Income Tax Basics: From Income to an ITR

Begin with the period

This guide uses the filing context of FY 2025–26 and AY 2026–27. The Income Tax Department’s AY 2026–27 guidance sets out return categories, forms and the old/new-regime overview. Do not transfer a year-specific rule to another year without checking.

A payslip is one record, not a complete picture of annual income. Other receipts can affect reporting and the applicable form. Keep documents for the entire relevant period and distinguish taxable income from cash deposited in an account.

Build the calculation in stages

Start with the income categories that apply. Then account for permitted exemptions and deductions under the chosen regime. Apply the relevant rates and any eligible rebate or relief; include applicable additional levies. Only then reconcile tax already paid or deducted.

A deduction is not a refund of the same amount. For a purely hypothetical ₹10,000 deduction, a 20% marginal rate would imply ₹2,000 of tax reduction before other interactions. This illustration is not an eligibility claim for any particular deduction.

Reconcile liability and credits

Suppose a hypothetical completed calculation gives total liability of ₹50,000. If eligible credits for tax deducted and paid are ₹42,000, the difference is ₹8,000 before any remaining adjustments. Do not subtract the credits from income: they are payments against tax.

Compare salary information with Form 16 and reconcile relevant information in AIS and Form 26AS. If records disagree, investigate the underlying transaction and correction route rather than silently accepting a total. See our document comparison guide.

Choose a form by eligibility

The simplest-looking return is not necessarily the correct one. Income type, residential status and other conditions can affect eligibility. Use the official criteria and our ITR-form guide as a starting point. Business income and special-rate income need separate attention.

Use calculators within their limits

Our salary-only estimator is a learning tool for its stated year and assumptions. It cannot replace a complete filing calculation. Check the regime comparison without entering unsupported deductions into both columns.

Before filing, review year, eligibility, income categories, tax credits and verification requirements. A nil balance payable does not alone answer whether a return is required.