Income Tax & ITR Filing in India: The 2026 Complete Guide

ITR-1 (Sahaj) — resident individuals with total income up to ₹50 lakh from salary, one house property, other sources (excluding lottery and racehorses), and agricultural income up to ₹5,000. Most salaried earners with simple lives.

ITR-2 — individuals and HUFs with no business income but with capital gains, income from more than one house property, or foreign assets. Salaried + investments + property goes here.

ITR-3 — individuals and HUFs with business or professional income. Sole proprietors, doctors, consultants, F&O traders typically.

ITR-4 (Sugam) — presumptive-income taxpayers under §44AD (business), §44ADA (profession) or §44AE (transport). Simpler — declare deemed profit (6%/8% for §44AD; 50% for §44ADA), file the form, done.

ITR-5 / 6 / 7 — partnerships and LLPs, companies, trusts respectively. Specialist territory.

From AY 2024-25, the new regime is the default. To stay on the old regime, the taxpayer has to opt out — and once opted out, §115BAC(6) restricts switching back for business income taxpayers.

New regime slab structure (FY 2024-25 onwards): up to ₹3L nil, ₹3-7L @ 5%, ₹7-10L @ 10%, ₹10-12L @ 15%, ₹12-15L @ 20%, above ₹15L @ 30%. Standard deduction ₹75,000 for salaried; rebate under §87A makes income up to ₹7L effectively tax-free.

Old regime: up to ₹2.5L nil, ₹2.5-5L @ 5%, ₹5-10L @ 20%, above ₹10L @ 30%. Standard deduction ₹50,000. Rebate under §87A up to ₹5L.

Rule of thumb: new regime wins when 80C + HRA + home-loan interest + 80D total below ~₹2.5L. Old regime still wins when those stack up substantially (e.g., metro renter with ₹3L HRA + ₹1.5L 80C + ₹50K NPS + ₹50K 80D). Run the calculator at https://incometax.gov.in/ both ways before filing.

AIS (Annual Information Statement) is the masterfile — every transaction reported to the tax department against your PAN. Salary, interest from each bank, dividend by company, mutual-fund redemptions, share sales, large cash deposits, foreign remittances under LRS, EPF withdrawals — all of it.

TIS (Taxpayer Information Summary) is the cleaned-up version of AIS by category — total interest from banks, total dividends, etc. Use TIS when filling out the return; verify against AIS line-by-line for anything unusual.

Form 26AS now mostly mirrors AIS, but still useful for the TDS section. TDS reported by deductors flows to 26AS, and that's what the system reconciles against your claimed TDS in the ITR. Mismatches trigger 143(1) intimations.

A 15-minute habit: every November, pull your AIS draft, click "submit feedback" on any erroneous entry, and resolve before March. Saves a December scramble.

Intimation u/s 143(1) — automated processing summary. Three outcomes: (a) accepted as filed (NIL demand, NIL refund), (b) refund processed and credited, (c) adjustments leading to demand. Most action is in (c) — usually a 26AS / TDS mismatch.

Notice u/s 142(1) — call for return or specific documents. Reply on the e-portal within the deadline. Routine; not adversarial by itself.

Notice u/s 143(2) — case selected for scrutiny. This is the start of regular assessment. Personal hearing is now via video; expect 3-6 months of submissions.

Notice u/s 148 — reassessment. The officer has "reason to believe income has escaped assessment." Post-2021 amendments, the timeline is up to 3 years (10 years for high-value escapement, ₹50L+). The notice now has to be preceded by a §148A enquiry — review whether the §148A order is sustainable.

Notice u/s 245 — refund adjustment against an outstanding demand. Often a surprise; check the demand origin before letting the refund be adjusted.

§80C (₹1.5L cap) — EPF + PPF + ELSS + life insurance premium + 5-year FD + home-loan principal + child tuition fees + Sukanya Samriddhi.

§80CCD(1B) (₹50K additional cap) — NPS contribution by employee, over and above 80C.

§80D — medical insurance: ₹25K for self/family + ₹50K for senior-citizen parents. Includes ₹5K preventive health check-up within the cap.

§80E — interest on education loan. No upper cap; deductible for up to 8 years.

HRA exemption — works only if you are salaried, paying rent, and your salary includes an HRA component. Compute as least of (actual HRA, rent paid minus 10% of basic, 40%/50% of basic).

Home-loan interest u/s 24(b) — ₹2L cap for self-occupied; no cap for let-out property (with carry-forward of loss under §71B subject to ₹2L cap against other heads).

NRIs file the same ITR forms but use ITR-2 by default (no business income presumed). DTAA relief is claimed in Schedule TR. Foreign assets — disclose in Schedule FA. TDS on Indian property sale is 20%/22%/30% — apply for a Lower-TDS certificate under §197 to reduce.

Freelancers — §44ADA presumptive scheme (deemed profit @ 50% of gross receipts up to ₹50L; ₹75L if cash receipts ≤ 5%). Simpler than maintaining full books. Above ₹50L (or ₹75L), full books + audit under §44AB.

F&O traders — derivatives are non-speculative business income. Maintain books, audit under §44AB if turnover crosses ₹10 crore (with the digital-mode safe-harbour), claim all business expenses (brokerage, internet, even pro-rated rent if relevant), set off F&O losses against other business income.