Section 202 - New tax regime for individuals, Hindu undivided family and others
Regime selection is a full-computation exercise, not merely a slab comparison. Business-income cases face stricter option and re-entry rules than non-business cases.
Reviewed by CA Nikhil Gupta · Updated 9 October 2026
Current law and effective date
Section 202 is controlled against the consolidated Income-tax Act, 2025 as amended by the Finance Act, 2026. The Act and Income-tax Rules, 2026 operate from 1 April 2026; earlier tax years and saved proceedings require the repeal-and-savings framework rather than automatic migration.
Primary statute: Income Tax Department consolidated Act | Rules: Notified Income-tax Rules, 2026
2-minute decode
Regime selection is a full-computation exercise, not merely a slab comparison. Business-income cases face stricter option and re-entry rules than non-business cases.
Who should use this section
Finance and tax teams evaluating new tax regime for individuals, hindu undivided family and others, especially where an option, special rate, denied deduction, loss pool, book-profit adjustment or transition credit can change the effective tax burden under section 202.
How section 202 works in practice
Section 202 sits in Chapter 13 (Determination of Tax in Special Cases) and should be read as a connected rule rather than an isolated label. The practical question is whether the facts actually satisfy the trigger for “New tax regime for individuals, Hindu undivided family and others”. A section 202 review should start with the taxpayer classification and the election/default rule, then rebuild taxable income before applying the headline rate. For section 202, separate ordinary income from special-rate income, identify deductions or losses that the regime blocks, and quantify transition balances before comparing alternatives. For new tax regime for individuals, hindu undivided family and others, the rate is the last step rather than the first. The operating controls are: Classify business-income versus non-business option rules; Maintain a regime-wise deduction and loss matrix; Calculate rebate, surcharge, marginal relief and special-rate income outside slab tax. A reviewer should record why classify business-income versus non-business option rules., because that conclusion drives the downstream computation, reporting or procedural consequence.
Old-law bridge
section 115BAC
The old-law bridge is a research aid, not an automatic precedent transfer. Match the old provision, the current section, saved proceedings and effective dates before importing an older interpretation.
Finance Act 2026 / current-law note
Finance Act, 2026 removes the section 144 reference from section 202(2)(a)(iii). The slab rates for Tax Year 2026-27 remain the enacted section 202 rates; the amendment is a deduction-reference clean-up, not a fresh slab revision.
Professional alert
Classify business-income versus non-business option rules. Maintain a regime-wise deduction and loss matrix. Calculate rebate, surcharge, marginal relief and special-rate income outside slab tax.
Connected Income-tax Rules, 2026 and Forms
| Rule | Current control | Form |
|---|---|---|
| Rule 136 | Exercise or withdrawal of option for new tax regime | - |
Worked application
A salaried individual compares the default regime with the alternative after including standard deduction, eligible employer NPS and deductions available only outside section 202.
Evidence / compliance checklist
- Classify business-income versus non-business option rules.
- Maintain a regime-wise deduction and loss matrix.
- Calculate rebate, surcharge, marginal relief and special-rate income outside slab tax.
- Maintain the section 202 option/default evidence and due-date proof.
- Archive the computation bridge from ordinary provisions to section 202 tax.
- Tie every denied deduction, loss or credit to the relevant current-law clause.
Common mistake
Treating section 202 as a headline-rate shortcut. New tax regime for individuals, Hindu undivided family and others must be applied only after testing eligibility, the option mechanics, blocked deductions/losses, special-rate income and any Finance Act 2026 transition rule.
Recommended approach
For section 202, create a one-page legal-to-evidence matrix. For section 202, put the current statutory condition in the first column, the transaction or procedural fact in the second, the supporting document in the third, and the tax/procedural consequence in the fourth. The first checkpoint should be: Classify business-income versus non-business option rules. This section 202 matrix makes reviewable differences visible before a return, opinion, notice response or litigation position is finalised.
Thresholds, rates, periods and timing checkpoints
- Nil up to Rs 4 lakh
- 5%: Rs 4-8 lakh
- 10%: Rs 8-12 lakh
- 15%: Rs 12-16 lakh
- 20%: Rs 16-20 lakh
- 25%: Rs 20-24 lakh
- 30% above Rs 24 lakh
Related provisions and interaction map
Section 202 should be cross-checked with surcharge, cess, rebate, special-rate income, loss carry-forward, return-option and transition provisions. Optional regimes also require a permanent record of deductions, depreciation and credit balances surrendered or preserved on entry.
Direct navigation / cross-checks: section 201, section 203
Validated statutory core - official current source controlled
Text-status note: This page presents a validated operative statutory core rather than pretending a summary is verbatim law. Use the linked official consolidated Act before quoting sub-section language in a filing, opinion or litigation document.
Primary-source trail
Statute: Income-tax Act, 2025 as amended by Finance Act, 2026
Rules: Income-tax Rules, 2026
Law navigation: Income Tax Department 2025 Act / Rules hub
Finance Act 2026 amendment materials: Official Notes on Clauses
Forms guidance: Official FAQs / Guidance Notes on Income-tax Rules, 2026 forms
Quoting note: The official consolidated Act controls verbatim legislative language.
FAQs
Does an old Income-tax Act, 1961 decision automatically decide section 202?
No. The old-law bridge helps research, but transferability depends on materially matching language, transition rules and any Finance Act 2026 change.
Which source should be quoted in advice or litigation?
Quote the official consolidated statute for the relevant tax year. Where this page presents a validated statutory core rather than complete verbatim text, use the official Act for sub-section wording.
What should be checked immediately before acting?
Re-check the current statutory text, the section-specific Rule/Form mapping and any notification or court order relevant to the exact facts. Section 202 should not be applied from a historic section number or a generic tax summary alone.