Know Your Deadlines for AY 2026-27
The deadline for filing your Income Tax Return (ITR) depends on your taxpayer category. For most salaried individuals and those who do not require a tax audit (filing ITR-1 or ITR-2), the due date is July 31, 2026. For taxpayers with business or professional
income not requiring an audit (filing ITR-3 or ITR-4), the deadline has been extended to August 31, 2026. Those requiring an audit must file by October 31, 2026. As of late July 2026, the government has not announced any extension to the July 31 deadline, so it is crucial to file on time to avoid penalties. A late filing fee of up to ₹5,000 may apply for missing the deadline.
Updated Slabs for the New Tax Regime
The new tax regime, which is the default option for AY 2026-27, features revised tax slabs. The basic exemption limit has been increased to ₹4 lakh. Income from ₹4 lakh to ₹8 lakh is taxed at 5%, from ₹8 lakh to ₹12 lakh at 10%, from ₹12 lakh to ₹16 lakh at 15%, from ₹16 lakh to ₹20 lakh at 20%, from ₹20 lakh to ₹24 lakh at 25%, and income above ₹24 lakh is taxed at 30%. A significant feature is the enhanced rebate under Section 87A, which makes income up to ₹12 lakh effectively tax-free. For salaried individuals, a standard deduction of ₹75,000 is also available, pushing the effective tax-free income to ₹12.75 lakh.
The Old Tax Regime: Still a Viable Option
While the new regime is the default, the old tax regime remains available for those who choose it. The tax slabs for the old regime are unchanged: no tax up to ₹2.5 lakh, 5% for ₹2.5 to ₹5 lakh, 20% for ₹5 to ₹10 lakh, and 30% for income above ₹10 lakh. Its main advantage is the availability of numerous deductions like those under Section 80C, HRA, and home loan interest. This regime is generally more beneficial for individuals with significant investments and expenses that qualify for these deductions. A standard deduction of ₹50,000 is available for salaried employees under this regime.
Key Changes in ITR Forms
The ITR forms for AY 2026-27 have been updated. A notable change in ITR-1 (Sahaj) is that taxpayers can now report income from up to two house properties, an increase from one previously. Additionally, ITR-1 now allows for reporting long-term capital gains from equity up to ₹1.25 lakh, which previously required filing the more complex ITR-2. ITR forms also have new disclosure requirements for Futures and Options (F&O) trading turnover and income, as well as specific reporting for disallowance of interest payments to MSMEs under Section 43B(h). Those opting out of the new tax regime with business income may need to file Form 10-IEA.
Choosing Between the Old and New Regimes
The choice between the two tax regimes is a critical one and depends entirely on your financial profile. The new tax regime is simpler and offers lower tax rates, making it ideal for those with fewer investments and deductions. Conversely, if your eligible deductions from sources like HRA, home loan interest, and investments under Section 80C are substantial, the old regime might result in lower tax liability. As a general rule, if your total claimed deductions exceed a significant portion of your income, it is worth comparing the tax payable under both regimes before making a final decision. Taxpayers without business income have the flexibility to choose their preferred regime each year at the time of filing their return.
