Section 115BAC is the legal home of the New Tax Regime (NTR) — the government's attempt to simplify income tax by offering lower slab rates in exchange for giving up most deductions and exemptions. From AY 2024-25 onwards, the NTR is the default regime. If you do nothing — you're already in it. To use the old regime, you must actively opt out.
Here's the core deal: the tax slabs under NTR (AY 2025-26, relevant for May 2026 exam) are — nil up to ₹3,00,000; 5% from ₹3,00,001 to ₹7,00,000; 10% from ₹7,00,001 to ₹10,00,000; 15% from ₹10,00,001 to ₹12,00,000; 20% from ₹12,00,001 to ₹15,00,000; and 30% above ₹15,00,000. Add 4% Health & Education Cess on the tax amount. The big sweetener: a rebate u/s 87A of ₹25,000 if your total income is ≤ ₹7,00,000 — meaning effectively zero tax up to ₹7 lakh.
What you lose in NTR: Chapter VI-A deductions (80C, 80D, 80G, 80E…), HRA exemption, LTA, professional tax, and interest on self-occupied house property u/s 24(b). What you keep: standard deduction of ₹75,000 for salaried employees and pensioners (₹25,000 for family pension), employer's NPS contribution u/s 80CCD(2), and the Agniveer corpus fund deduction u/s 80CCH. Salaried individuals can switch between regimes every year. Those with business or professional income can opt out only once — after that, re-entry is allowed only if they permanently exit business income.
This section is exam gold — expect 4-to-8-mark questions asking you to compute tax under NTR, compare it with old regime, or identify which deductions survive. Always state the regime explicitly in your answer and don't forget cess.