Income Tax Slabs & Important Sections, Explained Clearly
A single reference for the new & old tax regimes, 35+ deduction sections from 80C to 54F, free calculators, and ITR checklists — curated by KG Finvest for salaried employees, business owners, freelancers and senior citizens.
New Regime Slab Map — FY 2026-27
Income Tax Slabs — FY 2026-27 (AY 2027-28)
The Union Budget 2026 kept slab rates and exemption limits under both regimes unchanged from FY 2025-26. The new tax regime continues as the default regime; taxpayers may still opt for the old regime while filing their return.
New Tax Regime
| Income Slab | 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% |
Old Tax Regime
| Income Slab | 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% |
New vs Old Regime — Quick Comparison
| Feature | New Regime | Old Regime |
|---|---|---|
| Basic exemption | ₹4,00,000 | ₹2.5L / 3L / 5L (age-based) |
| Standard deduction (salary/pension) | ₹75,000 | ₹50,000 |
| Section 87A rebate | Up to ₹60,000 (income ≤ ₹12L) | Up to ₹12,500 (income ≤ ₹5L) |
| 80C / 80D / 80CCD(1B) etc. | Not allowed | Allowed |
| HRA exemption 10(13A) | Not allowed | Allowed |
| Home loan interest 24(b) — self-occupied | Not allowed | Up to ₹2,00,000 |
| Employer NPS 80CCD(2) | Allowed (up to 14% salary) | Allowed (up to 14%/10% salary) |
| Highest surcharge rate | Capped at 25% | Up to 37% |
| Compliance | Simple, fewer proofs | Needs investment/rent proofs |
Health & education cess of 4% applies on tax + surcharge under both regimes.
Which Regime May Suit You?
Young salaried, income ≤ ₹15L
Minimal investments, no home loan, few deductions to claim — the higher basic exemption and 87A rebate usually beat the old regime.
High HRA + home loan + 80C/80D
Metro renters with a home loan who fully use 80C (₹1.5L), 80D and HRA often save more tax by staying in the old regime — always calculate both.
Business owners & freelancers
Presumptive taxation (44AD/44ADA) works with either regime; the regime choice mainly affects slab rates, not the presumptive computation itself.
Senior citizens with FD/pension income
Higher basic exemption (₹3L/₹5L), 80TTB (₹50,000) and medical deductions (80D, 80DDB) often make the old regime more tax-efficient.
Save Tax — Search Every Section & Schedule
Every income tax section, exemption and ITR schedule explained in plain language — what it means for your tax bill, who can claim it, maximum deduction, conditions, documents required, and new-regime applicability. Covers salaried employees, self-employed & professionals, freelancers, senior citizens, HUFs, NRIs and societies/trusts.
Who Are You? — Filter by Category
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Tax Saving Tips
Compute both regimes every year
Regime choice can be switched annually for salaried individuals (via employer/ITR). Run the numbers before assuming one regime is "always better".
Stack Section 80C smartly
EPF + life insurance + children's tuition fees + ELSS often fill the ₹1.5L limit without fresh investment — check what you already have before buying new products.
Don't ignore 80CCD(1B)
An extra ₹50,000 NPS deduction is available over and above the 80C limit — one of the most under-used sections among salaried taxpayers.
Time your capital gains
Holding equity for over 12 months (or other assets per the relevant holding period) shifts gains into the more favourable long-term capital gains category.
Reconcile AIS and Form 26AS before filing
Mismatches between reported income and AIS/26AS are a leading cause of notices — always tally before submission.
Pay advance tax on time
Avoid interest under Sections 234B/234C by paying at least 90% of your final tax liability before 31 March.
Explore All KG Finvest Services
Tax planning is just one part of your financial picture — here's what else KG Finvest can help with.
ITR Checklists by Taxpayer Type
- Form 16 (Part A & B) from employer
- Salary slips for the financial year
- Form 26AS & AIS downloaded and reconciled
- Rent receipts / rent agreement for HRA (old regime)
- 80C proofs — PF, ELSS, LIC, PPF, tuition fees
- 80D health insurance premium receipts
- Home loan interest certificate (Section 24b)
- Bank interest / FD interest certificates
- Capital gains statements (mutual funds, shares, property)
- Previous year's ITR-V/acknowledgement for reference
- Audited/unaudited financial statements (P&L, Balance Sheet)
- GST returns filed during the year (for reconciliation)
- Books of accounts or presumptive turnover working (44AD)
- TDS certificates received (Form 16A)
- Depreciation schedule of fixed assets
- Advance tax challans paid during the year
- Loan account statements & interest certificates
- Details of unsecured loans and partner/director transactions
- Stock statement / inventory valuation
- Bank statements of all business accounts
- Invoices raised during the financial year
- Form 26AS/AIS to confirm TDS deducted by clients (Section 194J/194C)
- Bank statements showing professional receipts
- Expense records — internet, software subscriptions, travel, co-working fees
- Presumptive income working under Section 44ADA (if opted)
- Advance tax payment challans
- Investment proofs for 80C/80D (if on old regime)
- GST registration & returns, if applicable
- Higher basic exemption: ₹3L (60-80 yrs) / ₹5L (80+ yrs) under old regime
- Section 80TTB — deduction up to ₹50,000 on interest from deposits
- Section 80D — health insurance deduction up to ₹50,000
- Section 80DDB — treatment of specified diseases up to ₹1,00,000
- Exemption from advance tax if no business/professional income
- Form 15H can be submitted to avoid TDS on interest income, where eligible
- Standard deduction of ₹50,000 (old) / ₹75,000 (new) on pension income
Common Mistakes While Filing ITR
Not reconciling AIS/Form 26AS before filing, leading to mismatched income reporting and notices under Section 143(1).
Choosing the wrong ITR form — e.g. filing ITR-1 despite having capital gains or foreign assets.
Forgetting to report exempt income such as PPF interest or tax-free bond interest, which must still be disclosed.
Missing e-verification of the ITR within 30 days of filing — an unverified return is treated as not filed.
Double claiming deductions — e.g. claiming both HRA exemption and home loan interest for a self-occupied property in the same city without justification.
Ignoring clubbing provisions — income from assets gifted to a spouse or minor child may need to be clubbed with the transferor's income.
Not paying advance tax on capital gains or freelance income, resulting in interest under Sections 234B/234C.
Real-World Scenarios — Which ITR & What To Do
Common situations people actually face, worked through step by step.
🏠🎁 Salary + home loan, and father gifted ₹10 lakh
You're salaried, repaying a home loan on a self-occupied flat, and your father transferred ₹10,00,000 to help with the down payment.
- Gifts from a "relative" as defined under Section 56(2)(x) — parents included — are fully exempt, regardless of amount. No tax on the ₹10L itself.
- Still report it under Schedule EI (Exempt Income) — an unexplained large credit in your bank account is exactly what draws AIS scrutiny.
- Keep a simple gift deed or declaration letter from your father as proof of source, in case it's ever asked for.
- Home loan interest (self-occupied, Section 24(b), up to ₹2,00,000) and principal (Section 80C) are both old-regime-only — factor that into your regime choice.
📈 Salaried, and sold mutual funds or shares this year
Regular salary income, plus you redeemed some equity mutual funds or sold shares during the year.
- Report short-term and long-term gains separately in Schedule CG, using your broker/AMC capital gains statement.
- Equity LTCG has its own exemption threshold and rate — don't apply your salary slab rate to it.
- Reconcile every transaction against AIS before filing — mismatches here are a common notice trigger.
🧑💻 Freelancer with ₹35 lakh annual receipts
Independent consultant, gross receipts around ₹35L for the year, a handful of clients deducting TDS under Section 194J.
- Under 44ADA, only 50% of receipts is taxed — if your real expenses are under 50%, presumptive taxation means paying tax on less than you actually earned.
- If genuine expenses exceed 50%, regular books (ITR-3) with actual profit may result in lower tax — compute both before choosing.
- Keep basic invoices and bank records either way — needed to reconcile TDS credit in Form 26AS/AIS.
🏭 Small business, ₹80 lakh turnover, mostly UPI/digital
A trading or services business with turnover around ₹80L, receipts almost entirely via UPI/bank transfer.
- With ≥95% digital receipts, only 6% of turnover is taxed as presumptive income (vs 8% for cash-heavy businesses).
- Presumptive taxation means no requirement to maintain detailed books or get audited — but you also can't claim actual expenses beyond the presumptive rate.
- If GST-registered, keep GSTR filings reconciled with declared turnover — a mismatch invites questions from both departments.
🌍 NRI with a rented-out flat in India
You live abroad but own a flat in India that's rented out, with rent credited to an NRO account.
- Report rental income under house property; claim the standard 30% deduction plus home loan interest, if any.
- Tenants are required to deduct TDS at a higher rate under Section 195 for NRI landlords — a lower-deduction certificate from the Assessing Officer can reduce this upfront.
- Check DTAA relief if the same income is also taxed in your country of residence.
🌾 Salaried, plus ₹8,000 of agricultural income
Regular salary, and a small parcel of ancestral farmland brings in about ₹8,000 a year.
- Agricultural income itself stays exempt — but must be disclosed in Schedule EI.
- If non-agricultural income exceeds the basic exemption limit, agricultural income can still affect your tax rate via partial integration — it's not entirely a non-event.
🎁 Received ₹2 lakh cash gift from a friend
A friend (not a relative as defined under the Act) gave you ₹2,00,000 as a wedding or birthday gift.
- Gifts from non-relatives exceeding ₹50,000 in aggregate during the year are fully taxable (not just the amount above ₹50,000) under Section 56(2)(x).
- Report the full ₹2,00,000 as "Income from Other Sources" in Schedule OS.
- Worth knowing before accepting large gifts from friends, business associates, or anyone outside the defined "relative" list.
🌐 Salaried, holds US stocks via ESPP/RSU
Salaried employee whose employer grants RSUs/ESPP in a foreign (often US-listed) parent company, held in a foreign brokerage account.
- Schedule FA (Foreign Assets) disclosure is mandatory regardless of how small the holding or income is.
- Non-disclosure can attract a penalty of up to ₹10 lakh per year under the Black Money Act — independent of any tax actually owed.
- Report any foreign dividends and capital gains too; DTAA relief may apply if foreign tax was already withheld.
Due Dates (Typical, Confirm Annually)
| Compliance | Typical Due Date |
|---|---|
| ITR filing — individuals, no audit | 31 July |
| ITR filing — audit cases (business/professionals) | 31 October |
| Tax audit report filing | 30 September |
| Belated / revised return | 31 December |
| Advance tax — 1st instalment (15%) | 15 June |
| Advance tax — 2nd instalment (45% cumulative) | 15 September |
| Advance tax — 3rd instalment (75% cumulative) | 15 December |
| Advance tax — 4th instalment (100%) | 15 March |
Penalties for Non-Compliance
| Default | Penalty / Consequence |
|---|---|
| Late filing of ITR (Section 234F) | Up to ₹5,000 (₹1,000 if income ≤ ₹5L) |
| Under-reporting of income (Section 270A) | 50% of tax on under-reported income |
| Misreporting of income | Up to 200% of tax on misreported income |
| Non-payment / short advance tax (234B/234C) | Interest @1% per month on shortfall |
| Failure to e-verify return | Return treated as not filed |
| Non-filing despite requirement | Prosecution possible in serious/repeated cases |
Rates and thresholds are indicative and subject to periodic revision by the CBDT — always verify current figures before relying on them.
Tax Calculators
Income Tax Calculator — New vs Old Regime
Estimate only — before marginal relief and any special-rate income (e.g. LTCG). Surcharge slabs applied per prevailing rules; cess of 4% included.
Section 80C Deduction Calculator
HRA Exemption Calculator (Section 10(13A))
HRA exemption applies only under the old tax regime.
Home Loan Tax Benefit Calculator (Sections 24(b) & 80C)
When You Need Personalized Advisory
This page can answer most day-to-day questions — but some situations genuinely need a professional look at your full picture before you file. Here's when it's worth booking time with a KG Finvest advisor.
💼 Salaried Employees
- Multiple Form 16s from job changes mid-year
- ESOP/RSU income or foreign equity holdings
- Capital gains alongside salary income
- Deciding old vs new regime with a complex deduction mix
🏭 Business Owners
- Presumptive (44AD) vs regular books — which actually saves more
- GST and income tax reconciliation
- Loan/investment planning tied to business cash flow
- Turnover approaching audit thresholds
⚖️ Professionals & Freelancers
- 44ADA eligibility and multi-client TDS reconciliation (Form 26AS/AIS)
- Foreign client payments and export-of-services treatment
- Switching between presumptive and regular books
🌍 NRIs
- DTAA relief and residential status determination
- Repatriation rules and NRO/NRE account tax treatment
- TDS on property sale in India
🏛️ Societies & Trusts
- 12AB registration renewal timelines
- 85% application-of-income compliance
- 80P eligibility for co-operative societies
📩 Notices & Scrutiny
- Income tax notices, AIS/26AS mismatches flagged by the department
- Defective return notices or refund delays
- Response drafting within statutory deadlines
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