The new tax regime is India's default personal income tax structure — lower slab rates in exchange for giving up most deductions and exemptions like 80C, HRA and home loan interest. It now sits in section 202 of the Income-tax Act 2025 (the old 115BAC). With the section 156 rebate, normal income up to ₹12 lakh is effectively tax-free under it.
Being the default means the portal assumes the new regime unless you actively opt for the old one. The trade is simple: graduated slabs starting at nil for the first ₹4 lakh and rising in steps to 30% at the top, plus the ₹75,000 standard deduction for salary and employer NPS contribution, versus surrendering the familiar deduction stack — 80C investments, health insurance under 80D, HRA, and housing loan interest on self-occupied property.
For most salaried people and small business owners with modest deduction habits, the new regime now wins, especially below ₹12 lakh where the rebate zeroes the tax anyway. The choice needs actual arithmetic only for those with heavy deductions — large home loan interest, big 80C plus 80D commitments, and HRA together can still tip the old regime ahead. Run both numbers before filing rather than assuming.
The switching rules are asymmetric: salaried taxpayers can flip between regimes each year at filing, but taxpayers with business or professional income get essentially one switch back to the old regime, after which returning to it again is restricted. Business owners should therefore treat the regime choice as a multi-year decision, and make opt-out elections within the return due date — a belated return can cost you the choice.
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Reviewed to the law in force in FY 2026-27. General information, not advice — confirm the position for your facts before acting.