ITR Filing 2026-27 — Step-by-Step Guide for Salaried Indians (New vs Old Tax Regime)

Confusion about ITR filing costs crores of rupees every year — through penalties, missed deductions, and wrong regime choices. This is the complete, honest guide for salaried Indians filing for AY 2026-27 (FY 2025-26).

The Deadline You Cannot Miss

Category	Due Date
Salaried individuals, most cases	July 31, 2026
Individuals requiring tax audit	October 31, 2026
Late filing (with penalty)	December 31, 2026

Late filing penalty:

• Income ≤ ₹5 lakh: ₹1,000 penalty
• Income > ₹5 lakh: ₹5,000 penalty

Plus, you'll pay 1% per month interest on unpaid tax under Section 234A. File on time.

Which ITR Form Should You Use?

Form	Who uses it
ITR-1 (Sahaj)	Salaried individuals, income ≤ ₹50 lakh, one house property, interest income
ITR-2	Multiple house properties, capital gains (stocks, mutual funds), foreign income, more than ₹50 lakh
ITR-3	Business income (freelancers, consultants with professional income)
ITR-4 (Sugam)	Presumptive income (44ADA/44AD) for small businesses/professionals

Most salaried Indians: ITR-1 is your form.
If you sold mutual funds or stocks in FY25-26: Use ITR-2 (capital gains must be reported).

New Tax Regime vs Old Tax Regime — 2026-27 Comparison

The budget has made the new tax regime the default from FY 2024-25. Unless you explicitly opt for the old regime, you're in the new one.

New Tax Regime Slabs (FY 2025-26, AY 2026-27)

Income Slab	Tax Rate
Up to ₹4 lakh	0%
₹4 lakh – ₹8 lakh	5%
₹8 lakh – ₹12 lakh	10%
₹12 lakh – ₹16 lakh	15%
₹16 lakh – ₹20 lakh	20%
₹20 lakh – ₹24 lakh	25%
Above ₹24 lakh	30%

New regime benefits:

• ₹75,000 standard deduction (for salaried)
• ₹25,000 rebate u/s 87A for income up to ₹12 lakh → effectively zero tax if income ≤ ₹12 lakh
• No paperwork for exemptions

Old Tax Regime Slabs

Income Slab	Tax Rate
Up to ₹2.5 lakh	0%
₹2.5 lakh – ₹5 lakh	5%
₹5 lakh – ₹10 lakh	20%
Above ₹10 lakh	30%

Old regime benefits:

• 80C (PPF, ELSS, LIC, EPF) — up to ₹1.5 lakh
• 80D (health insurance premium) — up to ₹25,000 (₹50,000 for parents 60+)
• HRA exemption
• LTA
• 80CCD(1B) NPS — additional ₹50,000
• Interest on home loan deduction (Section 24) — up to ₹2 lakh
• Standard deduction ₹50,000

Which Regime Should YOU Choose?

Simple rule: If your total deductions under the old regime exceed ₹4.25 lakh (for those in 30% slab) or ₹3.75 lakh (for 20% slab), the old regime saves more tax.

Most salaried people earning ₹8–15 lakh with HRA + 80C + home loan: Old regime still better.
People earning ₹12 lakh or less with minimal deductions: New regime = zero tax (due to 87A rebate).

Tax calculator decision example:

For ₹12 lakh gross (salaried):

• New regime: ₹12L – ₹75,000 standard = ₹11.25L taxable. Tax ≈ ₹0 (87A rebate kicks in if taxable income ≤ ₹12L)
• Old regime: ₹12L – ₹50,000 std – ₹1.5L (80C) – ₹25,000 (80D) = ₹9.75L taxable. Tax ≈ ₹1,42,500

Winner at ₹12L with standard deductions only: New regime

For ₹15 lakh gross (salaried, with HRA exemption ₹1.5L, 80C ₹1.5L, 80D ₹25,000, home loan ₹1.5L):

• New regime: ₹15L – ₹75,000 std = ₹14.25L taxable. Tax ≈ ₹1,47,500
• Old regime: ₹15L – ₹50,000 – ₹1.5L – ₹1.5L – ₹25,000 – ₹1.5L – ₹1.5L (HRA) = ₹8.25L taxable. Tax ≈ ₹82,500

Winner at ₹15L with multiple deductions: Old regime (saves ~₹65,000)

Use the official tax calculator at incometax.gov.in/iec/foportal to check your specific situation.

How to File ITR Online — Step by Step

Step 1: Gather Documents

• Form 16 (from employer — mandatorily issued by June 15)
• Form 26AS (tax credit statement) from TRACES
• Annual Information Statement (AIS) — from income tax portal
• Bank statements for interest income
• Investment proofs (if using old regime)
• Home loan certificate (for interest deduction)
• Rental receipts (for HRA)

Step 2: Log into Income Tax Portal

1. Go to incometax.gov.in
2. Login with PAN as User ID
3. Password: what you set during registration (or use Aadhaar OTP)

Step 3: Start ITR Filing

1. Dashboard → "File Income Tax Return"
2. Select Assessment Year: 2026-27
3. Select Filing Type: Original Return
4. Select Mode: Online (recommended for ITR-1)
5. Select ITR Form: ITR-1 (for most salaried)

Step 4: Prefilled Data Review

The portal pre-fills data from your employer's TDS returns, Form 26AS, and bank data. Review carefully:

• Personal information and bank details
• Salary details from Form 16
• TDS deducted
• Other income (interest, dividends)

Important: Cross-check pre-filled data with your actual Form 16. Discrepancies happen — especially if you changed jobs.

Step 5: Choose Tax Regime

The portal asks: New or Old regime. Make your choice based on the calculation above.

Step 6: Add Any Missing Income

• Savings account interest (check your bank passbook/statement) — taxable, often missed
• Fixed Deposit interest — bank deducts 10% TDS but full interest is taxable
• Dividend income (from stocks or mutual funds)
• Freelance/consulting income (if any)

Most common mistake: Not reporting interest income. Tax department matches this with your AIS. If it's there and you don't report it, you may get a notice.

Step 7: Deductions (Old Regime Only)

Under old regime, enter:

• 80C investments (EPF, PPF, LIC, ELSS, children's tuition fees, home loan principal)
• 80D (health insurance premiums)
• 80CCD(1B) (NPS additional contribution)
• Section 24 (home loan interest)
• HRA exemption calculation
• Other applicable deductions

Step 8: Tax Calculation and Payment

The portal calculates your tax liability automatically. If you owe additional tax (beyond TDS), pay it via:

• Challan 280 → Self Assessment Tax
• UPI/Net Banking/Debit Card accepted

If TDS was more than your liability: you get a refund — directly to your bank account within 30–60 days of verification.

Step 9: Verify the Return

This step is critical — ITR without verification is treated as invalid.

Verification options:

• Aadhaar OTP (fastest — recommended)
• Net Banking EVC
• Demat Account EVC
• Bank Account EVC
• Physical ITR-V (send to Bengaluru CPC within 30 days — avoid this)

Deductions You Might Be Missing

Section 80C (Up to ₹1.5 lakh):

• EPF contribution (employer portion NOT eligible — only employee portion)
• PPF
• ELSS Mutual Funds
• LIC premium
• 5-year Bank FD
• NSC
• Children's school tuition fees (not development fees)
• Home loan principal repayment

Section 80D:

• Health insurance for self+spouse+kids: up to ₹25,000
• Health insurance for parents (below 60): additional ₹25,000
• Health insurance for parents (60+): additional ₹50,000
• Preventive health check-up: ₹5,000 within the above limits

Section 80E:

• Interest on education loan — NO upper limit (for higher education abroad or India)

Section 80G:

• Donations to approved charities — 50% or 100% deduction depending on the organization
• PM Relief Fund, PMNRF, CMRF — 100% deduction

Section 24:

• Home loan interest — up to ₹2 lakh per year (self-occupied property)

Section 80TTA/80TTB:

• 80TTA: Interest from savings account — up to ₹10,000 (for individuals under 60)
• 80TTB: Interest from savings + FD — up to ₹50,000 (for senior citizens 60+)

What Happens After Filing

1. Verification: Complete Aadhaar OTP verification immediately
2. Processing: Income Tax Department processes your return (typically 15–45 days)
3. Refund: If due, credited to bank in 30–60 days after processing
4. Intimation u/s 143(1): You receive a confirmation email from CPC — keep it safely

If you get a tax notice: Don't panic. Most are system-generated for minor discrepancies. Respond within the given deadline using the compliance portal.

Filing ITR isn't just about paying taxes — it's building your financial record. A clean ITR history makes loan applications, visa applications, and credit approvals significantly smoother. File every year, even if your income is below the taxable limit.