The Indian tax system saw a major change with advent of the Income-tax Act, 2025, which became effective from 1 April 2026. The new Act replaced the long standing Income-tax Act, 1961. One of the major changes under new Act is the renumbering of the Section relating to the new tax regime.
Under old Act, the new regime was governed by Section 115BAC whereas under Income-tax Act, 2025, it is covered u/s 202. Although the section number has changed, the Government's objective is to simplify and reorganize the tax law while largely retaining the existing tax policy, tax slabs and rates.
The new Act provides a new section for the new regime applicable to eligible taxpayers namely, Individuals, Hindu Undivided Families (HUFs), Associations of Persons (AOPs), Bodies of Individuals (BOIs) and Artificial Juridical Persons. In this article, we compare Section 115BAC vs Section 202 and discuss the major changes made under the new Income Tax Act.
Paying income tax is not just about how much you earn. It also depends on the tax regime you select. That is where Section 115BAC of Income-tax Act, 1961 comes in. This Section created a new method of computing income tax and in return for surrendering most deductions and exemptions, gave many taxpayers lower tax rates.
The Finance Act, 2020 introduced Section 115BAC became effective from Financial Year 2020-21 (Assessment Year 2021-22). Later, the Finance Act, 2023 made it the default tax regime from the Financial Year 2023-24 (Assessment Year 2024-25). The income-tax is calculated at lower tax slab rates u/s 115 BAC.
But taxpayers who choose this regime will not be able to claim most of the deductions and exemptions available under the old regime. Section 115BAC is the default tax regime for individuals and Hindu Undivided Families (HUFs). This means that, unless you opt for the old regime (if you are eligible to do so), your income tax will be calculated under the new regime by default.
India's new Income-tax Act 2025 has given new tax regime a brand new section number. While the tax rules under the New Act remain largely the same, they are now placed under separate provisions to make law easier to understand as well as follow.
The provisions of new regime are contained u/s 202 of the 2025 Act. This Section replaced Section 115BAC of the Income-tax Act, 1961 and came into effect from 1 April 2026. The move to Section 202 is part of the government's effort to simplify and reorganise the Income-tax Act.
While the section number has changed, the tax slabs, tax rates and the overall structure of the new regime remain the same even now. U/s 202, the new tax regime continues to be default regime for eligible taxpayers unless they choose to opt for old tax regime where permitted.
In the table below, we have compared Section 115BAC vs Section 202:-
| Feature | Section 115BAC | Section 202 |
|---|---|---|
| Governing Act | This section is governed by the Income-tax Act, 1961. | This section is governed by the Income-tax Act, 2025. |
| Primary Intent | It introduced the New Tax Regime. | It reorganises and continues the New Tax Regime under the new Act. |
| Effective Timeline | Section 115BAC applies up to Assessment Year (AY) 2026-27. | Section 202 became effective from 1 April 2026 onwards. |
| Default Tax Status | It established the New Tax Regime as the default tax system. | It continues the New Tax Regime as the default tax system. |
| Core Slab Policy | A progressive income tax slab structure is followed under Section 115BAC. | The same progressive tax slab structure is retained under Section 202. |
| Exemptions & Deductions | This section does not allow most major deductions such as Sections 80C, 80D, and HRA. | This section continues to restrict the same deductions under the new legal framework. |
| Terminology Basis | It uses the terms "Previous Year" and "Assessment Year". | It replaces these terms with the simpler term "Tax Year". |
The table below outlines the income tax slabs and the applicable tax rates under the new regime:-
| Sl. No. | Annual Taxable Income (in Rs.) | Applicable Income Tax Rate (in %) |
|---|---|---|
| 1. | Up to Rs. 4,00,000 | Nil |
| 2. | Rs. 4,00,001 - Rs. 8,00,000 | 5% |
| 3. | Rs. 8,00,001 - Rs. 12,00,000 | 10% |
| 4. | Rs. 12,00,001 - Rs. 16,00,000 | 15% |
| 5. | Rs. 16,00,001 - Rs. 20,00,000 | 20% |
| 6. | Rs. 20,00,001 - Rs. 24,00,000 | 25% |
| 7. | More than Rs. 24,00,000 | 30% |
Also Read: New Income Tax Act 2025: Key Details
Although the Income-tax Act, 2025 has replaced the Income-tax Act, 1961 with effect from 1 April 2026, the new tax regime continues with largely the same structure under Section 202 in place of Section 115BAC. The new regime remains the default tax regime for eligible taxpayers while most deductions and exemptions available under the old tax regime continue to be unavailable unless a taxpayer opts for the old regime where permitted. For professional assistance with income tax return filing, TDS compliance or any other tax related services, get in touch with tax experts at Registrationwala.
Q1. When did the Income Tax Act 2025 come into force?
A. The Income Tax Act 2025 came into force on 1 April 2026.
Q2. For how many decades was Income-tax Act, 1961 in force before it was replaced by Income-tax Act, 2025?
A. The Income-tax Act, 1961 remained in force for more than six decades (i.e., about 65 years) before it was replaced by Income-tax Act, 2025, which came into effect on 1 April 2026.
Q3. Up to which Financial Year (FY) and Assessment Year (AY) does Section 115BAC apply?
A. Section 115BAC applies up to FY 2025-26 (AY 2026-27). From FY 2026-27 (AY 2027-28) onwards, it is replaced by new regime u/s 202 of Income-tax Act, 2025.
Q4. Which Section of the ITA 2025 governs the new tax regime?
A. Section 202 of the ITA 2025 governs the new regime.
Q5. From which FY and AY does Section 202 replace Section 115BAC?
A. The Section 202 of ITA 2025 replaces the Section 115BAC of ITA 1961 from FY 2026-27 (AY 2027-28).
Q6. Which taxpayers fall under the 30% tax slab in the new regime?
A. Under the new regime, individuals with net taxable income above Rs. 24,00,000 are taxed at 30% slab rate.
Hi, I'm Sachin Chawla. I’m a commerce graduate from Agra University and a Chartered Accountant (2015) with DISA certification. I focus on helping businesses with formation, management, tax and FEMA matters, business licenses and regulatory compliance, IP advisory, risk management and auditing among others. Through my articles, I aim to share my expertise and provide practical guidance in these areas.
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