vinujaglan.com · Founder's official site Tax year: the one change everyone notices
Under the 1961 Act, income earned in a previous year (say FY 2025-26) was assessed in the following assessment year (AY 2026-27). The 2025 Act uses one term — tax year — for the twelve months starting 1 April. So income of April 2026 – March 2027 is simply Tax Year 2026-27.
Returns for FY 2025-26 (AY 2026-27), filed during 2026, are still under the 1961 Act and use the old section numbers. Tax Year 2026-27 returns, filed in 2027, use the new numbers.
Slab rates — new and old regime
Budget 2026 kept the slabs unchanged. The new regime is the default; you must actively choose the old regime.
| Taxable income | 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% |
A rebate of up to ₹60,000 makes tax nil when taxable income is up to ₹12 lakh, with marginal relief just above it. Salaried people also get a ₹75,000 standard deduction, so salary up to ₹12.75 lakh is effectively tax-free.
| Taxable income | Below 60 | 60 – 80 | 80+ |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 – ₹3,00,000 | 5% | Nil | Nil |
| ₹3,00,001 – ₹5,00,000 | 5% | 5% | Nil |
| ₹5,00,001 – ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
Surcharge: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore and 37% above ₹5 crore (the 37% rate does not apply in the new regime, where 25% is the maximum).
What you can claim in each regime
| Deduction / exemption | Old → New section | Old regime | New regime |
|---|---|---|---|
| Standard deduction (salary) | s.16(ia)→s.19 | ₹50,000 | ₹75,000 |
| LIC, PPF, ELSS, EPF, tuition, home-loan principal | s.80C→s.123 | Up to ₹1.5 lakh | ✗ |
| Health insurance | s.80D→s.126 | ₹25,000 / ₹50,000 (+ parents) | ✗ |
| Own NPS contribution (extra) | s.80CCD(1B)→s.124 | ₹50,000 | ✗ |
| Employer's NPS contribution | s.80CCD(2)→s.124 | Up to 10% of salary | Up to 14% of salary |
| House rent allowance | s.10(13A)→s.11 + Sch. | ✓ | ✗ |
| Home-loan interest — self-occupied | s.24(b)→s.22 | Up to ₹2 lakh | ✗ |
| Savings / deposit interest | s.80TTA/TTB→s.153 | ₹10,000 / ₹50,000 (seniors) | ✗ |
| Donations | s.80G→s.133 | ✓ | ✗ |
The five heads of income
| Head | Starts at (1961 → 2025) | Typical examples |
|---|---|---|
| Salaries | s.15→s.15 | Salary, pension, perquisites, leave encashment |
| House property | s.22→s.20 | Rent from house, shop, office |
| Business or profession | s.28→s.26 | Trading, manufacturing, F&O, freelancing, practice |
| Capital gains | s.45→s.67 | Sale of shares, mutual funds, land, gold |
| Other sources | s.56→s.92 | Interest, dividends, gifts above ₹50,000, family pension |
Returns and due dates
| Return | Old → New | Who / when |
|---|---|---|
| Original return | s.139(1)→s.263 | 31 July (most individuals) · 31 August (non-audit business, from AY 2026-27) · 31 October (audit cases; 21 Nov 2026 for AY 2026-27 after extension) |
| Belated return | s.139(4)→s.263(4) | Up to 31 December after the year, with late fee |
| Revised return | s.139(5)→s.263(5) | Up to 31 March after the year (fee if filed after 31 December) |
| Updated return (ITR-U) | s.139(8A)→s.263 | Within 48 months, with additional tax of 25%–70% |
| Late fee | s.234F→s.428 | ₹1,000 if income ≤ ₹5 lakh, otherwise ₹5,000 |
Frequently asked questions
Under the new regime, yes — through the rebate under Section 87A (now 156) — for normal income. Special-rate income such as short-term capital gains on shares is not covered by the rebate, so tax can still arise on it.
Salaried individuals without business income can choose each year while filing. Those with business income can switch out of the new regime only once in their lifetime (with limited re-entry).
The Income-tax Act, 1961 — proceedings for years before Tax Year 2026-27 continue under the old Act.
