INCOME TAX RETURN (ITR)
Filing an Income Tax Return (ITR) is your annual way of reporting your income, tax-saving investments, and taxes paid to the government. Think of it as your yearly financial “report card.” It’s essential not only for compliance but also for claiming refunds if you’ve paid excess tax.
As of March 2026, for the Financial Year (FY) 2025-26 (Assessment Year 2026-27), here is a breakdown of the forms, sections, and the step-by-step filing process.
| Form | Who is it for? | Example Scenario |
| ITR-1 (Sahaj) | Residents with income up to ₹50 Lakh from Salary, 1 House Property, and Other Sources (interest). | A teacher earning ₹12 LPA with savings bank interest. |
| ITR-2 | Individuals/HUFs with Capital Gains, foreign assets, or income > ₹50 Lakh (no business income). | An IT professional who sold stocks/mutual funds during the year. |
| ITR-3 | Individuals/HUFs having income from Business or Profession (not using presumptive tax). | A freelance graphic designer or a shop owner with audited accounts. |
| ITR-4 (Sugam) | Residents opting for Presumptive Taxation (Sec 44AD/44ADA) with income up to ₹50 Lakh. | A small doctor’s clinic or a small retail trader. |
| ITR-5 | Firms, LLPs, AOPs, and BOIs. | A registered Partnership Firm running a cafe. |
| ITR-6 | Companies (except those claiming Sec 11 exemption). | A Private Limited tech startup. |
| ITR-7 | Trusts, Political Parties, and Charitable Institutions. | An NGO or a registered religious trust. |
2. Common Deduction Sections
To reduce your taxable income, you can claim deductions under Chapter VI-A of the Income Tax Act. These are often used when filing under the Old Tax Regime:
- Section 80C: The most popular. Allows a deduction of up to ₹1.5 Lakh for investments like PPF, ELSS (tax-saving mutual funds), LIC premiums, and EPF.
- Section 80D: Deduction for health insurance premiums paid for yourself, family, and parents.
- Section 24(b): Deduction on interest paid on a home loan (up to ₹2 Lakh for self-occupied property).
- Section 80E: Deduction for the entire interest component of an education loan.
3. Step-by-Step: How to File on the Official Portal
You can file your return via the Income Tax e-Filing Portal.
Step 1: Log In
- Visit the portal and log in using your PAN (User ID) and password.
Step 2: Start the Filing Process
- Navigate to e-File > Income Tax Returns > File Income Tax Return.
- Select the relevant Assessment Year (e.g., AY 2026-27 for income earned in FY 2025-26).
- Select Online as the mode of filing and click “Continue.”
Step 3: Select Status and ITR Form
- Choose “Individual” as your filing status.
- Select the correct ITR form based on your income (e.g., ITR-1).
Step 4: Review Pre-filled Data
- The portal will show “Pre-filled” data (Salary, TDS, Bank Interest) sourced from your AIS/Form 26AS. Carefully review this against your own documents (Form 16/Bank statements).
Step 5: Fill Details & Choose Tax Regime
- Tax Regime: You will be asked to choose between the New Tax Regime (default) or the Old Tax Regime. Choose carefully, as the Old Regime allows for deductions (80C, 80D, etc.), whereas the New Regime typically offers lower tax rates but fewer exemptions.
- Add any missing income sources or deductions you are eligible for.
Step 6: Compute Tax & Pay (If required)
- The system will automatically calculate your final tax liability. If tax is due, you can pay it online through the “e-Pay Tax” service on the dashboard.
Step 7: Preview and Submit
- Check the summary, validate the information, and submit your return.
Step 8: E-Verify (Crucial)
- Filing is incomplete until you e-Verify. Use Aadhaar OTP, Net Banking, or EVC to verify within 30 days of submission. If you skip this, your return will be considered invalid.
Quick Pro-Tip:
Always keep your Form 26AS and Annual Information Statement (AIS) handy before you start. They contain a consolidated record of all taxes deducted and reported against your PAN, which helps you avoid discrepancies and tax notices.
Deciding between the Old and New Tax Regimes for FY 2025-26 (Assessment Year 2026-27) depends entirely on how many investments and deductions you have.
The New Tax Regime has been made much more attractive in the recent budgets, while the Old Tax Regime only makes sense if you have significant tax-saving investments.
| Feature | New Tax Regime (Default) | Old Tax Regime (Optional) |
| Standard Deduction | ₹75,000 | ₹50,000 |
| Tax-Free Limit | Up to ₹12.75 Lakh (with Rebate & Std. Ded.) | Up to ₹5.5 Lakh (with Rebate & Std. Ded.) |
| 80C Deductions | Not Allowed | Up to ₹1.5 Lakh allowed |
| HRA / Home Loan | Not Allowed | Allowed |
| Medical Ins. (80D) | Not Allowed | Allowed |
| Tax Rate | New Regime Slabs (FY 25-26) | Old Regime Slabs (FY 25-26) |
| 0% (Nil) | Up to ₹4,00,000 | Up to ₹2,50,000 |
| 5% | ₹4,00,001 – ₹8,00,000 | ₹2,50,001 – ₹5,00,000 |
| 10% | ₹8,00,001 – ₹12,00,000 | – |
| 15% | ₹12,00,001 – ₹16,00,000 | – |
| 20% | ₹16,00,001 – ₹20,00,000 | ₹5,00,001 – ₹10,00,000 |
| 25% | ₹20,00,001 – ₹24,00,000 | – |
| 30% | Above ₹24,00,000 | Above ₹10,00,000 |
2. Which one should you choose?
Case A: You earn ₹12 Lakh or less
- New Regime: Your tax is Zero. Thanks to the Section 87A rebate, income up to ₹12 Lakh (plus the ₹75,000 standard deduction) results in no tax liability.
- Old Regime: You would likely pay tax unless you have massive deductions (HRA, 80C, 80D) exceeding ₹6.5 Lakh.
- Verdict: New Regime is the clear winner.
Case B: You earn ₹15 Lakh
- New Regime: After standard deduction (₹75,000), your taxable income is ₹14.25 Lakh. Your total tax will be roughly ₹93,750 + Cess.
- Old Regime: To match the New Regime’s tax, you would need total deductions of roughly ₹4.25 Lakh (e.g., ₹1.5L in 80C + ₹2L Home Loan + ₹50k NPS + ₹25k Health Insurance).
- Verdict: If your total deductions are less than ₹4 Lakh, stick to the New Regime.
Case C: You earn ₹25 Lakh+
- New Regime: You benefit from lower middle-income slabs (10%, 15%, 20%), which keeps the tax lower for a large portion of your income.
- Old Regime: Almost 60% of your income gets taxed at the highest rate of 30%.
- Verdict: The New Regime is generally better unless you are paying a very high home loan interest (₹2L+) and have high HRA exemptions.
Summary Checklist
- Choose New Regime if: You want a simple process, don’t want to lock money in 5-year FDs/PPF, or earn up to ₹12.75 Lakh.
- Choose Old Regime if: You have a high Home Loan (Section 24b), high HRA, and fully exhaust Section 80C (LIC, PPF, ELSS).
