Income Tax Knowledge Hub (India) — FY 2025-26

ITR Due Date Extensions

Every so often, the CBDT pushes ITR deadlines back — usually when the e-filing portal is struggling under load, a form is released late, or some other genuine hardship affects taxpayers broadly. Extensions are announced through official circulars, not rumours doing the rounds on social media, so it's worth checking the e-filing portal directly.

What is Income Tax?

Income tax is a direct tax — charged on the income you actually earn in a financial year, and unlike GST, you can't shift that burden onto someone else. It funds roads, schools, hospitals, and welfare programs.

India uses a progressive structure: your rate climbs as your income rises. What you actually owe depends on your total income, residential status, age, and which deductions or exemptions you qualify for.

Example: Someone earning Rs 9.8 lakh under the old regime can meaningfully cut taxable income using 80C, 80D, and HRA. The same person under the new regime pays lower rates from the start, but has far fewer deductions to work with.

Who Has to Pay Income Tax?

Anyone earning taxable income in India — called an "assessee" in the law — is expected to file a return. The Act sorts taxpayers into distinct categories, each with its own rules:

Note: Some income is taxable in India regardless of residential status, simply because it arose, accrued, or was received here.

The Income Tax Act

• Under the Constitution, tax can only be imposed under the authority of a law — for income tax, that's the Income Tax Act, 1961.
• Income tax sits in the Union List, meaning only Parliament can legislate on it.
• Each year's Finance Bill, presented during the Budget session, amends the Act; once passed, these become part of the law.
• Beyond the Act itself, Income-tax Rules, CBDT circulars, notifications, and case law all shape how it's actually applied.

Income Tax Department

The Income Tax Department (ITD), under the Ministry of Finance, handles the day-to-day machinery of direct taxes — processing returns, issuing refunds, running assessments, and following up on non-compliance. Policy direction comes from the Central Board of Direct Taxes (CBDT), which frames the rules the ITD then enforces.

Meaning of ITR — Income Tax Return

Every person with taxable income needs to file an Income Tax Return online, each year, using the correct ITR form as prescribed by the department. The government publishes seven ITR forms in total, and picking the right one for your situation is the first real step in filing.

Documents You'll Need

Before you sit down to file, it helps to have these ready:

• Form 16 (salaried employees) and Form 16A (TDS on other payments)
• Form 26AS — your consolidated tax credit statement
• Annual Information Statement (AIS) and Taxpayer Information Statement (TIS)
• Proof of tax-saving investments you plan to claim
• Bank account details, pre-validated for refunds

Exactly which of these matter most depends on your income sources — a salaried employee's checklist looks quite different from a freelancer's or a business owner's.

Who Can Skip Filing?

As a rule, anyone with taxable income should file. There are two specific exceptions:

• Senior citizens aged 75+ whose income is only pension plus interest from the same bank paying that pension — provided they've submitted a declaration and the bank deducts TDS under Section 194P.
• Anyone below the basic exemption limit for their chosen regime:
  • Old regime — Rs 2,50,000 (under 60), Rs 3,00,000 (60–79), Rs 5,00,000 (80+)
  • New regime — relaxed to Rs 4,00,000 for FY 2025-26

Age is reckoned as on 31 March of the financial year.

Even if you qualify to skip filing, doing it anyway is often worth it — it builds a financial record useful for loans and visas, and it's the only way to actually get a TDS refund back.

E-Filing, Explained

Filing happens entirely online through the Income Tax Department's e-filing portal at incometax.gov.in. Register once, then log in each year to file. Much of your data — TDS, interest income, and more — is already pre-filled from AIS and Form 26AS, though it's worth checking every field rather than trusting it blindly.

ITR Due Dates

• Non-audit cases (most individuals): 31 July of the assessment year, unless extended.
• ITR-3 / ITR-4 filers not subject to audit: extended to 31 August, starting from FY 2025-26 returns onward.
• Audit cases: 31 October.
• Cases involving transfer pricing: 30 November.

ITR Forms List

Seven ITR forms cover the range of income structures, residential statuses and taxpayer types:

• ITR-1 — resident individuals, income up to Rs 50 lakh; no business income or taxable capital gains.
• ITR-2 — individuals/HUFs with capital gains or crypto income, or income above Rs 50 lakh; still no business income.
• ITR-3 — individuals/HUFs with business or professional income.
• ITR-4 — resident individuals opting for presumptive taxation, income up to Rs 50 lakh.
• ITR-5 — partnership firms, LLPs, AOPs, and BOIs.
• ITR-6 — companies.
• ITR-7 — specified charitable and similar institutions.

Most delivery partners and gig workers on presumptive taxation use ITR-4; those with more complex business income typically need ITR-3.

Deductions under the Income Tax Act

A deduction lets you subtract specific investments or expenses from your income before tax is worked out, so only what's left gets taxed. Some deductions reward particular savings habits (like 80C); others exist purely because of the nature or source of the income itself. The old regime offers a far wider menu of these than the new regime, which trades deductions for simplicity and lower rates.

Popular Deductions (Quick Reference)

• Section 80C — up to Rs 1.5 lakh for PF, PPF, ELSS, life insurance, and tuition fees.
• Section 80CCD(1B) — an extra Rs 50,000 for NPS contributions, on top of 80C.
• Section 80CCD(2) — your employer's NPS contribution, deductible separately.
• Section 80D — health insurance premiums, with a higher cap for senior citizens.
• Section 80E — interest on an education loan, with no upper limit.
• Section 24 — interest on a home loan.
• Sections 80TTA / 80TTB — interest on savings accounts (80TTB covers senior citizens' interest income specifically, including fixed deposits).

How Tax is Calculated

Once your Total Income is known, tax is worked out using the applicable slab rates for your chosen regime. Surcharge is added if income crosses certain high thresholds, then a flat 4% Health & Education Cess applies on top. If you qualify for the Section 87A rebate, that's subtracted next. Finally, whatever you've already paid — through TDS, advance tax, or self-assessment tax — is deducted to arrive at what you still owe, or what comes back as a refund.

Tax Slabs — FY 2025-26 (AY 2026-27)

Picture a staircase: the rate stays flat for a stretch, then steps up once you cross a threshold. Tax is calculated slab-by-slab for individuals and HUFs; companies and trusts are taxed at flat rates instead.

New Tax Regime

Introduced to cut the compliance burden on individuals and HUFs, the new regime trades most deductions for lower slab rates and simpler computation. It's now the default regime. Thanks to the Section 87A rebate, income up to Rs 12 lakh is effectively tax-free here for FY 2025-26 — an easy win for anyone without large deductions to claim. The standard deduction under this regime is Rs 75,000 for salaried individuals and pensioners.

Old Tax Regime

The old regime rewards documentation — HRA, LTA, 80C, 80D and a long list of other deductions can meaningfully cut taxable income. It suits people with significant eligible investments or expenses, at the cost of more paperwork and careful computation. The standard deduction here is Rs 50,000.

Special Tax Rates

Not everything follows the slab system — some income is taxed at its own fixed rate regardless of which regime you choose:

• Listed equity shares / equity mutual funds — Long-Term Capital Gains: 12.5%, above the exempt threshold.
• Listed equity shares / equity mutual funds — Short-Term Capital Gains: 20% flat.
• Other assets (property, gold, etc.): taxed under their own long/short-term rules, which have shifted in recent budgets — verify current provisions before a large transaction.
• Casual income (lottery, game shows): 30% flat, plus applicable cess/surcharge.

Rebate u/s 87A and Cess

Section 87A lets smaller taxpayers bring their tax bill down to zero, up to a point. Under the new regime, resident individuals with total income up to Rs 12,00,000 can claim a rebate of up to Rs 60,000 — wiping out tax entirely below that line, with marginal relief smoothing the transition just above it. Under the old regime, the threshold is Rs 5,00,000, with the rebate capped at Rs 12,500. Whatever tax remains after the rebate then attracts a flat 4% Health & Education Cess.

Computation of Income

Here's the full waterfall — from gross income under each head down to the final tax payable or refundable. Not every line applies to every taxpayer; extra items may be needed depending on your specific income and deductions.

Slab rates, rebates and thresholds change with each Budget — this structure stays the same, but plug in the current year's figures.

Residential Status

Your residential status decides whether India taxes your entire global income or only what you earn within India:

• Resident and Ordinarily Resident (ROR): worldwide income is taxable.
• Resident but Not Ordinarily Resident (RNOR): Indian income, plus certain foreign income tied to a business controlled from India.
• Non-Resident (NR): only Indian-source income is taxable.

Which bucket you fall into depends on days spent in India during the year and the years before it, with extra conditions for Indian citizens and Persons of Indian Origin living abroad.

The 5 Heads of Income

1) Salary

Basic pay, allowances (HRA, DA), perks like a company car or accommodation, bonuses, and pension. A standard deduction applies, and HRA exemption depends on rent, salary, and city.

2) House Property

Rental income from property you own; a self-occupied property's taxable value is generally nil. Municipal taxes, a standard deduction, and home loan interest under Section 24 reduce what's taxable.

3) Profits and Gains of Business or Profession

Business income, freelance work, and consulting. Presumptive taxation (Sections 44AD/44ADA) can replace full books of account below certain turnover limits.

4) Capital Gains

Profit from selling capital assets — shares, mutual funds, property, gold — split into short-term and long-term based on holding period, each taxed differently.

5) Income from Other Sources

The catch-all head: interest, dividends, gifts above the exempt threshold, and lottery or game-show winnings.

How Tax is Paid

Tax isn't only settled at filing time — the government collects it through the year via TDS/TCS, advance tax, and self-assessment tax, so revenue flows in steadily and compliance is easier to track.

TDS (Tax Deducted at Source)

For many kinds of payments, the payer deducts tax before it reaches you and deposits it with the government on your behalf. The payer also has to remit that TDS and file a TDS statement within specified due dates. Cross-check what's been deducted against Form 26AS and AIS/TIS, and make sure it matches your Form 16/16A — mismatches here are one of the most common triggers for a notice.

Advance Tax

If your estimated tax liability for the year — after TDS — comes to Rs 10,000 or more, you're expected to pay it in instalments through the year rather than all at once, on government-specified due dates.

Self-Assessment Tax

Whatever's left to pay after advance tax and TDS is settled as self-assessment tax, before filing. It's simply your total computed tax minus what's already been paid.

Paying Tax Online

Advance tax and self-assessment tax can both be paid directly through the e-filing portal. Keep the challan — you'll need it as proof.

Refunds

A refund arises when the tax you've already paid — through advance tax, TDS, or excess self-assessment tax — turns out to be more than your actual liability. The excess is credited directly to your bank account once your return is processed, typically within about a week in straightforward cases.

FY, AY, PAN & TAN Explained

• Financial Year (FY): 1 April to 31 March — the period taxpayers use for accounting and reporting. Income earned between 1 April 2025 and 31 March 2026 is FY 2025-26.
• Assessment Year (AY): the year right after, when that income is assessed. FY 2025-26 income is assessed in AY 2026-27.
• PAN: Permanent Account Number — a unique 10-character alphanumeric ID issued to taxpayers.
• TAN: Tax Deduction and Collection Account Number — a unique 10-character ID for anyone required to deduct or collect tax.

What Happens If You Don't File

• A late fee under Section 234F, plus interest under Sections 234A/B/C.
• Loss of the ability to carry forward certain losses to future years.
• A higher chance of receiving a notice, and in serious cases, penalties or prosecution.

What is ITR-V?

ITR-V is the acknowledgement generated the moment you file. If you don't e-verify immediately, you can complete e-verification later online, or post a signed physical copy to CPC Bengaluru within the prescribed window.