Section 115BAC New Tax Regime 2025: Slabs, Deductions, Exemptions & Benefits
Section 115BAC of the Income Tax Act introduces the new tax regime, featuring lower tax slab rates in return for giving up most deductions and exemptions. This section allows taxpayers to select the regime that suits them best each financial year, subject to prescribed conditions. If no option is exercised, the new regime automatically becomes the default. Although it offers simpler compliance and is advantageous for those who do not claim multiple deductions, individuals can still choose the old regime if it results in lower tax liability.
What is Section 115BAC – New Tax Regime Slabs?
Section 115BAC offers concessional tax slabs under the new regime. Starting from FY 2023–24, this regime is treated as the default. Under it, several commonly claimed deductions and exemptions are not permitted. Individuals or HUFs who wish to continue with the old regime must opt for it while filing their income tax return. However, if they have business income, they must submit Form 10-IEA before the ITR due date. Once the due date passes, the old regime cannot be selected, and the taxpayer will be required to file under the new regime.
Eligibility for Section 115BAC
- Section 115BAC applies exclusively to individual taxpayers and Hindu Undivided Families (HUFs).
- Anyone opting for the new regime must refrain from claiming the following deductions and exemptions:
- House Rent Allowance under Section 10(13A)
- Special allowances under Section 10(14)
- Allowances received by politicians under Section 10(17)
- Interest on home loans for self-occupied property under Section 24
- Additional depreciation under Section 32
- Scientific research expenditure under Section 35
- Deductions under Chapter VI-A (except employer’s NPS contribution under Section 80CCD(2), contribution to the Agniveer Scheme under Section 80CCH(2), and deduction for additional employee cost under Section 80JJAA)
- House Rent Allowance under Section 10(13A)
- Taxpayers must also avoid carrying forward losses arising from the above-mentioned deductions.
What Are the Tax Rates Under the New Tax Regime?
For FY 2025–26 (AY 2026–27), the government further eased the income tax slabs. The updated slabs and corresponding tax rates under the new regime for FY 2025–26 (AY 2026–27) are shown below:
| Tax Slab for FY 2025–26 | Tax Rate |
| Up to ₹4 lakh | NIL |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
The tax slabs applicable under the new regime for FY 2024–25 (AY 2025–26) are presented below:
| Tax Slab for FY 2024–25 | Tax Rate |
| Up to ₹3 lakh | NIL |
| ₹3 lakh – ₹7 lakh | 5% |
| ₹7 lakh – ₹10 lakh | 10% |
| ₹10 lakh – ₹12 lakh | 15% |
| ₹12 lakh – ₹15 lakh | 20% |
| Above ₹15 lakh | 30% |
Under the old tax regime, the slab structure and tax rates remain unchanged.
Rebate
A rebate helps reduce the tax burden for resident individuals with lower income, even if their taxable income crosses the basic exemption threshold. Non-residents, companies, HUFs, and other taxpayers are not eligible for this benefit.
Rebate for FY 2024–25:
- Under the new regime, individuals with taxable income up to ₹7 lakh receive a rebate of ₹25,000.
- Under the old regime, individuals with taxable income up to ₹5 lakh receive a rebate of ₹12,500.
For FY 2025–26, the rebate under the new regime is ₹60,000. There is no change in the rebate available under the old regime.
Comparison of Old and New Tax Regime Slabs
The following table compares the tax rates under both regimes for FY 2024–25 (AY 2025–26):
| Income Slabs | Old Regime (Age < 60 & NRIs) | Old Regime (Age 60–80) | Old Regime (Age > 80) | New Regime (FY 2024–25) |
| Up to ₹2.5 lakh | NIL | NIL | NIL | NIL |
| ₹2.5 lakh – ₹3 lakh | 5% | NIL | NIL | NIL |
| ₹3 lakh – ₹5 lakh | 5% | 5% | NIL | 5% |
| ₹5 lakh – ₹6 lakh | 20% | 20% | 20% | 5% |
| ₹6 lakh – ₹7 lakh | 20% | 20% | 20% | 5% |
| ₹7 lakh – ₹7.5 lakh | 20% | 20% | 20% | 10% |
| ₹7.5 lakh – ₹9 lakh | 20% | 20% | 20% | 10% |
| ₹9 lakh – ₹10 lakh | 20% | 20% | 20% | 10% |
| ₹10 lakh – ₹12 lakh | 30% | 30% | 30% | 15% |
| ₹12 lakh – ₹12.5 lakh | 30% | 30% | 30% | 20% |
| ₹12.5 lakh – ₹15 lakh | 30% | 30% | 30% | 20% |
| Above ₹15 lakh | 30% | 30% | 30% | 30% |
Although the new regime offers wider and more relaxed slab rates, it restricts most deductions and exemptions available under the old regime.
Exemptions and Deductions Available Under the New Tax Regime
Under the new tax regime, taxpayers are allowed to claim only a limited set of deductions and exemptions. These include:
Chapter VI-A Deductions
- Employer’s contribution to the NPS account under Section 80CCD(2), where up to 14% of salary is deductible (compared to 10% in the old regime).
- Deduction for additional employee cost under Section 80JJAA.
- Deduction for contributions made to the Agniveer Corpus Fund, introduced through Section 80CCH(2) in Budget 2023.
Salary-Related Deductions/Exemptions
- Deduction under Section 80CCD(2) for employer’s NPS contribution — up to 14% of salary.
- Standard deduction of ₹75,000 under the new regime (earlier ₹50,000 under the old regime).
- Exemptions for voluntary retirement under Section 10(10C), gratuity under Section 10(10) and leave encashment under Section 10(10AA).
- Certain allowances remain exempt under specific conditions, such as transport allowance for specially-abled employees, conveyance allowance for work-related travel, travel allowance for transfers or tours, and daily allowances for duties performed away from the regular place of work.
- Perquisites provided for official duties.
House Property
- Interest deduction on a home loan for let-out property under Section 24.
Other Sources
- Gifts received up to ₹50,000.
- Deduction for family pension income under Section 57(iia). Budget 2024 increased the maximum deduction from ₹15,000 to ₹25,000.
Exemptions and Deductions Not Available Under the New Tax Regime
The following major exemptions and deductions cannot be claimed under the new tax regime:
Chapter VI-A Deductions
- Deductions under Section 80TTA/80TTB.
- Deductions under Section 80C, 80D, 80E, etc., except Section 80CCD(2) and Section 80JJAA.
- Exemptions for various perquisites and allowances, including the food allowance of ₹50 per meal (up to 2 meals per day).
- Employee’s own contribution to NPS.
- Deductions for donations to political parties or eligible trusts.
Salary
- Professional tax and entertainment allowance.
- Leave Travel Allowance (LTA).
- House Rent Allowance (HRA).
- Allowances received by MPs/MLAs.
- Helper allowance.
- Children education allowance.
- Other special allowances under Section 10(14).
House Property
- Interest deduction on a self-occupied or vacant residential property under Section 24.
Other Sources
- Exemption for minor child income.
Business or Profession
- Additional depreciation under Section 32(1)(iia).
- Deductions under Sections 32AD, 33AB, 33ABA.
- Deductions for donations or expenditure on scientific research under Sections 35(2AA), 35(1)(ii), 35(1)(iia), 35(1)(iii).
- Deduction under Section 35AD or Section 35CCC.
- Exemption for SEZ units under Section 10AA.
Comparison of Deductions: Old vs New Tax Regime (FY 2024–25)
The following table highlights the major deduction and exemption differences between the Old Tax Regime and the New Tax Regime under Section 115BAC for FY 2024–25:
| Deduction / Exemption | Old Regime | New Regime (Section 115BAC) |
| Section 80C (PPF, NSC, LIC, ELSS, etc.) | Available up to ₹1.5 lakh | Not available |
| House Rent Allowance (HRA) | Available based on actuals | Not available |
| Standard Deduction | ₹50,000 | ₹75,000 (FY 2024–25), ₹50,000 (FY 2023–24) |
| Section 80D (Health insurance premium) | Available | Not available |
| Section 24 (Home loan interest on self-occupied property) | Up to ₹2 lakh | Not available |
| Section 80G (Donations) | Available | Not available |
| Leave Travel Allowance (LTA) | Available | Not available |
| Section 80E (Education loan interest) | Available | Not available |
| Section 80TTA / 80TTB | Available | Not available |
| Professional Tax | Available | Not available |
| Entertainment Allowance | Available | Not available |
| Transport Allowance for PwD | Available | Available |
| Children’s Education Allowance | Available | Not available |
| House Property Loss Set-off | Allowed | Not allowed |
| Additional Depreciation (Section 32(1)(iia)) | Available | Not available |
Switching Between Tax Regimes – Form 10 IEA Rules
For Salaried Employees
- The choice of tax regime is made at the start of the financial year.
- This choice impacts TDS only and can still be changed at the time of filing the return (July 2025).
- If no choice is communicated, the employer deducts TDS under the default New Tax Regime.
- Salaried taxpayers can switch between the new and old regimes every year while filing returns.
For Non-Salaried Taxpayers (Business/Profession Income)
- They cannot switch regimes every year.
- Once they opt out of the new regime, they cannot re-enter it freely.
- Form 10 IEA must be filed to opt for the old regime.
- The same form can be used in future years to continue under the old regime.
- To revert to the new regime, Form 10 IEA must be filed again — but this switch back is allowed only once in a lifetime.
- There is no need to inform anyone during the year about the selected regime.
Important Due Dates
- Due date for filing ITR for FY 2024–25 (AY 2025–26): 15 September 2025
- Belated Return deadline: 31 December 2025
How to Choose the New Tax Regime and Plan Your Taxes
- Choosing the right tax regime at the start of the financial year helps with proper tax planning.
- Taxpayers should compare the tax liability under both regimes before deciding.
- Investments, TDS and advance tax calculations depend on the tax regime selected.
- If opting for the old regime, Form 10 IEA must be furnished before filing the return.
Illustrations: When Is the New or Old Regime Better?
Example 1: New Regime More Beneficial (FY 2024–25)
| Particulars | Amount (₹) | Old Regime | New Regime |
| Salary | 12,50,000 | 12,50,000 | 12,50,000 |
| Less: Standard Deduction | 50,000 | 75,000 | |
| Less: Professional Tax | 2,400 | – | |
| Gross Total Income | 11,97,600 | 11,75,000 | |
| Less: 80C Deduction | 1,50,000 | – | |
| Total Income | 10,47,600 | 11,75,000 | |
| Income Tax (incl. 4% cess) | 1,31,851 | 79,300 |
Result:
New regime saves ₹52,551.
However, if the taxpayer claims more deductions (home loan interest, health insurance, NPS, education loan, etc.), the old regime may become favourable.
Example 2: Old Regime More Beneficial (FY 2024–25)
| Particulars | Old Regime (₹) | New Regime (₹) |
| Salary | 10,00,000 | 10,00,000 |
| Less: HRA Exemption | 70,000 | – |
| Less: Standard Deduction | 50,000 | 75,000 |
| Less: Professional Tax | 2,400 | – |
| Gross Total Income | 8,77,600 | 9,25,000 |
| Less: Section 80C | 1,50,000 | – |
| Less: Section 80D | 50,000 | – |
| Total Income | 6,77,600 | 9,25,000 |
| Income Tax | 48,020 | 42,500 |
| Add: 4% Cess | 1,921 | 1,700 |
| Total Tax | 49,941 | 44,200 |
Result:
Old regime is beneficial by ₹5,741.
Who Benefits More from Which Regime?
- Individuals with lower deductions (few investments, no housing loan, minimal tax-saving expenses) — New regime is generally better.
- Individuals who claim substantial deductions (80C, 80D, home loan interest, NPS, etc.) — Old regime provides higher tax savings.
- Taxpayers earning between ₹5–15 lakh with limited deductions usually benefit more under the new regime.
Tax Liability Comparison Without Any Deductions (FY 2024–25)
| Annual Income* | Tax – Old Regime (₹) | Tax – New Regime (₹) | Tax Saved (₹) |
| ₹7,50,000 | 54,600 | 0 | 54,600 |
| ₹10,00,000 | 1,06,600 | 44,200 | 62,400 |
| ₹12,50,000 | 1,79,400 | 79,300 | 1,00,100 |
| ₹15,00,000 | 2,57,400 | 1,30,000 | 1,27,400 |
*Income assumed after standard deduction under both regimes.
Treatment of House Property Deductions and Business Losses Under the New Tax Regime
| Deduction / Loss | Old Regime | New Regime |
| Self-Occupied House Property | Interest on home loan up to ₹2 lakh is deductible; the resulting loss can be set off. | No interest deduction allowed; loss cannot be set off. |
| Let-Out House Property | Full interest deduction permitted; excess loss can be set off or carried forward. | Deduction restricted to the extent of taxable rental income; excess loss cannot be set off or carried forward. |
| Business Loss / Unabsorbed Depreciation | Allowed to be set off and carried forward if conditions are satisfied. | Not permitted when connected to deductions that are disallowed under the new regime (e.g., Section 35). |
| Example: Section 35 Deduction Loss | Can be carried forward and adjusted in future years. | Set-off not allowed if the related deduction is not permitted in the new regime. |
Conclusion
From the above comparison, it becomes clear that the new tax regime offers better benefits for taxpayers with moderate income who do not claim many deductions. Individuals who do not invest heavily in tax-saving options such as NPS or health insurance often find the new regime more favourable.
Taxpayers earning between ₹5 lakh and ₹10 lakh with minimal deductions generally experience lower tax liability under the new structure. On the other hand, those with annual income above ₹15 lakh who make substantial tax-saving investments are likely to gain more from the old tax regime.
FAQs on Section 115BAC – New Tax Regime
Is Section 80C applicable under the new tax regime?
No. Deductions under Section 80C are not allowed in the new tax regime.
Is HRA exemption allowed in the new tax regime?
No. HRA exemption is not permitted under the new tax regime.
How do I calculate tax under the new tax regime?
To compute tax under the new regime (from FY 2024–25 onwards):
- Start with your gross total income.
- Deduct the standard deduction of ₹75,000.
- Claim eligible deductions like 80CCD(2) and 80JJAA (if applicable).
- Apply the new tax slabs on the resulting taxable income.
- Claim Section 87A rebate if eligible.
- Add 4% cess to arrive at total tax payable.
What is Section 115BAC – the New Tax Regime?
Section 115BAC, introduced in Budget 2020 and modified in Budget 2023, offers lower tax rates but with restricted exemptions and deductions. From FY 2023–24, this regime is the default tax regime.
What is the new deduction for family pension under the new regime?
Budget 2024 increased the deduction on family pension from ₹15,000 to ₹25,000, applicable only under the new tax regime from FY 2024–25.
What is the difference between the old and new tax regime?
- New Regime: Lower slab rates, fewer deductions.
- Old Regime: Higher tax rates but allows numerous deductions/exemptions (80C, HRA, LTA, etc.).
Your choice depends on your income level and deduction eligibility.
Are senior citizen-specific slab rates available in the new tax regime?
No. The new regime has a common slab structure for all taxpayers—individuals, senior citizens, and super senior citizens.
Do I need to file Form 10-IEA to opt for the old regime?
- Yes, if you have business income.
- No, if you do not have business income—you can select the old regime directly while filing ITR.
Which tax regime is better—old or new?
It depends on your situation:
- If you have high deductions, the old regime is usually better.
- If you have minimal deductions, the new regime often results in lower tax. Comparing both is advisable.
Which deductions are NOT allowed under the new tax regime?
The new regime disallows many deductions, including:
- 80C, 80D, 80E, 80G, etc.
- HRA, LTA, home loan interest on self-occupied property
- Other Chapter VI-A deductions except those specifically permitted.
Which deductions ARE allowed under the new regime?
Allowed deductions include:
- Standard deduction (₹75,000)
- Employer contribution to NPS – Section 80CCD(2)
- Additional employee cost – Section 80JJAA
- Family pension deduction – Section 57(iia)
- Agniveer Corpus Fund contribution – 80CCH
- Transport allowance for specially-abled employees
Is the rebate different in the new regime?
Yes. The rebate limit is higher under the new regime:
- New Regime: Rebate up to ₹25,000 (income up to ₹7 lakh) + marginal relief.
- Old Regime: Maximum rebate ₹12,500 (income up to ₹5 lakh).
Can I claim interest on home loan for a self-occupied house under the new regime?
No. Deduction for interest on housing loan for self-occupied property is not allowed under Section 115BAC.
Can I switch between the old and new regime every year?
- Yes, salaried taxpayers without business income can switch every year.
- No, taxpayers with business income can switch only once unless specific conditions are met.
Is standard deduction available in the new tax regime?
Yes. A standard deduction of ₹75,000 is available from FY 2024–25.
Is leave travel allowance (LTA) available in the new regime?
No. LTA exemption is not available under the new tax regime.
Is professional tax deductible in the new regime?
No. Professional tax deduction is not allowed under Section 115BAC.
Are medical reimbursements and meal vouchers exempt in the new regime?
No. These exemptions have been removed under the new regime.
Is employer’s contribution to EPF taxable under the new regime?
No. EPF employer contribution up to the statutory limit remains exempt, same as old regime.
Can I claim deduction for donations under Section 80G in the new regime?
No. Section 80G deduction is not allowed in the new tax regime.
