The Salaried Income-Tax Filing Guide FY 2026-27: Regime, Slabs, ITR-1 & Forms

These slabs apply to resident individuals, including senior citizens, under the Finance Act 2025^[2] framework. A Health and Education Cess of 4% applies on the tax payable, and surcharge applies above Rs. 50 lakh.

• →Budget 2025 raised the rebate from Rs. 25,000 to Rs. 60,000 and pushed the tax-free ceiling from Rs. 7 lakh to Rs. 12 lakh.
• →The rebate is not a deduction: tax is computed at slab rates first, then the rebate is subtracted from the tax payable.
• →Cross the Rs. 12,00,000 taxable ceiling by even Re. 1 and the rebate falls away in full, creating a marginal-relief band the calculator handles.
• →It applies only to resident individuals, not HUFs, NRIs, or non-residents, and only on slab-rate income; capital gains under Section 111A and 112A get no rebate.

• →With the Rs. 75,000 standard deduction on top of the Rs. 12,00,000 rebate ceiling, the salaried zero-tax ceiling reaches Rs. 12,75,000 of gross salary.
• →Family pensioners get a Rs. 25,000 standard deduction under the new regime.
• →Under the new regime, allowance-level exemptions like HRA, LTA, and transport / conveyance allowance are not separately exempt, because the standard deduction subsumes them.
• →Under the old regime, the standard deduction stays at Rs. 50,000, and transport allowance up to Rs. 1,600/month was historically exempt.

Under the old regime, income up to Rs. 5 lakh is tax-free after the rebate and the standard deduction is Rs. 50,000. HRA exemption (Section 10(13A)), Section 80C (Rs. 1.5 lakh), 80D, 80CCD(1B) NPS (Rs. 50,000), and home-loan interest under Section 24(b) (Rs. 2 lakh, self-occupied) are available only under the old regime.

• →The old regime usually wins when total deductions (HRA + 80C + 80D + 24(b) + NPS) exceed the income-dependent break-even.
• →The new regime wins for minimal-deduction filers, on lower rates and the Rs. 12 lakh rebate ceiling.
• →The new regime is the default; you opt into the old regime each year, using Form 10-IEA^[7] if you have business or professional income, before the return due date, after which switching back is allowed only once in a lifetime.
• →Salaried filers with no business income switch inside the ITR-1 or ITR-2 flow each year; there is no mid-year switch, so confirm your choice with your employer before 1 April.

Break-even runs on deductions actually claimed, not theoretical ones. The four profiles below are computed on FY 2026-27 slabs including the 4% cess. Use the Tax Optimization Calculator to run your own numbers; it is browser-only, so no salary or PAN data leaves your device.

• →The calculator needs gross salary, salary structure (basic, HRA, DA, allowances), city tier, annual rent, and your Section 80C, 80D, and 24(b) figures.
• →City tier sets the HRA cap: the eight metros (Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad) raise the ceiling to 50% of basic under Rule 279 of the Income-tax Rules 2026^[5], versus 40% elsewhere; the legacy four-metro list under Rule 2A of the 1962 Rules no longer governs.
• →HRA exemption depends on basic, not gross, and the third leg of the minimum is rent paid minus 10% of basic.
• →Edge cases the tool handles: NPS Section 80CCD(1B) Rs. 50,000, Section 89(1) arrears relief (which needs Form 10E filed first), and surcharge bands above Rs. 50 lakh.

Three documents cover your filing. Form 16 is the employer certificate under Section 203^[10]. Form 26AS is the government's PAN-linked master of tax deposited. The AIS (Annual Information Statement) is the widest view, adding interest, dividends, and mutual-fund transactions.

• →If Form 16 shows higher TDS than Form 26AS, the credit available to you is only what appears in Form 26AS.
• →AIS entries with no Form 16 match (FD interest, dividends, mutual-fund redemptions) are real income the ITR must declare.
• →Raise an AIS feedback correction on the e-Filing portal^[6] before filing if the department's reported figure is wrong.

The rename does not affect the return you file by 31 July 2026 (AY 2026-27, FY 2025-26 income), which still uses Form 16 and Form 26AS. Form 130 and Form 168 first apply to FY 2026-27 income, filed in 2027. During the transition you typically hold Form 16 for the year that ended and a forthcoming Form 130 for the year that started.

• →Form 130 is more than a rename: it adds an explicit dd/mm/yyyy period-of-employment field and may add a part for specified pension or interest income under the Section 393(1) expansion; treat its exact new schedule as provisional until CBDT publishes the final format.
• →Form 16 stays valid for FY 2025-26 (employer issues by 15 June 2026); Form 130 covers Tax Year 2026-27 (issued by 15 June 2027).
• →The reconciliation discipline is unchanged: match salary slip to Form 130 Part A to Form 168. See salary slip and Form 16 reconciliation.

Most employers run a two-stage process: an April estimate (no receipts yet) and a January-February submission with actual proof for the full year. The HRA section needs the landlord's name and address, monthly rent, rental period, and the landlord's PAN once annual rent exceeds Rs. 1,00,000.

• →Form 12BB has been mandatory for every salaried employee since 1 June 2016.
• →The landlord PAN becomes mandatory the moment annual rent exceeds Rs. 1,00,000 (about Rs. 8,334/month).
• →Miss the proof and your employer deducts TDS on the full HRA under Section 192 (Section 392 from Tax Year 2026-27), recoverable only via an ITR refund.
• →Attach one rent receipt per month; generate compliant monthly receipts if you need them.

This divider matters because the page spans two tax years. Read the sections above for the year that is running (FY 2026-27, new form numbers). Read the sections below for the return in your hands this July (AY 2026-27, old form numbers: Form 16, Form 26AS).

15 June is the statutory issue deadline. A late employer owes Rs. 100 a day under Section 272A(2)(g), accruing from 16 June. You can raise a free grievance on the e-Filing portal^[6] (e-File > Grievance) citing the employer TAN and your PAN.

• →Total gross salary from all 12 slips, including variable pay, bonuses, and arrears.
• →Download Form 26AS and confirm the TDS matches your slip totals; where they differ, Form 26AS governs.
• →Download the AIS (e-File > AIS), verify the salary figure, and correct any wrong entry before filing.
• →Enter the figures in ITR-1 (or ITR-2), claim your deductions, file, and revise later if Form 16 arrives and differs.

ITR-1 (Sahaj) suits salary or pension income, up to two house properties, other-source income, long-term capital gains under Section 112A^[11] up to Rs. 1.25 lakh, and agricultural income up to Rs. 5,000. Use ITR-2 if you are an NRI, a director, hold unlisted shares or foreign assets, or cross Rs. 50 lakh.

• →Log in with your PAN; first-time users register via Aadhaar OTP.
• →Open e-File > Income Tax Return and select AY 2026-27, form ITR-1.
• →Review the pre-filled salary, TDS, and interest data; match each figure to your Form 16 and Form 26AS.
• →Claim your HRA exemption and deductions (80C, 80D, 80GG), and correct any wrong pre-filled figure.
• →Check the computation, pay any balance as self-assessment tax, and enter the challan.
• →Run the pre-submission checklist below, submit, then e-verify within 30 days via Aadhaar OTP, net banking, or a bank EVC.

Submitting starts an automated match against what employers, banks, and registrars already reported. A correction raised after submission cannot undo an adjustment already made, so fix mismatches first.

• →Hold proof for every deduction: 80C up to Rs. 1.5 lakh, 80D premiums, 80TTA savings interest up to Rs. 10,000. These apply only under the old regime.
• →Keep rent receipts plus the landlord PAN if annual rent crosses Rs. 1 lakh; no HRA in salary means claim rent under Section 80GG, which needs Form 10BA.
• →Pre-validate your refund bank account, link PAN with Aadhaar (an unlinked PAN is inoperative), and pay any balance under Section 140A^[13] before submitting.

Check that your salary slip and Form 16 reflect the regime you filed under, since mismatches are a common cause of refund delays. See our guide on reconciling salary slip and Form 16 for the line-by-line checks.