New Section 202: Income Tax Slabs & Rebate Explained (Effective April 1, 2026)
The Income-Tax Bill 2025 introduces Section 202, replacing Section 115BAC of the Income-Tax Act, 1961. This section consolidates the new tax regime for individuals, domestic companies, and cooperative societies, making tax compliance simpler.
📌 Key Changes:
✅ Section 115BAC is now Section 202 (from April 1, 2026).
✅ Tax slabs remain unchanged from the Budget 2025 proposal.
✅ New tax rebate under Section 156 allows tax-free income up to ₹12 lakh.
Let’s break down the income tax slabs, rebate under Section 156, and who benefits from this new structure.
📊 Income Tax Slabs Under Section 202 (FY 2026-27)
The new tax regime under Section 202 follows these tax slab rates:
| Total Income (₹) | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
🔹 Basic exemption limit: ₹4 lakh
🔹 Highest tax rate: 30% for income above ₹24 lakh
🚀 What does this mean for taxpayers?
✔ Low and middle-income earners benefit from reduced tax rates.
✔ No tax up to ₹12 lakh with rebate under Section 156.
📢 Section 156: ₹60,000 Tax Rebate Under New Tax Regime
Section 156 replaces Section 87A of the Income-Tax Act, 1961, offering a ₹60,000 rebate to individuals opting for the new tax regime.
Who qualifies for this rebate?
✅ If total income is up to ₹12 lakh, taxpayers can claim a 100% tax rebate of up to ₹60,000.
✅ If income exceeds ₹12 lakh, the rebate is reduced by the amount exceeding ₹12 lakh.
📌 Example Scenarios:
| Total Income (₹) | Tax Before Rebate (₹) | Rebate Under Section 156 (₹) | Final Tax Payable (₹) |
|---|---|---|---|
| ₹10,00,000 | ₹60,000 | ₹60,000 | ₹0 (Tax-Free) |
| ₹12,00,000 | ₹1,20,000 | ₹60,000 | ₹60,000 |
| ₹12,50,000 | ₹1,35,000 | ₹50,000 | ₹85,000 |
| ₹13,00,000 | ₹1,50,000 | ₹40,000 | ₹1,10,000 |
🚀 Key Takeaways:
✔ Individuals earning up to ₹12 lakh will pay zero tax.
✔ Those earning slightly above ₹12 lakh still get partial rebate benefits.
🔎 Old vs. New Tax Regime: Which One is Better?
| Feature | Old Tax Regime | New Tax Regime (Section 202) |
|---|---|---|
| Tax Rates | Higher | Lower |
| Basic Exemption Limit | ₹2.5 lakh | ₹4 lakh |
| Rebate | ₹25,000 (for income up to ₹7 lakh) | ₹60,000 (for income up to ₹12 lakh) |
| Deductions & Exemptions | ✅ Available | ⌠Limited |
| Simplicity | ⌠Complex | ✅ Easier Compliance |
💡 Who should choose the new tax regime?
✔ Salaried taxpayers with no major deductions.
✔ Those earning up to ₹12 lakh (since they qualify for a ₹60,000 rebate).
✔ Business owners & professionals preferring a simplified tax structure.
📢 Still confused? Use an income tax calculator to compare regimes before filing!
🚀 Key Takeaways: What You Should Do Next
✔ New tax regime moves to Section 202 from FY 2026-27.
✔ Tax-free income up to ₹12 lakh with Section 156 rebate.
✔ Section 202 provides a simplified structure with fewer exemptions but lower rates.
✔ Use a tax calculator or consult a tax expert before choosing between old and new regimes.
🔎 Got Questions on Section 202 & Section 156?
💬 Drop your queries in the comments below! 🚀
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