Complete Income Tax Guide India FY 2026-27: Slabs, Deductions, ITR Filing & More
Table of Contents
India’s income tax system can feel overwhelming – but it doesn’t have to be. This complete income tax guide for FY 2026-27 covers everything: who pays tax, the latest slabs, how to save tax, ITR filing deadlines, and everything in between. Bookmark this page – it’s your one-stop income tax reference.
📌 What’s New in FY 2026-27 (vs FY 2025-26)
- No change to tax slabs – Budget 2026 kept existing rates intact
- New Tax Regime basic exemption: ₹4 lakh | 87A rebate: ₹60,000 (for income ≤ ₹12L)
- Income Tax Act 2025 effective from 1 April 2026 – replaces Act of 1961
- ITR filing deadline for individuals: 31 July 2027 (for FY 2026-27 income)
What is Income Tax?
Income tax is a direct tax levied by the Government of India on the income earned by individuals, Hindu Undivided Families (HUFs), companies, firms, and other entities during a financial year. Governed by the Income Tax Act (1961 until FY 2025-26, replaced by Income Tax Act 2025 from FY 2026-27), it is administered by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance.
The tax system operates on a self-assessment basis – taxpayers compute their own income, calculate the tax due, pay it, and file a return declaring their income and tax payment — verifiable via Form 26AS and AIS — to the Income Tax Department.
Who Must Pay Income Tax?
The following must pay income tax in India if their income exceeds the basic exemption limit:
- Resident Individuals (below 60): Basic exemption – ₹4 lakh (new regime) | ₹2.5 lakh (old regime)
- Senior Citizens (60-79 years): ₹4 lakh (new) | ₹3 lakh (old)
- Super Senior Citizens (80+): ₹4 lakh (new) | ₹5 lakh (old)
- Hindu Undivided Families (HUF): Same as individual taxpayer (below 60)
- Partnership Firms / LLPs: 30% flat rate (no basic exemption)
- Domestic Companies: 22% (new regime, Section 115BAA) or 25%/30% (old)
- Non-Residents (NRI): Taxed on income earned or received in India
Income Tax Slabs FY 2026-27
New Tax Regime (Default) – Recommended for Most Taxpayers
| Income Slab | 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% |
Standard deduction: ₹75,000 | Section 87A rebate: up to ₹60,000 for net taxable income ≤ ₹12 lakh → Effectively zero tax for salaried up to ₹12.75 lakh gross.
Old Tax Regime – Still Better with Large Deductions
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | NIL |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard deduction: ₹50,000 | Section 87A rebate: up to ₹12,500 for income ≤ ₹5 lakh | Major deductions (80C, 80D, HRA, home loan interest) fully available.
Types of Income Under Income Tax
The Income Tax Act classifies income into five heads:
- Salary (Section 15-17): Basic pay, HRA, allowances, perquisites, pension – from employment. At retirement, gratuity and leave encashment have separate exemption limits.
- House Property (Section 22-27): Rental income, notional rent on self-occupied property. See our guide on income from house property for deduction rules and calculation steps.
- Business/Profession (Section 28-44): Trading profit, professional fees, freelance income. Read our complete guide on income tax for freelancers and understand how Section 44ADA presumptive taxation simplifies filing for professionals. If your business is GST-registered, see our GST basics complete guide India 2026 and stay updated on GST new rates 2026.
- Capital Gains (Section 45-55A): Gains from sale of property, shares, MFs, gold. Exemptions are available under Section 54F (reinvestment in residential property) and for developers under Section 80IBA (affordable housing)
- Other Sources (Section 56-59): Interest, dividends, lottery winnings, gifts. Income from online gaming is also taxable — see our guide on tax on online gaming in India for TDS and ITR rules. Other key topics: PPF interest rate and tax benefits, trading tax in India for F&O and intraday traders, credit card high value transactions and tax compliance, and deferred tax liability for businesses.
Key Deductions to Reduce Taxable Income (Old Regime)
| Section | Deduction | Limit |
|---|---|---|
| 80C | PPF, ELSS, LIC, EPF, NSC, 5-yr FD, home loan principal, tuition | ₹1,50,000 |
| 80CCD(1B) | NPS contribution (additional, over 80C) | ₹50,000 |
| 80CCD(2) | Employer NPS contribution (also in new regime) | 14% of basic+DA |
| 80D | Health insurance premium (self + family + parents) | Up to ₹1,00,000 |
| 24(b) | Home loan interest (self-occupied) | ₹2,00,000 |
| 80E | Education loan interest | No limit (8 yrs) |
| 80G | Charitable donations to approved funds | 50%/100% of donation |
| 80EEA | Affordable housing loan interest (first-time buyers) | Rs. 1,50,000 |
| 80GG | Rent paid (no HRA received) | Rs. 60,000 per year |
| 80TTB | Interest income for senior citizens | Rs. 50,000 |
| 80U | Disability deduction | Rs. 75,000 / Rs. 1,25,000 |
| 80P | Cooperative society income | As applicable |
ITR Filing – Key Deadlines FY 2025-26 (AY 2026-27)
| Taxpayer Type | Due Date |
|---|---|
| Individuals / HUF (non-audit) | 31 July 2026 |
| Audit cases (companies, firms) | 31 October 2026 |
| Transfer Pricing cases | 30 November 2026 |
| Belated Return | 31 December 2026 |
| Revised Return | 31 March 2027 |
Advance Tax – Pay Tax During the Year
If your total tax liability (after TDS) exceeds ₹10,000, you must pay advance tax in four instalments:
- 15 June 2026: 15% of estimated annual tax
- 15 September 2026: 45% cumulative
- 15 December 2026: 75% cumulative
- 15 March 2027: 100% (full payment)
Senior citizens (60+) with no business income are exempt from advance tax.
New vs Old Tax Regime – Which to Choose?
The right regime depends on your individual deductions. As a thumb rule:
- Choose New Regime if your income is ≤ ₹12.75 lakh (zero tax), or if your total eligible deductions are less than the “break-even” deduction amount for your income
- Choose Old Regime if you have large deductions: HRA (living in metro), home loan interest + principal, parents’ health insurance for senior citizens, and significant NPS contributions
Income Tax Act 2025 – What Changed?
Effective from 1 April 2026 (FY 2026-27), the Income Tax Act 2025 replaces the Income Tax Act 1961. Key points:
- Simplified language – same tax rates and deductions, no fundamental changes
- For AY 2026-27 (FY 2025-26 income): Still use old Act 1961
- For AY 2027-28 onwards (FY 2026-27 income): New Act 2025 applies
- Sections have been renumbered – consult updated references
- PAN card rules have also been updated – see new PAN rules 2026 for key changes
- These changes were driven by Union Budget 2025 announcements
Quick Answers – Common Questions
📚 Related Guides in This Series:
- Old vs New Tax Regime: Which One Should You Choose?
- Income Tax Slabs FY 2026-27: Complete Rate Chart
- Which ITR Form Should You File? Complete Decision Guide
- ITR Filing Last Date FY 2025-26: All Deadlines in One Place
- TDS on Salary: Section 192 Complete Guide FY 2026-27
- Capital Gains Tax FY 2026-27: LTCG and STCG Rates — for asset-specific breakdowns, see our guides on long-term capital gains tax and short-term capital gains tax
- Income Tax for Women FY 2026-27 – deductions, schemes, and tax planning specific to women taxpayers
- Tax Saving Tips for Salaried Employees FY 2026-27
- NPS Tax Benefit FY 2026-27: Section 80CCD Deductions
- AIS vs Form 26AS: Key Differences Explained
