The new tax regime is the slab system in section 202 of the Income-tax Act, 2025. Before 1 April 2026 the same idea lived in section 115BAC. For FY 2026-27 the Finance Bill 2026 memorandum says the slab rates are unchanged.
The bands on salary and other ordinary income are simple. Nothing on the first ₹4,00,000. Then 5% up to ₹8 lakh, 10% up to ₹12 lakh, 15% up to ₹16 lakh, 20% up to ₹20 lakh, 25% up to ₹24 lakh, and 30% above that. These bands do not change with age. The old regime still has a higher nil band for a senior citizen. The new regime does not.
What you give up is the list of deductions. Section 123 (this was section 80C), the extra NPS deduction under section 124(3), HRA, and the self-occupied home-loan interest deduction are not available when tax is computed under section 202. What you keep is the standard deduction of ₹75,000 on salary, and an employer’s contribution to NPS up to 14% of salary under section 124.
Section 156(2) can wipe the tax when total income is not more than ₹12,00,000, with marginal relief just above that line. Cess of 4% comes after the rebate. Surcharge in this regime stops at 25%. There is no 37% band.
A worked example
A salaried resident enters ₹15,00,000 and claims nothing else, because the new regime would ignore a section 123 claim anyway. The standard deduction is ₹75,000. Taxable income is ₹14,25,000.
The engine’s slab rows for that income are ₹4,00,000 at 5% (₹20,000), ₹4,00,000 at 10% (₹40,000) and ₹2,25,000 at 15% (₹33,750). Slab tax is ₹93,750. There is no rebate at this income, surcharge is ₹0, cess is ₹3,750, and the bill is ₹97,500.
The same salary in the old regime, with the ₹1,50,000 section 123 cap used, produces a bill of ₹2,10,600. For this person, with only that one deduction, the new regime is the smaller bill. Add a large HRA exemption or home-loan interest and the comparison can flip. That is what the old versus new calculator is for.
Mistakes people make
- Claiming PPF, ELSS or the extra ₹50,000 NPS deduction and also filing under section 202.
- Using the senior-citizen nil band. Age does not lift the ₹4,00,000 band here.
- Treating ₹12,75,000 as the rebate limit for a shop owner. Without the standard deduction the line is ₹12,00,000.
- Expecting the regime to cut the 12.5% rate on shares.
The section
Section 202 (this was section 115BAC). The rebate that sits on top is section 156(2) (this was section 87A). Read the regime guide before you opt.
Questions
Is the new regime the default?
For a person who does not choose otherwise, tax is computed under section 202. The old regime is the one you opt into when the deductions are worth more than the lower slabs. The regime calculator does that comparison.
Which deductions survive in the new regime?
The standard deduction of ₹75,000 on salary survives. An employer’s NPS contribution can survive, at 14% of salary. Section 123, the extra NPS ₹50,000, and HRA do not.
Does the new regime change long-term tax on shares?
No. Section 198 stays at 12.5% above ₹1,25,000. The regime changes slab income. It does not rewrite sections 196, 197 or 198.
Sources
Figures checked 28 Oct 2026.