Part A
Tax Rates
A·1
Tax Rates — Individuals & HUF
Assessment Year 2026-27 (FY 2025-26)
Two regimes
The new regime under section 115BAC is the default. The old regime is optional and must be opted into (and, for those with business income, Form 10-IEA applies). Most deductions and exemptions are unavailable under the new regime.
New regime — section 115BAC (default)
| Total 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% |
₹ 75,000
Standard deduction (salary/pension)
Nil tax
up to ₹ 12,00,000 income
via 87A rebate
₹ 60,000
Maximum 87A rebate
Rebate & marginal relief (new regime)
Resident individuals with total income up to ₹ 12,00,000 pay nil tax (rebate u/s 87A up to ₹ 60,000). Just above ₹ 12 lakh, marginal relief caps the tax so it does not exceed the income over ₹ 12 lakh. With the ₹ 75,000 standard deduction, a salaried person is effectively tax-free up to ₹ 12,75,000.
Old regime (optional)
| Total income (₹) | Below 60 | 60 to <80 | 80 & above |
|---|---|---|---|
| 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% |
Old regime reliefs
Standard deduction ₹ 50,000; rebate u/s 87A up to ₹ 12,500 where total income does not exceed ₹ 5,00,000. Chapter VI-A deductions (80C, 80D, etc.), HRA and home-loan interest remain available.
Surcharge on income-tax
| Total income | Rate | New regime |
|---|---|---|
| Above ₹ 50 lakh – ₹ 1 crore | 10% | 10% |
| Above ₹ 1 crore – ₹ 2 crore | 15% | 15% |
| Above ₹ 2 crore – ₹ 5 crore | 25% | 25% |
| Above ₹ 5 crore | 37% | 25% (capped) |
Surcharge — watch points
Surcharge attracts marginal relief at each threshold. The surcharge on dividend income and on capital gains u/s 111A/112A/112 is capped at 15%. Under the new regime the highest surcharge is 25%. Health & education cess @ 4% applies on tax plus surcharge in every case.
Quick example (new regime)
Total income ₹ 16,00,000 (after standard deduction): tax = 5% of 4L + 10% of 4L + 15% of 4L = ₹ 1,20,000, plus 4% cess = ₹ 1,24,800.
A·2
Tax Rates — Partnership Firms & LLP
AY 2026-27
30%
Flat rate of income-tax
12%
Surcharge if income > ₹ 1 crore
marginal relief
4%
Health & education cess
No slabs
A firm / LLP is taxed at a flat 30% on total income — there is no basic exemption or slab benefit. Surcharge of 12% applies only where total income exceeds ₹ 1 crore (with marginal relief); cess is 4% on tax plus surcharge.
Deductible remuneration to partners — section 40(b)
| Book profit | Maximum allowable remuneration |
|---|---|
| On the first ₹ 6,00,000 (or loss) | ₹ 3,00,000 or 90% of book profit, whichever is higher |
| On the balance of book profit | 60% |
Revised w.e.f. AY 2025-26
These limits were enhanced by the Finance (No.2) Act 2024. Interest to partners is deductible up to 12% p.a. Both must be authorised by, and within the limits of, the partnership deed.
New TDS — section 194T
From 1 April 2025, a firm/LLP must deduct TDS @ 10% on salary, remuneration, interest, commission or bonus paid to a partner where the aggregate exceeds ₹ 20,000 in the year.
Alternate Minimum Tax (AMT)
Where a firm/LLP claims specified deductions (e.g. Chapter VI-A Part C, s.10AA), AMT @ 18.5% (plus surcharge/cess) of adjusted total income applies u/s 115JC. AMT credit may be carried forward for 15 years. LLPs cannot opt for the lower company regimes.
A·3
Tax Rates — Domestic Companies
AY 2026-27
Applicable rate of tax
| Type of domestic company | Rate | MAT |
|---|---|---|
| Turnover ≤ ₹ 400 cr in FY 2022-23 | 25% | 15% |
| Any other domestic company | 30% | 15% |
| Opting section 115BAA (no incentives) | 22% | Not applicable |
| New manufacturing co. — section 115BAB | 15% | Not applicable |
Section 115BAB sunset
The concessional 15% rate u/s 115BAB is for companies set up and registered on or after 1 Oct 2019 that commenced manufacturing by 31 March 2024. Companies already in the regime continue; fresh entry is closed.
Surcharge (companies not under 115BAA/BAB)
| Total income | Surcharge |
|---|---|
| Above ₹ 1 crore – ₹ 10 crore | 7% |
| Above ₹ 10 crore | 12% |
115BAA / 115BAB surcharge & cess
Companies under 115BAA or 115BAB pay a flat 10% surcharge regardless of income. Cess @ 4% applies to all companies on tax plus surcharge.
MAT — section 115JB
Minimum Alternate Tax is 15% of book profit (plus surcharge and cess) and applies to companies under the normal regime where it exceeds the regular tax. MAT credit may be carried forward and set off for 15 assessment years. MAT does not apply to companies opting for 115BAA or 115BAB.
A·4
Co-operatives, AOP/BOI & Others
AY 2026-27
Co-operative societies — normal rates
| Total income (₹) | Rate |
|---|---|
| Up to 10,000 | 10% |
| 10,001 – 20,000 | 20% |
| Above 20,000 | 30% |
Concessional regimes for co-operatives
Section 115BAD — 22% (surcharge 10%, cess 4%), no incentives. Section 115BAE — 15% for new manufacturing co-operatives set up after 31 March 2023 commencing production by 31 March 2024. Surcharge on normal co-ops: 7% (income ₹ 1–10 cr) and 12% (above ₹ 10 cr). AMT for co-operatives is 15%.
AOP / BOI & local authorities
| Person | Rate |
|---|---|
| AOP/BOI — no member taxable above maximum rate, shares known | Slab rates (as individual) |
| AOP/BOI — a member taxed at higher rate, or share indeterminate | Maximum Marginal Rate (or higher) |
| Local authority | 30% |
Maximum Marginal Rate
Where any member's share is indeterminate, or a member is itself taxed at a rate higher than MMR, the whole AOP/BOI income is taxed at the maximum marginal rate (s.167B). Cess @ 4% applies in all cases.
A·5
Concessional Regimes, MAT & AMT
A cross-cutting summary
| Regime | Applies to | Rate | Minimum tax |
|---|---|---|---|
| 115BAC | Individual/HUF (default) | Slab | — |
| 115BAA | Domestic company | 22% | No MAT |
| 115BAB | New manufacturing company | 15% | No MAT |
| 115BAD / 115BAE | Co-operative society | 22% / 15% | — |
| 115BBH | Any person (VDA income) | 30% | — |
MAT vs AMT
MAT (s.115JB) applies to companies at 15% of book profit where it exceeds regular tax (not for 115BAA/BAB). AMT (s.115JC) applies to non-corporates claiming specified deductions, at 18.5% (15% for co-operatives) of adjusted total income. Both generate a credit carried forward for 15 years; both attract surcharge and 4% cess.
Opting in
The lower company/co-operative regimes are irreversible once opted (Form 10-IC / 10-ID / 10-IF). Individuals with business income switching to the old regime use Form 10-IEA.
Part B
Heads of Income
B·1
Income from Salary
Sections 15–17
₹ 75,000
Standard deduction (new regime)
₹ 50,000
Standard deduction (old regime)
₹ 25 lakh
Leave encashment exemption
non-government
Key exemptions & allowances
| Item | Position |
|---|---|
| House Rent Allowance | Exempt — least of three (s.10(13A)); old regime only |
| Leave Travel Allowance | Exempt twice in a block of 4 years (domestic travel) |
| Gratuity | Exempt up to ₹ 20 lakh (s.10(10)) |
| Leave encashment on retirement | Exempt up to ₹ 25 lakh, non-govt (s.10(10AA)) |
| Pension — commuted | Exempt (varies for gratuity recipients); uncommuted is taxable |
| VRS compensation | Exempt up to ₹ 5 lakh (s.10(10C)) |
Under the new regime
Most allowances and exemptions (HRA, LTA, and the Chapter VI-A deductions) are not available; only the ₹ 75,000 standard deduction, employer NPS (80CCD(2)) and a few duty-related allowances survive. Perquisites such as rent-free accommodation, motor car and ESOP are valued under Rule 3.
B·2
Income from House Property
Sections 22–27
Computation
Gross Annual Value − municipal taxes paid = Net Annual Value; less 30% standard deduction (s.24(a)) and interest on borrowed capital (s.24(b)).
| Type | Annual value | Interest deduction |
|---|---|---|
| Self-occupied (up to 2 houses) | Nil | Up to ₹ 2,00,000 |
| Let-out / deemed let-out | Actual or expected rent | Full interest (subject to set-off cap) |
Two key limits
Loss from house property set off against other heads is capped at ₹ 2,00,000 per year (balance carried forward 8 years, set off only against house-property income). Pre-construction interest is allowed in five equal instalments from the year of completion. Up to two self-occupied houses may be treated as nil-value.
New regime
Loss under this head cannot be set off against other heads under the new regime; interest on a let-out property remains deductible against its rental income.
B·3
Profits & Gains of Business or Profession
Sections 28–44
Common disallowances
| Section | Disallowance |
|---|---|
| 40(a)(i)/(ia) | Expense where TDS not deducted/paid — 30% (resident) / 100% (non-resident) |
| 40A(3) | Cash expenditure exceeding ₹ 10,000 (₹ 35,000 for transport) — fully disallowed |
| 43B | Statutory dues, interest to banks, leave encashment — only on actual payment |
| 43B(h) | Sum payable to a micro/small enterprise beyond the MSME-Act time limit (15/45 days) |
Books & depreciation
Books are required u/s 44AA above prescribed turnover/income; depreciation is on the block of assets (s.32, WDV). Where presumptive taxation is opted, detailed books and audit are generally not required.
B·4
Presumptive Taxation & Tax Audit
Sections 44AD, 44ADA, 44AE & 44AB
| Scheme | Eligibility | Deemed income |
|---|---|---|
| 44AD (business) | Turnover up to ₹ 2 cr (₹ 3 cr if cash ≤ 5%) | 8% (6% on digital receipts) |
| 44ADA (profession) | Gross receipts up to ₹ 50 lakh (₹ 75 lakh if cash ≤ 5%) | 50% of receipts |
| 44AE (goods carriage) | Up to 10 vehicles | Heavy (₹12T): ₹ 1,000/ton/month; other: ₹ 7,500/month/vehicle |
Tax audit — section 44AB
Audit is required where business turnover exceeds ₹ 1 crore (₹ 10 crore if cash receipts and payments are each ≤ 5%) or professional receipts exceed ₹ 50 lakh; and u/s 44AB(e) where one opts out of presumptive / declares lower profit and total income exceeds the basic exemption. Opting out of 44AD locks out the scheme for 5 years.
B·5
Income from Capital Gains
Rates effective for transfers on or after 23 July 2024
The 23 July 2024 watershed
The Finance (No.2) Act 2024 overhauled capital gains — it simplified holding periods, raised the listed-equity rates, and withdrew indexation for all assets except certain pre-23-July-2024 immovable property.
Holding period — long-term vs short-term
| Asset | Long-term if held for more than |
|---|---|
| Listed shares / equity MF / listed securities | 12 months |
| Immovable property, unlisted shares, other assets | 24 months |
| Debt mutual funds bought on/after 1 Apr 2023 | Always short-term (s.50AA) |
Rates of tax
| Asset & gain | Section | Rate |
|---|---|---|
| Listed equity / equity MF (STT paid) — STCG | 111A | 20% |
| Listed equity / equity MF (STT paid) — LTCG | 112A | 12.5% on gains above ₹ 1.25 lakh |
| Immovable property — LTCG (acquired on/after 23 Jul 2024) | 112 | 12.5% without indexation |
| Immovable property — LTCG (acquired before 23 Jul 2024) | 112 | Lower of 12.5% (no index) or 20% (with index) |
| Unlisted shares / other assets — LTCG | 112 | 12.5% without indexation |
| Short-term (other than 111A) & debt MF | slab | Taxed at applicable slab rate |
Indexation option (property only)
For land or building acquired before 23 July 2024, a resident individual/HUF may choose the lower of 12.5% without indexation or 20% with indexation. The ₹ 1.25 lakh exemption (raised from ₹ 1 lakh) applies only to LTCG u/s 112A; surcharge on 111A/112A/112 gains is capped at 15%.
Cost Inflation Index (base 2001-02 = 100)
| FY | CII | FY | CII |
|---|---|---|---|
| 2001-02 | 100 | 2002-03 | 105 |
| 2003-04 | 109 | 2004-05 | 113 |
| 2005-06 | 117 | 2006-07 | 122 |
| 2007-08 | 129 | 2008-09 | 137 |
| 2009-10 | 148 | 2010-11 | 167 |
| 2011-12 | 184 | 2012-13 | 200 |
| 2013-14 | 220 | 2014-15 | 240 |
| 2015-16 | 254 | 2016-17 | 264 |
| 2017-18 | 272 | 2018-19 | 280 |
| 2019-20 | 289 | 2020-21 | 301 |
| 2021-22 | 317 | 2022-23 | 331 |
| 2023-24 | 348 | 2024-25 | 363 |
| 2025-26 | 376 |
Set-off rules
Short-term capital loss may be set off against STCG or LTCG; long-term capital loss only against LTCG. Unabsorbed capital losses carry forward for 8 assessment years (return must be filed in time).
B·6
Capital Gain Exemptions
The Section 54 family
| Section | Gain on | Reinvest in | Key condition |
|---|---|---|---|
| 54 | Residential house (LT) | Residential house | 1 yr before / 2 yr after (3 yr construct); two houses once if gain ≤ ₹ 2 cr |
| 54B | Agricultural land | Agricultural land | Used for 2 yrs; reinvest within 2 yrs |
| 54D | Industrial land/building (acquired) | Industrial land/building | Compulsory acquisition |
| 54EC | Land or building (LT) | NHAI/REC/PFC/IRFC bonds | Within 6 months; cap ₹ 50 lakh; 5-yr lock-in |
| 54F | Any LT asset (not a house) | One residential house | Net consideration; not own > 1 house |
| 54GB | Residential property | Eligible start-up / SME shares | Subscribe before due date |
Capital Gains Account Scheme
If the amount is not reinvested before the due date of filing the return, deposit it in the CGAS to preserve the exemption, and utilise it within the prescribed period.
B·7
Income from Other Sources
Sections 56–59
| Income | Treatment |
|---|---|
| Dividend | Taxable at slab; TDS u/s 194 @ 10% if > ₹ 10,000 |
| Interest (bank, bonds, etc.) | Taxable at slab |
| Casual income — lottery, betting, online games | Flat 30% (s.115BB/115BBJ); no deduction, exemption or basic-exemption set-off |
| Family pension | Standard deduction of 1/3 or ₹ 15,000 (old) / ₹ 25,000 (new regime) |
| Gifts | Taxable u/s 56(2)(x) — see C·4 |
Winnings
TDS on winnings is deducted u/s 194B / 194BA with no threshold relief for the rate; the 30% rate applies on gross winnings without any deduction.
Part C
Specific Incomes
C·1
Taxation of Share Transactions
Capital gains vs business income
| Activity | Head of income |
|---|---|
| Delivery-based equity (investment) | Capital gains (STCG 111A / LTCG 112A) |
| Intraday equity | Speculative business income |
| Futures & Options (derivatives) | Non-speculative business income |
| Frequent dealing as stock-in-trade | Business income |
Securities Transaction Tax & buy-back
STT is paid on listed transactions and is a precondition for the 111A/112A rates. From 1 October 2024, company buy-back proceeds are taxed as a deemed dividend in the shareholder's hands (the cost becomes a capital loss).
Loss-stripping
Watch the bonus-stripping (s.94(8)) and dividend-stripping (s.94(7)) provisions, which disallow artificially created losses.
C·2
Virtual Digital Assets
Section 115BBH & 194S
30%
Flat tax on transfer of VDA
+ surcharge & cess
1%
TDS u/s 194S
on transfer
Nil
Set-off / carry-forward of loss
not allowed
No relief
Income from transfer of a VDA is taxed at a flat 30% with no deduction except the cost of acquisition. Losses cannot be set off against any income (including other VDA gains) and cannot be carried forward. TDS u/s 194S applies at 1% above ₹ 50,000 (specified persons) / ₹ 10,000 (others).
Gift of VDA
A VDA received as a gift is taxable in the recipient's hands u/s 56(2)(x).
C·3
Agricultural Income
Section 10(1) & partial integration
Exempt — but watch integration
Agricultural income is exempt u/s 10(1). However, where net agricultural income exceeds ₹ 5,000 and non-agricultural income exceeds the basic exemption, it is aggregated for rate purposes (partial integration) — increasing the average rate on non-agricultural income.
| Step | Action |
|---|---|
| 1 | Tax on (agricultural + non-agricultural income) |
| 2 | Tax on (agricultural income + basic exemption limit) |
| 3 | Tax payable = Step 1 − Step 2 (plus cess) |
What qualifies
Rent or revenue from agricultural land in India, income from agricultural operations, and income from a farm building used for agriculture. Mere ownership or trading of produce purchased from others is not agricultural income.
C·4
Taxability of Gifts
Section 56(2)(x)
| Gift | Taxable if |
|---|---|
| Sum of money | Aggregate exceeds ₹ 50,000 in the year — whole amount taxable |
| Immovable property (no consideration) | Stamp duty value > ₹ 50,000 |
| Immovable property (inadequate consideration) | SDV − consideration > ₹ 50,000 and > 10% of consideration |
| Movable property (shares, jewellery, art, VDA) | FMV (or FMV − consideration) exceeds ₹ 50,000 |
Exempt gifts
Gifts from a relative, on the occasion of marriage, under a will or inheritance, in contemplation of death, or from a local authority/registered trust are not taxable. 'Relative' includes spouse, siblings, lineal ascendants/descendants and their spouses, and siblings of spouse/parents.
C·5
Tax on Unexplained Income
Sections 68–69D & 115BBE
| Section | Covers |
|---|---|
| 68 | Unexplained cash credits |
| 69 / 69A / 69B | Unexplained investments, money/bullion, under-stated investments |
| 69C | Unexplained expenditure |
| 69D | Amount borrowed/repaid on hundi otherwise than by account-payee instrument |
Punitive rate — section 115BBE
Such income is taxed at a flat 60% + 25% surcharge + 4% cess (effectively ~78%), with no deduction, set-off or carry-forward permitted. A further penalty of 10% may apply u/s 271AAC.
Part D
Deductions & Aggregation
D·1
Deductions — Chapter VI-A
Old-regime reliefs (mostly unavailable in the new regime)
Savings & retirement
| Section | Deduction | Limit |
|---|---|---|
| 80C | LIC, PF, PPF, ELSS, tuition, principal repayment, etc. | ₹ 1,50,000 |
| 80CCD(1B) | Additional NPS contribution | ₹ 50,000 |
| 80CCD(2) | Employer's NPS contribution | 14% of salary (new regime) / 10% (old) |
Health, disability & education
| Section | Deduction | Limit |
|---|---|---|
| 80D | Health insurance / medical | Self ₹ 25,000 (₹ 50,000 senior) + parents ₹ 25,000/50,000 |
| 80DD / 80U | Disabled dependant / self | ₹ 75,000 (₹ 1,25,000 severe) |
| 80DDB | Specified diseases | ₹ 40,000 (₹ 1,00,000 senior) |
| 80E | Interest on education loan | Full, for 8 years |
| 80EEB | Interest on electric-vehicle loan | ₹ 1,50,000 |
Donations, rent & interest
| Section | Deduction | Limit |
|---|---|---|
| 80G | Donations | 50% / 100%, often within 10% of GTI |
| 80GG | Rent paid (no HRA) | Least of ₹ 60,000 / 25% of income / rent − 10% |
| 80TTA / 80TTB | Savings interest / senior citizens' interest | ₹ 10,000 / ₹ 50,000 |
New regime
Under the default new regime, only 80CCD(2), 80CCH and 80JJAA remain available — the popular 80C, 80D, 80G and 80TTA/TTB deductions apply only under the old regime. Donations above ₹ 2,000 must be paid otherwise than in cash to qualify u/s 80G.
D·2
Set-off & Carry-forward of Losses
Sections 70–80
| Loss | Set off against | Carry forward |
|---|---|---|
| House property | Other heads — capped at ₹ 2,00,000/yr | 8 years (vs house property) |
| Non-speculative business | Any head except salary | 8 years (vs business) |
| Speculative business | Speculative income only | 4 years |
| Short-term capital loss | STCG or LTCG | 8 years |
| Long-term capital loss | LTCG only | 8 years |
| Unabsorbed depreciation | Any head except salary | Indefinitely |
File on time
Carry-forward of business and capital losses requires the return to be filed by the due date u/s 139(1) (s.80). House-property loss and unabsorbed depreciation may be carried forward even with a belated return.
D·3
Clubbing of Income
Sections 60–64
| Section | Income clubbed |
|---|---|
| 60 | Transfer of income without transferring the asset |
| 61 | Income from a revocable transfer of assets |
| 64(1) | Spouse's remuneration from a concern in which the individual has substantial interest (unless qualified); income from assets transferred to spouse / son's wife without adequate consideration |
| 64(1A) | Income of a minor child (exempt up to ₹ 1,500 per child u/s 10(32)) |
| 64(2) | Income from self-acquired property converted into HUF property |
Minor's own income
A minor's income from manual work or any skill/talent/specialised knowledge is taxed in the minor's own hands and is not clubbed.
Part E
Compliance & Procedure
E·1
Residential Status
Section 6 — the foundation of taxability
Basic conditions (individual)
A person is RESIDENT if either is met
(a) in India for 182 days or more in the previous year; or (b) in India for 60 days or more in the PY and 365 days or more in the 4 preceding years.
Modified thresholds (condition b)
| Situation | 60-day condition becomes |
|---|---|
| Indian citizen leaving India for employment / as crew of an Indian ship | 182 days |
| Indian citizen / PIO visiting India — Indian income ≤ ₹ 15 lakh | 182 days |
| Indian citizen / PIO visiting India — Indian income > ₹ 15 lakh | 120 days |
Deemed resident — section 6(1A)
An Indian citizen with total income (other than from foreign sources) exceeding ₹ 15 lakh, who is not liable to tax in any other country by reason of domicile/residence, is deemed resident — and is treated as Resident but Not Ordinarily Resident (RNOR).
Resident but Not Ordinarily Resident — section 6(6)
A resident is RNOR if
non-resident in 9 of the 10 preceding years, or in India for 729 days or less in the 7 preceding years. The 120-day residents and deemed residents above are also RNOR.
Scope of total income — section 5
| Income | Resident & OR | RNOR | Non-Resident |
|---|---|---|---|
| Received / accrued in India | Taxable | Taxable | Taxable |
| Accrues outside India from a business controlled in India | Taxable | Taxable | Not taxable |
| Other foreign income | Taxable | Not taxable | Not taxable |
Count the days carefully
Day of arrival and day of departure are both generally counted as stay in India. Residential status is determined afresh every year. The corresponding provision in the new law is section 6 of the Income-tax Act, 2025.
E·2
Due Dates & Return of Income
AY 2026-27
Due dates for filing the return
| Assessee | Due date |
|---|---|
| Individual / HUF — no audit | 31 July 2026 |
| Company; assessee liable to tax audit; working partner of an audited firm | 31 October 2026 |
| Assessee with transfer-pricing report (Form 3CEB) | 30 November 2026 |
| Belated or revised return | 31 December 2026 |
| Updated return (ITR-U) | within 48 months of end of AY |
Which ITR form?
| Form | Broadly for |
|---|---|
| ITR-1 (Sahaj) | Resident individual — salary, one house property, other sources, income up to ₹ 50 lakh (with limited LTCG u/s 112A up to ₹ 1.25 lakh) |
| ITR-2 | Individual/HUF without business income (capital gains, multiple properties, foreign assets) |
| ITR-3 | Individual/HUF with business or professional income |
| ITR-4 (Sugam) | Resident individual/HUF/firm (non-LLP) under presumptive 44AD/44ADA/44AE, income up to ₹ 50 lakh |
| ITR-5 | Firms, LLPs, AOP, BOI |
| ITR-6 | Companies (other than those claiming s.11 exemption) |
| ITR-7 | Trusts and persons u/s 139(4A)–(4D) |
Late filing
A belated return attracts a fee u/s 234F — ₹ 5,000 (₹ 1,000 if total income up to ₹ 5 lakh) — and bars carry-forward of most losses. From 1 January, only the updated return route remains open.
E·3
Advance Tax & Interest u/s 234
Sections 208, 234A, 234B, 234C
Who pays advance tax
Every assessee whose tax payable after TDS/TCS is ₹ 10,000 or more (s.208). Resident seniors (60+) with no business income are exempt.
Instalments of advance tax
| Due date | Cumulative advance tax payable |
|---|---|
| 15 June | 15% |
| 15 September | 45% |
| 15 December | 75% |
| 15 March | 100% |
Interest at a glance
| Section | For | Rate & period |
|---|---|---|
| 234A | Late filing of return | 1% p.m. on tax after TDS & advance tax, from the due date to filing |
| 234B | Advance tax paid < 90% of assessed tax | 1% p.m. on the shortfall, from 1 April of the AY to payment |
| 234C | Deferment of an instalment | 1% p.m. on each shortfall (3 months for the first three, 1 month for the last) |
Reliefs & rounding
No 234C for the June / September instalment if at least 12% / 36% is paid by then. The base for 234 interest is rounded down to the nearest ₹ 100 (Rule 119A). Interest under all three sections is simple interest.
E·4
Updated Return — ITR-U
Section 139(8A) [s.263(6)(a) of the 2025 Act]
A 48-month second chance
The Finance Act 2025 extended the window to file an updated return from 24 to 48 months from the end of the relevant assessment year (effective 1 April 2025). For AY 2025-26, ITR-U may be filed up to 31 March 2030.
Additional tax payable — section 140B [s.267]
| Filed within (from end of AY) | Additional tax (on tax + interest) |
|---|---|
| 12 months | 25% |
| 12 – 24 months | 50% |
| 24 – 36 months | 60% |
| 36 – 48 months | 70% |
ITR-U can only go UP
An updated return cannot reduce tax, claim or increase a refund, or be filed where it shows a loss return (subject to the limited Budget 2026 relaxation for reducing a carried-forward loss). It is blocked where a search, survey or seizure has occurred, or assessment/reassessment is pending, and can be filed only once per AY.
Compute the full cost first
Pay the regular tax, interest u/s 234A/B/C, and the additional tax via Challan 280 (code 300) before filing — ITR-U is invalid without proof of payment. File the relevant ITR form alongside ITR-U.
E·5
Cash Transaction Limits
The key prohibitions & disallowances
| Section | Limit | Consequence |
|---|---|---|
| 269SS | Loan/deposit/advance ≥ ₹ 20,000 in cash | 100% penalty (271D) |
| 269T | Repayment ≥ ₹ 20,000 in cash | 100% penalty (271E) |
| 269ST | Receipt of ₹ 2,00,000 or more in cash | 100% penalty (271DA) |
| 40A(3) | Cash expense > ₹ 10,000 (₹ 35,000 transport) | Disallowed |
| 80G | Cash donation > ₹ 2,000 | No deduction |
| 194N | Cash withdrawal > ₹ 1 crore | TDS @ 2% |
Stamp-value rules
For immovable property, where the stamp duty value exceeds the consideration by more than 10%, the difference is taxed (s.43CA / 50C for the seller and s.56(2)(x) for the buyer).
E·6
AIS & TIS
Annual Information Statement / Taxpayer Information Summary
Reconcile before filing
The AIS consolidates information reported to the department — TDS/TCS, interest, dividend, securities and mutual-fund transactions, foreign remittances, SFT data and more. The TIS presents an aggregated, category-wise summary used for pre-filling the return.
Feedback
Where an entry is incorrect, duplicated or relates to another person, submit feedback in the AIS. Always reconcile the AIS/TIS and Form 26AS with your books before filing to avoid mismatches and notices.
E·7
Statement of Financial Transactions (SFT)
Section 285BA, Rule 114E
Key reporting thresholds (per person, per year)
| Transaction | Threshold |
|---|---|
| Cash deposits — savings account | ₹ 10 lakh |
| Cash deposits/withdrawals — current account | ₹ 50 lakh |
| Credit-card payments | Cash ₹ 1 lakh / any mode ₹ 10 lakh |
| Purchase of shares / debentures / bonds / MF units | ₹ 10 lakh |
| Purchase or sale of immovable property | ₹ 30 lakh |
| Cash receipt for goods/services | ₹ 2 lakh |
Filing
Reporting entities (banks, registrars, companies, etc.) file Form 61A by 31 May following the financial year. SFT data flows into the taxpayer's AIS.
E·8
Assessment & Reassessment
The procedural backbone
| Section | Stage |
|---|---|
| 143(1) | Intimation after processing — arithmetical / prima-facie adjustments |
| 143(2) / 143(3) | Scrutiny notice (within 3 months of FY-end of filing) and scrutiny assessment |
| 144 / 144B | Best-judgment assessment / faceless assessment |
| 147 & 148 | Income escaping assessment — reassessment |
| 148A | Inquiry and show-cause before issuing a 148 notice |
| 263 / 264 | Revision by the Principal Commissioner (prejudicial / in favour) |
Reassessment time limits (post Finance Act 2024)
A notice u/s 148 may generally be issued within 3 years from the end of the assessment year, extended to 5 years where the income escaping assessment is likely to be ₹ 50 lakh or more, subject to the 148A procedure and approvals.
E·9
Limitation Periods
Time limits at a glance
| Action | Time limit |
|---|---|
| Scrutiny assessment (143(3)) | 12 months from end of the AY (9 months for recent years) |
| Issue of 143(2) notice | 3 months from end of the FY in which the return is filed |
| Rectification (154) | 4 years from the end of the FY of the order |
| Reassessment notice (148) | 3 years (5 years if escaped income ≥ ₹ 50 lakh) |
| Revision by PCIT (263) | 2 years from end of the FY of the order |
| Filing belated/revised return | 31 December of the AY |
Always confirm
Limitation periods have several provisos and exclusions (stays, references, set-aside cases). Confirm the exact date for the year and proceeding in question.
E·10
Appeals
The appellate hierarchy
| Forum | Form | Time limit |
|---|---|---|
| JCIT (Appeals) / CIT (Appeals) | Form 35 | 30 days from receipt of order |
| Income Tax Appellate Tribunal | Form 36 | 60 days from receipt of order |
| High Court | — | 120 days (substantial question of law) |
| Supreme Court | — | As per SC Rules |
Practical points
Appeal fees before CIT(A) range from ₹ 250 to ₹ 1,000 by assessed income. A stay of demand usually requires payment of 20% of the disputed demand. Section 264 offers an alternative revision route in genuine hardship cases.
E·11
Penalties & Fees
The commonly invoked provisions
| Section | Default | Penalty |
|---|---|---|
| 234F | Late filing of return | ₹ 5,000 (₹ 1,000 if income ≤ ₹ 5 lakh) |
| 270A | Under-reporting / mis-reporting of income | 50% / 200% of tax |
| 271AAC | Unexplained income u/s 68–69D | 10% of tax |
| 271B | Failure to get accounts audited | 0.5% of turnover, max ₹ 1,50,000 |
| 271C / 271CA | Failure to deduct TDS / collect TCS | Equal to the tax not deducted/collected |
| 271H | Late / incorrect TDS-TCS statement | ₹ 10,000 to ₹ 1,00,000 |
| 271D / 271E / 271DA | Contravention of 269SS / 269T / 269ST | 100% of the amount |
| 272A | Failure to answer, sign, furnish information | ₹ 10,000 per default |
Part F
TDS / TCS
F·1
TDS & TCS — Rates & Compliance
Tax Year 2026-27
Frequently used TDS sections
| Section | Payment | Rate | Threshold (₹) |
|---|---|---|---|
| 192 | Salary | Slab | Basic exemption |
| 194A | Interest (bank) | 10% | 50,000 (1,00,000 senior) |
| 194C | Contractor | 1% / 2% | 30,000 / 1,00,000 p.a. |
| 194H | Commission / brokerage | 2% | 20,000 |
| 194I | Rent — plant / land-building | 2% / 10% | 6,00,000 p.a. |
| 194J | Professional / technical | 10% / 2% | 50,000 |
| 194Q | Purchase of goods | 0.1% | 50,00,000 |
| 194T | Partner's remuneration / interest | 10% | 20,000 |
| 194S | Transfer of VDA | 1% | 50,000 / 10,000 |
Compliance dates
Deposit TDS by the 7th of the next month (30 April for March). File quarterly statements by 31 Jul / 31 Oct / 31 Jan / 31 May. Issue Form 16 by 15 June and Form 16A within 15 days of the return due date. Where the deductee has no PAN, deduct at the higher of the rate or 20% (s.206AA).
Part G
Transition & Planning
G·1
Income-tax Act 1961 ↔ 2025
The transition
A new code from 1 April 2026
The Income-tax Act, 2025 replaces the 1961 Act with effect from 1 April 2026. It is shorter (about 536 sections) and introduces the single concept of 'Tax Year' in place of 'previous year' and 'assessment year'. Returns for FY 2025-26 (AY 2026-27) are still filed under the 1961 Act.
Selected section mapping
| 1961 Act | 2025 Act |
|---|---|
| Section 2 (definitions) | Section 2 |
| Section 10 exemptions | Schedule II |
| Section 45 (capital gains) | Section 67 |
| Section 80C | Section 123 |
| Section 115BAC | Section 202 |
| Section 139 (return) | Section 263 |
| Section 192 (salary TDS) | Section 392 |
G·2
Year-end & Year-beginning Tasks
A practical checklist
Before 31 March
- Pay the final advance-tax instalment by 15 March and review the full-year position
- Complete tax-saving investments (80C, 80D, 80CCD(1B)) — old regime
- Reconcile Form 26AS / AIS / TIS with the books and the TDS deducted
- Clear MSME dues within the s.43B(h) time limit to preserve the deduction
- Verify physical stock, fixed-asset additions and depreciation working
- Collect Form 15G / 15H and ensure TDS has been deducted and deposited
From 1 April
- Apply the new financial year's TDS/TCS rates and thresholds
- Decide old vs new regime and file Form 10-IEA where required
- Plan advance tax for the new year and diarise the four instalment dates
- Renew LUT for zero-rated GST supplies and review registrations
G·3
Financial Planning Guide
General principles
- Emergency fund — keep 6–12 months of expenses in liquid form before investing
- Protection first — adequate term life cover and family health insurance
- Tax-efficient saving — use EPF/PPF/NPS/ELSS within goals, not merely for deduction
- Asset allocation — balance equity, debt and gold to risk appetite and horizon
- Retirement — start early; NPS adds the 80CCD(1B) benefit under the old regime
- Estate hygiene — maintain nominations and a will across bank, demat and property
Not investment advice
This guide states general principles only. It is not a recommendation to buy or sell any product; personalised advice should consider your full circumstances and risk profile.