Start here
Two Income-tax Acts are live at once, and which one governs you depends entirely on the year you are dealing with — the 1961 Act for FY 2025-26 and earlier, the 2025 Act from FY 2026-27. Get that wrong and every section number you look up online is wrong too. This page settles that first, then routes you to the specific explainer for your situation, each one written against the primary text rather than someone else’s summary.
Use this page if
- You are a salaried filer and want the right explainer for one specific question, not a 5,000-word overview.
- You have found a section number online and want to know whether it applies to your year.
- You are working out which regime, which ITR form, or what to do about a notice.
- Two Acts are live and the section numbers overlap — settle which governs your year before anything else.
- Choose your regime and file the right form: the foundation for everything below.
- Exemptions and deductions, which now exist mainly for Old Regime filers.
- Capital gains and the rebate trap that produces unexpected demand notices.
- Foreign shares, Schedule FA, and a disclosure window that closes on 31 December 2026.
- Advance tax, department emails and scrutiny selection.
- Missed deadlines and refunds that have not arrived.
First: which Act governs your year
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. The old Act still governs FY 2025-26 and earlier, so both numbering systems are live — and five section numbers exist in both with completely different subject matter.
This is the single most common source of error in Indian tax content right now, including in otherwise reliable sources. Most commentary online cites a bare section number without naming an Act or a year. For anything after 1 April 2026, a large share of those citations point at the wrong provision or at nothing at all.
The trap, specifically:
| Section | Under the 1961 Act | Under the 2025 Act |
|---|---|---|
| 78 | Loss carry-forward | Stamp-duty-value deeming on a sale |
| 92 | Transfer pricing | Income from other sources |
| 72, 269, 288 | Different subject matter in each Act | Different subject matter in each Act |
And some provisions stopped being sections altogether. HRA moved from Section 10(13A) to Schedule III, Table Sl. No. 11 — a Schedule entry, not a section. Life insurance proceeds moved the same way. So “Section 10(13A)” is not merely outdated for FY 2026-27; it refers to nothing.
- The Income-tax Act, 2025 and the AY 2026-27 transition
Which Act applies to which year, the full renumbering for salaried provisions, and the five sections that mean different things in each Act.
Start here: pick your regime and file
Decide which regime costs you less, then file the correct form. Everything else in this guide sits on top of those two decisions.
- Old vs New Regime FY 2026-27: the break-even deduction number
The current-year comparison. How much in deductions you need before the Old Regime beats the New one, and why the answer is now mostly a housing question.
- Old vs New Regime FY 2025-26
The prior year, for anyone still filing or revising a FY 2025-26 return under the 1961 Act.
- ITR filing AY 2026-27: the salaried walkthrough
ITR-1 versus ITR-2, Form 16, reconciling your AIS, and Schedule CG. Also the form-selection logic if you hold any foreign asset.
Exemptions and deductions
Almost every deduction now exists only under the Old Regime, which is why the regime decision comes first. If you are on the New Regime, most of this section does not reach you.
- HRA in FY 2026-27: four new metro cities at the 50% cap
Bengaluru, Pune, Hyderabad and Ahmedabad joined the 50% list. Why that is worth nothing to many renters, and the one calculation that tells you which group you are in.
- ELSS vs PPF vs NPS in 2026: the tax case is gone
With the deduction unavailable to most filers, these three have to be compared as investments rather than as tax shelters. Which one actually wins on its own merits.
Capital gains and the rebate trap
If you sold shares, units or property, the rate depends on the asset, the holding period and the year — and the rebate does not work the way most filers assume.
The trap in one sentence: the rebate is denied against income taxed at special rates. So a salaried filer whose salary alone would attract no tax can still receive a demand notice after selling shares. That was Section 87A of the 1961 Act and is Section 156 of the 2025 Act.
- Section 87A and STCG: the Rs 62,400 demand notice
Why a nil-tax salary plus a small capital gain produces a demand, when the rebate does and does not apply, and the appellate position on contesting back-year demands.
- Circle rate up? The tax traps sellers and developers miss
When the stamp-duty value is deemed to be your sale consideration, what it does to your capital gain, and the buyer-side consequence most people never see coming.
Foreign shares and Schedule FA
If you hold shares in a foreign company — including a single fractional RSU — you have a disclosure obligation with no minimum threshold and a penalty measured per year. There is currently a window to fix past omissions, and it closes on 31 December 2026.
- ESOP and RSU tax: both events, and Schedule FA
The perquisite at exercise or vest, the capital gain at sale, why the same rupee is not taxed twice, the 24-month threshold on foreign shares, and what Schedule FA actually asks for.
- Foreign RSUs you paid tax on but never put in Schedule FA
If payroll deducted perquisite tax and you still never filed Schedule FA, the disclosure scheme almost certainly puts you on a flat-fee track rather than the 60% one. Which track, how the valuation works, and the deadline.
Advance tax, notices and scrutiny
Tax does not end at filing. Instalments, AIS-driven emails and scrutiny selection each have their own rules, and most of the anxiety around them is misplaced.
- Advance tax: do you actually owe it?
When the Rs 10,000 threshold bites, how the interest provisions work, and why employer TDS does not cover a capital gain.
- The e-campaign “significant transactions” email
What that message from the department actually means, what it is generated from, and exactly how to respond to it.
- ITR scrutiny: the compulsory selection criteria
The categories that attract compulsory scrutiny — and why a clean salaried return is in none of them.
Missed deadlines and missing refunds
A missed deadline is recoverable and a delayed refund usually has a specific, checkable cause. Neither is as bad as it feels.
- Missed the ITR deadline: the belated return route
What a belated return costs you, what you lose by filing late, and the outer date beyond which the option disappears.
- Refund not arrived? How to read the status
The refund-reissue procedure, how to read a Section 143(1) intimation, and the bank-validation failure that stalls most refunds.
Editor’s Analysis
The most expensive thing I have learned about tax, I learned in my first year of working. I did not plan for it. I treated the deduction on the payslip as the whole of the story, and when the actual liability landed it took a single month’s in-hand pay down far enough to break everything sitting on top of it — the investing I had just started, the amount I was putting aside each month, and the household budget I had built around a figure that turned out to be the wrong figure.
The point is not the size of the bill. Spread across a year it was manageable. The problem is that an unplanned tax liability does not arrive across a year; it arrives in one month, usually in the last quarter, and a household budget is a monthly object. That is why the damage is out of proportion to the amount. You do not stop paying rent for a month, so what gets cancelled is the investment — and the investment was the thing that was supposed to compound.
What I would tell a younger colleague is narrower than “plan your taxes”. It is this: your employer withholds, it does not plan. Payroll’s job is to deduct correctly against whatever you declared, and it will do that job perfectly well while you make a bad decision. Work out what you owe in April, decide then how you want to fund it, and do not let January and a proof-submission deadline make the decision for you.
Editor’s Analysis — why the amount is what it is
The mental model most salaried people get wrong is that tax is a bill. They treat it as a liability to be minimised, and then quietly ask whether the money is being used well enough to justify what has left their account. That instinct is understandable, but it makes for bad decisions — it is how people end up buying a poor product to save a deduction, and how they end up angrier about tax than informed about it. Tax is a subscription to a set of things you are already consuming: the road, the court, the police station, the border. Roughly 5.9 crore income tax returns were filed for AY 2026-27 by the July deadline, against a population above 140 crore. India’s direct tax collection is running near 7 per cent of GDP. A very small group is funding a very large country, and the leverage on each rupee is correspondingly high.
Look at where it goes and the abstraction disappears. India’s defence allocation for FY 2026-27 is about Rs 7.85 lakh crore, roughly 15 per cent of total central government spending — and of that, about Rs 1.71 lakh crore, 22 per cent of the defence budget, is military pensions. That is the part worth noticing, because it is the shape of the problem everywhere: pension promises made when a country was young become the binding constraint once it is not.
Europe is the live demonstration. EU pension expenditure was about 12.3 per cent of GDP in 2023; Italy spends 15.5 per cent and France about 14.6 per cent — a sixth of national output going to people who have stopped working. The EU’s old-age dependency ratio was around 36 per hundred working-age people in 2022 and is projected to reach 55 by 2050. India’s is currently around 11. That gap is the entire reason our tax burden feels lighter, and it is temporary. The right mental model is not “is this money being spent well enough for me”. It is that a young country with a narrow tax base has a window in which to build things, and that window closes on a demographic schedule. Understanding the rules to pay the correct amount is the job. Resenting the concept is not a strategy.
What to do next
If you know which rules apply to you
File it yourself, online
TaxBuddy runs fixed-fee salaried plans covering regime selection, capital gains and the ITR form switch that follows. Enough for a return where you already know what goes where.
This is an affiliate link. If you file through it, FinEstate earns a commission at no extra cost to you. We link to it because the plans cover the cases this guide describes, not because of the commission. Disclaimer.
If you are not sure which rules apply
Speak to a chartered accountant
Two Income-tax Acts are live at once and several section numbers appear in both with different subject matter. If you are working across assessment years, holding foreign assets, or acting on guidance you are not certain has been updated, that is worth thirty minutes with someone who will check the instrument rather than the blog post.
No fee for the introduction. What you agree with the CA afterwards is between you and them. We do not see your documents and we receive no part of their fee.
Key Takeaways
- Settle the year first. The Income-tax Act, 1961 governs FY 2025-26 and earlier; the Income-tax Act, 2025 governs FY 2026-27 onward. Any citation without an Act named is unreliable.
- Sections 72, 78, 92, 269 and 288 exist in both Acts with different subject matter. HRA and life insurance proceeds moved out of sections entirely and into Schedules.
- The regime decision comes before everything else, because almost every deduction is Old Regime only.
- The rebate is denied against special-rate income — which is why a nil-tax salary plus a small capital gain can still produce a demand notice.
- Foreign shares carry a Schedule FA obligation with no minimum threshold and a per-year penalty. The window to regularise past omissions closes 31 December 2026.
- Employer TDS covers what you declared. It does not plan, and it does not cover your capital gains.
Frequently Asked Questions
Which Income-tax Act applies to my return?
It depends on the year the income arose, not the year you are filing in. The Income-tax Act, 1961 governs FY 2025-26 and earlier. The Income-tax Act, 2025 governs FY 2026-27 onward. Both are live, and five section numbers appear in both with different subject matter — so a citation that does not name its Act cannot be relied on.
I found a reference to Section 10(13A) for HRA. Is it still valid?
For FY 2025-26 and earlier, yes. For FY 2026-27 onward, no — and not because the number changed. HRA moved out of the sections entirely and now sits at Schedule III, Table Sl. No. 11 of the Income-tax Act, 2025, with the city percentages prescribed by Rule 279 of the Income-tax Rules, 2026. Section 10(13A) does not exist under the new Act.
My salary attracts no tax. Why did I get a demand notice after selling shares?
Because the rebate is not available against income taxed at special rates, and short-term gains on listed equity are special-rate income. Your salary can be fully covered by the rebate while the gain is taxed in full. That was Section 87A of the 1961 Act and is Section 156 of the 2025 Act, and it is the single most common cause of an unexpected demand on an otherwise clean salaried return.
Do I have to declare a single foreign share worth a few hundred rupees?
Yes. Schedule FA has no minimum value threshold, and filing ITR-1 while holding any foreign asset is itself a compliance error. The penalty for non-disclosure runs per year under the Black Money Act, 2015. If you have missed it in past years, there is a disclosure scheme open until 31 December 2026 that may cost far less than you expect.
Which regime should I be on?
It has become mostly a housing question rather than an income question. Large rent in a metro city, or substantial home-loan interest, can carry you past the break-even point; without either, the New Regime usually wins regardless of what you earn. The break-even analysis linked above gives the deduction total you need to clear for FY 2026-27.
Primary sources
- Income-tax Act, 2025 — governs FY 2026-27 onward. Section 156 rebate, Section 202 new-regime rates, Schedule III Table Sl. No. 11 for HRA, Sections 196 to 198 for capital gains.
- Income-tax Act, 1961 — governs FY 2025-26 and earlier. Section 87A rebate, Section 115BAC new regime, Section 10(13A) HRA, Sections 111A, 112 and 112A for capital gains.
- Income-tax Rules, 2026 — made by Notification No. 22/2026, G.S.R. 198(E) of 20 March 2026. Rule 279 carries the HRA city table.
- Each linked article carries its own primary sources, cited to the instrument rather than to commentary.
Secondary sources and commentary
- The return-filing count, direct tax collection share of GDP, defence allocation and EU pension figures in the second Editor’s Analysis are drawn from published government budget documents and Eurostat reporting. They are context rather than tax rules, and are not independently re-verified here.
The Bottom Line
Settle which Act governs your year, choose your regime, file the right form, and reconcile your AIS. Do those four things and Indian income tax as a salaried earner is far simpler than it feels.
The two things that catch people out are not complicated, just counter-intuitive: the rebate does not reach special-rate capital gains, and a single foreign share creates a disclosure obligation. Each guide above takes one piece to primary-source depth.
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Subscribe freeDisclosure and method
This is a guide page for general information and is not legal, tax or investment advice. Rates, thresholds and administrative rules change, and two Acts are currently live — so confirm which applies to your year, and consult a qualified chartered accountant before acting on anything here. FinEstate is not a SEBI-registered Investment Adviser or Research Analyst, and nothing on this page is a recommendation to buy or sell any security.
Compiled with AI assistance and reviewed before publication. Statutory provisions are cited to the Act and section; each linked article carries its own primary sources. The macroeconomic figures in the second Editor’s Analysis are context drawn from published government and Eurostat data rather than independently verified here.