Section 202 — New tax regime for individuals, Hindu undivided family and others. Successor to s.115BAC of the 1961 Act.
Section 202 is in Chapter XIII — Determination of Tax in Special Cases, which runs from section 190 to section 235.
Sub-section (1) makes the rate Table the default basis of charge for an individual, a Hindu undivided family, an association of persons other than a co-operative society, a body of individuals whether incorporated or not, and an artificial juridical person referred to in section 2(77)(g). It operates irrespective of anything else in the Act other than Chapter XVII-B, but subject to Parts A, B, E and this Part of the Chapter, and applies unless the person exercises the option in the manner provided under sub-section (4). The Table: nil up to Rs 4,00,000; 5% from Rs 4,00,001 to Rs 8,00,000; 10% to Rs 12,00,000; 15% to Rs 16,00,000; 20% to Rs 20,00,000; 25% to Rs 24,00,000; and 30% above Rs 24,00,000.
Sub-section (2) is the price of those rates. Clause (a) computes total income without exemption or deduction under Schedule III (Table: Sl. Nos. 5, 6, 7, 8, 11 or 17), Schedule III (Table: Sl. Nos. 12 or 13) other than those as may be prescribed, section 19(1) (Table: Sl. No. 1), section 22(1)(b) for properties referred to in section 21(6), section 33(8), sections 48, 49, 45(3)(a), (b) or (c), 46, 47(1)(a), and Chapter VIII other than sections 124(1), 124(2), 125(2) and 146; sub-clause (iii), which listed section 144, was omitted by Act No. 4 of 2026 with effect from 1 April 2026 and now stands blank. Clause (b) bars set-off of a carried forward loss or depreciation from an earlier year attributable to any of those deductions, and of a house property loss against any other head; clause (c) bars exemption or deduction for allowances or perquisites provided under any other law in force. Sub-section (3) deems the loss and depreciation denied by clause (b) to have been given full effect to, with no further deduction in any later year.
Sub-section (4) is the opt-out. For a person with business or profession income the option must be exercised on or before the section 263(1) due date; once exercised it applies to subsequent tax years; it may be withdrawn only once, for a tax year other than the one for which it was exercised; and after withdrawal the person is never again eligible to exercise it, except where he ceases to have business or profession income. For a person without such income, the option is exercised along with the return furnished under section 263(1). Sub-section (5) keeps the section 147 deduction available to a Unit in the International Financial Services Centre on fulfilment of the conditions in that section.
The Table is graded low enough to be made the default, and paid for by stripping out the exemptions, deductions, allowances and loss set-offs listed in sub-section (2). Making it the default rather than an election reverses the burden: a person wanting the ordinary route has to say so, in time and in the prescribed manner. The one-way ratchet in sub-section (4)(a) stops a business assessee choosing afresh each year to suit the numbers.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Rate on total income up to Rs 4,00,000 | Nil | Person covered by sub-section (1) who has not exercised the sub-section (4) option | Sub-section (1), Table Sl. No. 1 |
| Rate on the next band | 5% | From Rs 4,00,001 to Rs 8,00,000 | Sub-section (1), Table Sl. No. 2 |
| Rate on the next band | 10% | From Rs 8,00,001 to Rs 12,00,000 | Sub-section (1), Table Sl. No. 3 |
| Rate on the next band | 15% | From Rs 12,00,001 to Rs 16,00,000 | Sub-section (1), Table Sl. No. 4 |
| Rate on the next band | 20% | From Rs 16,00,001 to Rs 20,00,000 | Sub-section (1), Table Sl. No. 5 |
| Rate on the next band | 25% | From Rs 20,00,001 to Rs 24,00,000 | Sub-section (1), Table Sl. No. 6 |
| Top rate | 30% | Total income above Rs 24,00,000 | Sub-section (1), Table Sl. No. 7 |
| Deadline for the option where there is business or profession income | On or before the due date specified under section 263(1) for that tax year | Once exercised, it applies to subsequent tax years | Sub-section (4)(a)(i) and (ii) |
| Number of times the option may be withdrawn | Once only | For a person with business or profession income, and for a tax year other than the one for which it was exercised; after withdrawal it is never again available unless such income ceases | Sub-section (4)(a)(iii) and (iv) |
| Timing of the option where there is no business or profession income | Along with the return of income furnished under section 263(1) | No carry-forward or withdrawal restriction is stated for this class | Sub-section (4)(b) |
Because this is the default, the risk lies in inaction rather than in choosing. A person with business or profession income who wants ordinary rates must exercise the option on or before the section 263(1) due date, and the choice then becomes near-permanent — withdrawal is allowed once, and after it the option is gone unless business or profession income ceases. Sub-section (3) is the part most easily missed: the loss and depreciation clause (2)(b) refuses are deemed to have been given full effect to, so they are extinguished rather than held over for a year in which the option might be exercised. On the other side, Chapter VIII is not wholly lost — sections 124(1), 124(2), 125(2) and 146 survive — and section 144 came off the denied list when Act No. 4 of 2026 omitted sub-clause (2)(a)(iii).
An individual with total income of Rs 18,00,000 and no business income is taxed under the Table unless she opts out: nil on the first Rs 4,00,000, 5% on the next Rs 4,00,000, 10% on the next, 15% on the next and 20% on the remaining Rs 2,00,000 — Rs 1,60,000, subject to Parts A, B, E and this Part of the Chapter. In arriving at the Rs 18,00,000 she gets none of the deductions listed in sub-section (2)(a), and a house property loss cannot be set against her salary under clause (b)(ii) — nor carried forward, because sub-section (3) deems it fully given effect to. Having no business income she may exercise the option along with each year's return; a person with business income who withdraws it once can never exercise it again while that income continues.
You meet it as the tax computation on the face of nearly every individual and Hindu undivided family return, because it is the default. You also meet it as the option exercised under sub-section (4), and as the disallowance of Chapter VIII deductions in an intimation or assessment where the option was not validly exercised.
shall, unless the person exercises the option in the manner provided under sub-section (4), be computed at the rate of tax given in the following Table
The loss and depreciation referred to in sub-section (2)(b) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year.
after such withdrawal, the person shall never be eligible to exercise the option under this sub-section, except where such person ceases to have any income from business or profession
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the circulars index.
See the notifications index.
