New Tax Regime
The default income tax structure with lower slab rates but no access to most deductions and exemptions, including 80C and HRA.
The new tax regime is now the default option for filing, offering lower slab rates in exchange for giving up most deductions and exemptions available under the old regime, including Section 80C, HRA exemption, and home loan interest on a self-occupied property. It does retain a few benefits, such as the standard deduction and the employer's NPS contribution under Section 80CCD(2).
Because it's the default, a taxpayer who wants to use the old regime instead has to actively elect it each year while filing, subject to some restrictions for those with business income. The rebate under Section 87A is also more generous under the new regime, which means many taxpayers with income up to roughly ₹12 lakh, after standard deduction, end up paying no tax at all under this regime.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.