Income Tax Return Filing AY 2026-27: New Regime, Deductions & Filing Tips

What's New in AY 2026-27?

Assessment Year 2026-27 corresponds to income earned during Financial Year 2025-26 (April 2025 – March 2026). The New Tax Regime (NTR) continues as the default regime — taxpayers who want to opt for the Old Tax Regime (OTR) must actively select it while filing their return (or via Form 10-IEA if they have business income).

Key changes for AY 2026-27 include revised slab rates under the new regime, an enhanced standard deduction, and a higher rebate limit under Section 87A.

New Tax Regime — Slab Rates (AY 2026-27)

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%

Standard deduction under the new regime is ₹75,000 for salaried individuals and pensioners. Section 87A rebate is available up to ₹60,000 for income up to ₹12 lakh — meaning zero tax liability for most salaried individuals earning up to ₹12.75 lakh.

Old Regime vs. New Regime — Which is Better for You?

The old regime is typically more beneficial if you have significant deductions — primarily Section 80C investments (₹1.5 lakh), home loan interest (Section 24(b), up to ₹2 lakh), HRA exemption, and health insurance premium (Section 80D). For individuals with total deductions exceeding ₹3–3.5 lakh, the old regime often results in lower tax outgo.

For individuals with few deductions (no home loan, renting, limited 80C investments), the new regime with its lower slab rates and standard deduction typically wins. Our team runs a breakeven analysis for every client before recommending a regime.

Which ITR Form Applies to You?

ITR-1 (Sahaj): Salaried individuals, pension income, one house property, other sources — total income up to ₹50 lakh. Cannot be used if you have capital gains or agricultural income above ₹5,000.
ITR-2: Individuals and HUFs with capital gains, more than one house property, or foreign income/assets. No business income.
ITR-3: Individuals and HUFs with income from business or profession (including F&O trading).
ITR-4 (Sugam): Individuals, HUFs, and firms (other than LLP) opting for Presumptive Taxation under Section 44AD, 44ADA, or 44AE — income up to ₹50 lakh.
ITR-5: Partnership firms, LLPs, AOPs, BOIs (not companies).
ITR-6: Companies (other than those claiming exemption under Section 11).

Key Deductions Available Under the Old Regime

Section 80C: Up to ₹1,50,000 — EPF, PPF, LIC, ELSS, SSY, NSC, home loan principal
Section 80D: Health insurance premium — ₹25,000 (self/family) + ₹25,000 (parents); ₹50,000 if parents are senior citizens
Section 24(b): Home loan interest — ₹2,00,000 for self-occupied property
Section 80TTA/80TTB: Interest on savings account — ₹10,000 (general); ₹50,000 for senior citizens
Section 80G: Donations to approved funds — 50% or 100% deduction depending on the institution
Section 80E: Education loan interest — full deduction for 8 years from repayment start

Filing Tips for AY 2026-27

Download and verify your Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) before filing — reconcile with your own records
Ensure all TDS credits in Form 26AS match your actual income — mismatches cause CPC processing errors
Declare all bank accounts (even dormant ones) in the return — this is a mandatory disclosure
File before 31 July 2026 to avoid the late filing fee under Section 234F (₹5,000 for income above ₹5 lakh)
If you have capital gains, do not use ITR-1 — you will receive a defective return notice from CPC
If foreign travel or credit card spend exceeds ₹2 lakh during FY 2025-26, this may appear in AIS — account for it

We provide ITR filing services for salaried individuals, business owners, NRIs, and companies across Rajkot and Gujarat. Filing early ensures faster refund processing and reduces the risk of defective return notices. Contact our team for a regime comparison and hassle-free filing.