Section 202: the default new tax regime rate schedule

Who this section applies to

Section 202(1) applies to a person who is:

• an individual; or
• a Hindu undivided family; or
• an association of persons (other than a co-operative society); or
• a body of individuals, whether incorporated or not; or
• an artificial juridical person referred to in section 2(77)(g).

The default rate table (Section 202(1))

Unless the person exercises the opt-out option under sub-section (4), the income-tax payable on total income for a tax year is computed at these rates:

Exemptions and deductions not available under this regime

For the purposes of the sub-section (1) rate table, total income is computed without a long list of exemptions and deductions that would otherwise be available, including:

• Several Schedule III exemption entries (Sl. No. 5, 6, 7, 8, 11, 17, and most of Sl. No. 12 and 13);
• Section 19(1) (Table Sl. No. 1) - a standard deduction item;
• Section 22(1)(b), for properties referred to in section 21(6);
• Section 33(8), section 48 and section 49;
• Section 45(3)(a), (b) or (c), and section 46;
• Section 47(1)(a); and
• Chapter VIII, other than the provisions of section 124(1) and 124(2), section 125(2), or section 146.

Loss set-off restrictions and other conditions

Total income under this regime is also computed without setting off any loss carried forward or depreciation from an earlier tax year that is attributable to the disallowed deductions above, and without setting off any loss under the head "Income from house property" against any other head of income.

No exemption or deduction is allowed for any allowance or perquisite, by whatever name called, provided under any other law in force.

A loss or depreciation that cannot be set off for these reasons is deemed to have been given full effect to, so no further deduction for it is allowed in any subsequent year.

Opting out of the default regime (Section 202(4))

A person may choose not to be governed by the sub-section (1) rate table for a tax year, by exercising an option in the prescribed manner:

• A person having income from business or profession: must exercise the option on or before the due date under section 263(1) for furnishing the return of income for that tax year; once exercised, it applies to subsequent tax years; it can be withdrawn only once, for a tax year other than the one in which it was first exercised; and after such withdrawal, the person can never exercise this opt-out option again, except where the person ceases to have business or profession income (in which case the year-by-year opt-out below becomes available).
• A person not having income from business or profession: may exercise the option for a tax year simply by declaring it along with the return of income furnished under section 263(1) for that year.

IFSC units

For a person having a Unit in an International Financial Services Centre, the exemption/deduction restrictions in sub-section (2) are modified so that the deduction under section 147 remains available to that Unit, subject to that section's conditions.

Frequently asked questions