Understand income tax. Plan with confidence.
Learn how income tax works in India, how taxable income is calculated, how tax regimes differ and what to check before filing your return.
Know your taxable income.
Income sources, deductions and applicable tax rates all influence your final tax position.
Tax starts with the income picture.
Salary is one source. Interest, rent, capital gains and other income can also affect taxable income.
What exactly is income tax?
Income tax is a direct tax on taxable income. For an individual, relevant income can come from salary, house property, business or professional activity, capital gains and other sources.
The amount you earn is not always the same as the amount on which tax is finally calculated. The calculation can involve deductions, exemptions, rebates and different rates depending on the applicable tax regime and your circumstances.
A proper tax calculation starts by identifying all relevant income and then applying the rules that actually apply to you.
Four things to understand before calculating your tax.
Income tax becomes easier to understand when you separate your income, taxable income, applicable rates and final liability.
Income Sources
Identify salary, interest, rent, capital gains, business income and other relevant sources.
Taxable Income
Determine the income that remains taxable after applicable adjustments and eligible deductions.
Tax Rates
Apply the relevant slab rates and any special tax rates applicable to specific income.
Final Liability
Consider rebate, surcharge, cess and tax already paid before arriving at the final amount.
A new tax law is now in effect.
The Income-tax Act, 2025 came into force from 1 April 2026. For income earned from Tax Year 2026–27 onwards, the new law uses the term “Tax Year” instead of the earlier “previous year” terminology.
Earlier framework
Earlier tax years continue to be governed by the provisions applicable to those periods.
New Act begins
The Income-tax Act, 2025 takes effect from this date.
New terminology
Tax Year 2026–27 refers to the twelve-month financial year beginning 1 April 2026.
Understand the current slab structure.
For AY 2026–27, the Income Tax Department lists the revised new-regime slabs below. The applicable rebate and other conditions should also be checked.
New Tax Regime — AY 2026–27
What else affects your tax?
From income to final tax.
Instead of looking at tax as one large calculation, break it into a few practical steps.
Identify income
Gather salary, interest, property income, capital gains, business income and other relevant amounts.
Determine taxable income
Apply applicable deductions, exemptions and adjustments under the relevant regime.
Apply tax rates
Calculate tax using the relevant slabs and any special provisions that apply.
Check final liability
Consider rebate, surcharge, cess and taxes already paid before filing.
Your deductions can change the calculation.
Tax planning is not simply about finding the lowest headline rate. The complete calculation should consider your income, eligible deductions and the tax regime applicable to your situation.
Track every income source
Include salary, interest, rent, capital gains and other relevant income rather than relying on one statement.
Keep supporting records
Maintain Form 16, tax statements, investment records, receipts and other relevant documents.
Check eligibility
Do not assume that every investment or expense qualifies. Verify the applicable tax provision first.
Compare your position
Where both regimes are relevant, compare your actual tax position rather than only comparing slab rates.
Review tax already paid
Check TDS and other available tax credits before arriving at the balance tax payable or refund.
Review before submission
Check personal details, income, deductions, bank information and tax calculations before filing.
A practical income tax checklist.
A final review can help identify missing income, incorrect information or unsupported deductions before you submit your return.
Check salary, interest, rent, capital gains and other applicable income.
Compare reported income and TDS information with your own records.
Make sure each deduction is available under the applicable tax regime.
Review TDS and other available tax credits before finalising the return.
Common income tax questions.
These answers provide general educational guidance. Always verify the latest provisions applicable to your tax situation.
Income tax is a direct tax charged on taxable income. For individuals, relevant income can include salary, house property, capital gains, business or professional income and income from other sources.
The new tax regime provides revised slab rates and is the default regime for eligible individuals. The final tax position depends on taxable income, applicable rebate and other provisions.
Section 87A provides a tax rebate to eligible resident individuals subject to applicable income limits and conditions.
No. Depending on the taxpayer, taxable income can also arise from interest, house property, capital gains, business or professional activity and other sources.
Under the Income-tax Act, 2025, “Tax Year” refers to the twelve-month financial year beginning on 1 April. Tax Year 2026–27 therefore refers to the financial year from 1 April 2026 to 31 March 2027.
Know your numbers. Plan your tax.
Understanding your income, taxable income, applicable tax regime and available tax provisions can make tax planning easier. Use this guide as a starting point and verify the latest rules before filing.
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