions that are not available under the new regime:

• Daily Allowance received by MP, MLA or member of any committee
• Travel Allowance to individuals
• House Rent Allowance (HRA)
• Rs. 1,500 against minor’s income clubbed in the hands of parents 
• Any Special Allowance for non-official purposes
• Deduction available u/s 10AA to assessee operating in SEZ
• Tax on Employment
• Interest on House Loan on Self-Occupied Property
• Additional Depreciation for Businesses
• Amount deposited in Tea development account, Coffee development account and Rubber Development account.
• Deposit in Site Restoration Account u/s 49
• Deduction against the amount paid to a third party conducting scientific research
• Deduction against expenditure incurred for carrying out specified business
• Expenditure incurred on agricultural extension project
• Deduction under Chapter VIII other than those under sections - 124(1), 125(3), and 146.
• Any allowance or perquisite of any name provided under any law in force  

Exemptions and Deductions Available Under the New Tax Regime

Under the New tax regime, you can claim tax exemption or deduction for the following:

• Transport allowances in case of a specially-abled person.
• Conveyance allowance received to meet the conveyance expenditure incurred as part of the employment.
• Any compensation received to meet the cost of travel on tour or transfer.
• Daily allowance received to meet the ordinary regular charges or expenditure you incur on account of absence from his regular place of duty.
• Perquisites for official purposes
• Exemption on voluntary retirement, gratuity and Leave encashment
• Standard Deduction Rs.75,000 
• Interest on Home Loan on let-out property
• Gifts up to Rs 50,000
• Deduction under Family Pension up to Rs. 25,000. 
• Deduction for employer’s contribution to NPS account u/s 124(1)
• Deduction of amount paid or deposited in the Agniveer Corpus Fund u/s 125(3)
• Deduction in respect of additional employee cost.
• Deduction for Capital and Revenue expenditure towards inhouse scientific research incurred of the business.

Unabsorbed Depreciation and Business Loss Under the New Regime

Under the new tax regime, taxpayers with business income cannot set off brought-forward business losses or unabsorbed depreciation if they relate to exemptions or deductions that are not available under the new regime.