Complete Income Tax Guide India FY 2026-27: Slabs, Deductions, ITR Filing & More

class=”fl-article-body”>

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 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

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

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)

ITR Filing – Key Deadlines FY 2025-26 (AY 2026-27)

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