ITR for Salaried Employees

ITR for Salaried Employees – AY 2026‑27 | ITR Forms, Tax Slabs & Deductions

Introduction

If you are a salaried individual or pensioner in India for FY 2025‑26 (Assessment Year 2026‑27), this page is your all‑in‑one guide to:

Choosing the correct ITR form (ITR‑1, ITR‑2, ITR‑3, ITR‑4),
Understanding the new tax regime vs old tax regime,
Claiming maximum deductions (HRA, home loan, health insurance, disability, donations, etc.), and
Using key forms like Form 16, 12BB, 26AS, 15G/15H, and 10E correctly.

All information is based on the Income Tax Act, 1961, and applicable rules & notifications for AY 2026‑27; this is frequently updated by TaxBrain’s Team.

This applies to you if you are a

Salaried employees across companies, banks, IT, BFSI, manufacturing, government/private, and PSUs.
Pensioners receiving pension income.
Freelancers or consultants earning side income over and above salary.
Individuals considering the new vs old tax regime and wanting to optimize their tax liability.

Whether you are filing on your own or using TaxBrain’s professional income‑tax filing services, this guide helps you understand exactly what is expected and what you can claim.

2. Choosing the right ITR form as a salaried individual (AY 2026‑27)

ITR‑1 (SAHAJ) – Simple salaried income

ITR‑1 (SAHAJ) is the most common ITR for resident individuals (other than “Not Ordinarily Resident”) whose total income is up to ₹ 50 lakh and comes only from:

Salary or pension,
Income from one house property (rental or self‑occupied),
Other sources (interest, family pension, dividend, etc.),
Agricultural income up to ₹ 5,000, and
Long‑term capital gains under Section 112A up to ₹ 1,25,000.

You cannot file ITR‑1 if:

You are a director in a company,
You have short‑term capital gains,
Your LTCG under Section 112A exceeds ₹ 1,25,000,
You held unlisted equity shares at any time during the year,
You own assets or financial interests outside India,
You have signing authority on foreign bank accounts,
You have income from any source outside India,
You had TDS under Section 194N (cash withdrawal/salary‑related TDS),
You have deferred tax on ESOPs,
You have brought‑forward or carried‑forward losses under any head,
Or your total income (excluding LTCG up to ₹ 1,25,000) exceeds ₹ 50 lakh.

If your profile is simple (salary, 1 house, savings‑bank interest, maybe some FDs or bonds), ITR‑1 is usually the right choice.

ITR‑2 – When you don’t qualify for ITR‑1

ITR‑2 is for:

Individuals and HUFs whose income is not under “Profits and Gains from Business or Profession”, and
Who are not eligible for ITR‑1.

Typical cases where you must file ITR‑2 include:

More than one house property (rental or vacant),
Capital gains that exceed the ITR‑1 limits (e.g., large LTCG or STCG),
Foreign income or assets (even minor overseas investments),
Or diverse income streams that cannot fit into ITR‑1.

As a salaried employee, if you have mutual‑fund gains, foreign dividend income, or multiple properties, you should file ITR‑2.

ITR‑3 – Salaried professionals or business‑side income

ITR‑3 is for:

Individuals and HUFs who have income from Profits and Gains of Business or Profession,
Or income from salary, house property, business, capital gains, and other sources,
And who are not eligible for ITR‑1, ITR‑2, or ITR‑4.

If you are a salaried professional (e.g., CA, CS, doctor, architect, consultant) who also runs a proprietorship business or consultancy, your income mixes salary + professional income, and you must file ITR‑3.

ITR‑4 (SUGAM) – Presumptive business income

ITR‑4 (SUGAM) is for:

Individuals, HUFs, or firms (other than LLPs),
Who are resident, and
Declare business or professional income on a presumptive basis under Sections 44AD, 44ADA, or 44AE.

You can optionally use ITR‑4 if you also have salary / pension, income from one house property, other sources, and LTCG under Section 112A (≤ ₹ 1,25,000).

You cannot use ITR‑4 if:

You are a director in a company,
You have short‑term capital gains,
Your LTCG under Section 112A exceeds ₹ 1,25,000,
You held unlisted equity,
You have foreign income / assets, or foreign bank‑account signing authority,
You have deferred ESOP‑related tax,
You have brought‑forward or carried‑forward losses,
Or your total income (excluding LTCG up to ₹ 1,25,000) exceeds ₹ 50 lakh.

Note: ITR‑4 is not mandatory; it is a simplified return option only if you are eligible for the presumptive‑income scheme.

3. Key forms every salaried employee must know

Form 12BB – Claim deductions before TDS

Form 12BB is submitted by an employee to employer(s) to claim:

HRA exemption,
Leave Travel Concession (LTC),
Deduction on interest for home loan,
And other tax‑saving investments / payments (PPF, life insurance, ELSS, NPS, etc.).

By providing Form 12BB, your employer can accurately compute TDS under Section 192, so your monthly salary is taxed at the correct rate and you do not face a large tax liability at year‑end.

Form 16 – Salary TDS certificate

Your Form 16 is issued by your employer at the end of the financial year and contains:

Detailed breakup of gross salary,
Exemptions and deductions allowed (HRA, LTA, standard deduction, etc.),
Taxable salary, and
Tax Deducted at Source (TDS) paid to the Income Tax Department.

You use Form 16 as the primary document when filing your ITR under Section 192. If you changed jobs in the year, you must collect Form 16 from each employer and consolidate them in your return.

Form 16A – TDS on non‑salary income

Form 16A is issued by TDS deductors such as:

Banks (FD interest, savings interest where TDS applies),
Post‑office, mutual funds, insurance companies, or any other payer.

It shows:

Nature of payment (interest, commission, rent, etc.),
Amount of TDS deducted,
And TDS deposited with the Income Tax Department.

These details must match with Form 26AS / AIS for your ITR to be error‑free.

Form 67 – Foreign income and foreign tax credit

If you have income from outside India, for example:

Overseas salary,
NRO/NRE interest,
Foreign dividends,

You must file Form 67 on or before the ITR due date under Section 139(1). It captures:

Income from each foreign country or specified territory, and
Foreign tax credit claimed in India to avoid double taxation.

This is essential if you have NRI background, foreign investments, or overseas employment.

Form 26AS / AIS – Your comprehensive tax statement

Form 26AS / Annual Information Statement (AIS) is available on the Income Tax e‑filing portal (Login → e‑Filing → View Form 26AS / AIS). It includes:

TDS / TCS on salary, interest, commission, rent, etc.,
Taxes paid (self‑assessment, advance tax, regular assessment),
Demands and refunds,
And additional information like GST‑related data, foreign‑government‑reported income, and more.

Before filing your ITR, you should:

Compare Form 16 and 16A with Form 26AS / AIS, and
Ensure TDS values and dates match; mismatches must be corrected (via employer or bank).

Form 15G and Form 15H – No TDS on interest

Form 15G: For a resident individual (below 60) or HUF whose total income for the year is below the basic exemption limit, so that banks do not deduct TDS on interest (FD, savings, etc.).
Form 15H: Similar to 15G, but for resident individuals aged 60 or above.

You must submit these forms to your bank / post‑office / NBFC at the start of the year, along with your estimated income, to avoid unnecessary TDS on interest income.

Form 10E – Relief on arrears or advance salary

If you receive salary in arrears, advance, gratuity, compensation for termination, or commuted pension, you can file Form 10E to claim relief under Section 89(1). This adjusts your tax calculation so that receiving a lump‑sum amount in one year does not push you into a higher tax slab.

Form 10E is submitted online or offline to the Income Tax Department, and the relief is then reflected in your ITR computation.

4. Tax slabs and regimes – New vs Old (AY 2026‑27)

New tax regime (Section 115BAC) – Default for salaried employees

The Finance Act 2024 made the new tax regime (Section 115BAC) the default for:

Individuals, HUFs, AOPs (non‑co‑ops), BOIs, and AJPs.

Salaried employees who do not have business or profession income can choose the regime every year, directly in the ITR, as long as they file by the due date under Section 139(1).

Old tax regime – When deductions matter

The old tax regime is the traditional system where you can claim a wide range of deductions and exemptions (HRA, 80C, 80D, etc.). However, tax rates are higher than in the new regime.

For salaried individuals:

If you have large investments (PPF, ELSS, NPS, home loan interest, health insurance, etc.), the old regime often results in lower tax.
If your deductions are limited, the new regime usually gives you lower tax liability.

Tax slabs (resident < 60 years) – New vs Old (AY 2026‑27)

Regime	Slab (₹)	Tax rate / computation
Old – < 60	Up to 2,50,000	Nil
	2,50,001–5,00,000	5% on amount above ₹ 2,50,000
	5,00,001–10,00,000	₹ 12,500 + 20% above ₹ 5,00,000
	Above 10,00,000	₹ 1,12,500 + 30% above ₹ 10,00,000
New – < 60	Up to 4,00,000	Nil
	4,00,001–8,00,000	5% on amount above ₹ 4,00,000
	8,00,001–12,00,000	₹ 20,000 + 10% above ₹ 8,00,000
	12,00,001–16,00,000	₹ 60,000 + 15% above ₹ 12,00,000
	16,00,001–20,00,000	₹ 1,20,000 + 20% above ₹ 16,00,000
	20,00,001–24,00,000	₹ 2,00,000 + 25% above ₹ 20,00,000
	Above 24,00,000	₹ 3,00,000 + 30% above ₹ 24,00,000

Similar but slightly different slabs apply for senior citizens (60–79) and very senior citizens (80+).

Surcharge, cess, and rebate – How your final tax is calculated

Surcharge applies if your taxable income exceeds ₹ 50 lakh, with higher slabs at ₹ 1 crore, ₹ 2 crore, and above ₹ 5 crore.
Health & Education Cess of 4% applies on income tax + surcharge in both regimes.
Rebate under Section 87A:
- Old regime: Up to ₹ 12,500 if taxable income ≤ ₹ 5,00,000.
- New regime: Up to ₹ 60,000 if taxable income ≤ ₹ 12,00,000.

Marginal relief is available when income slightly exceeds ₹ 50 lakh, ₹ 1 crore, ₹ 2 crore, or ₹ 5 crore, so that the effective tax + surcharge does not rise disproportionately.

5. Deductions – New regime vs old regime

Deductions allowed even in the new regime

1. Section 24(b) – Home loan interest (let‑out property only)

Even under the new regime, you can claim interest on housing loan under Section 24(b) for let‑out or vacant property, with no upper limit on interest. However, loss from house property cannot be set off against other heads or carried forward.

For self‑occupied property, this deduction is only available in the old regime.

2. Section 80CCD(2) – Employer‑contributed pension

You can claim employer contribution to specified pension schemes (e.g., NPS) up to:

14% of salary (for most government and PSU employees).

This is allowed even under the new regime and is often a significant tax‑saving avenue.

3. Section 80CCH – Agnipath / Agniveer Corpus Fund

If you are enrolled in the Agnipath Scheme and contribute to the Agniveer Corpus Fund, or if the Central Government contributes to your account, you can claim full deduction of those amounts.

Deductions available only in the old regime

1. Section 24(b) – Home loan interest (self‑occupied)

Under the old regime, you can claim:

Up to ₹ 2,00,000 on interest for self‑occupied property (loan taken on or after