What is income tax? It is a tax the central government charges every year on the income of individuals, HUFs, firms, companies and other persons, at rates set by slab for individuals and at flat rates for businesses. Much of it is collected before you even see the money, through TDS on salary, interest and fees, and the rest is settled when you file your return.
This page is the starting point of Business Tax Slab, an independent reference that is not the Income Tax Department or its portal. It explains the basic ideas, gives the slab tables for FY 2025-26, and links each topic hub on the site so you can go straight to the rule you need.
Quick facts
Charged on
Total income of a year, under five headsDefault regime
New regime, slabs from 0% to 30%Tax free up to
₹12 lakh taxable income in the new regime (₹12.75 lakh salary)Cess
4% on tax plus surchargeReturn due, AY 2026-27
31 July for most individualsRun by
Income Tax Department under CBDT, Ministry of FinanceLaw
1961 Act for FY 2025-26; 2025 Act from tax year 2026-27
What is income tax and who pays it
Income tax in India is a direct tax: the person who earns the income pays it, unlike GST, which is built into prices. It is charged on the total income of a year, worked out under five heads: salary, house property, business or profession, capital gains, and other sources such as interest. Read more on the five heads of income.
Residents pay tax on their worldwide income. Non-residents are taxed only on income they earn or receive in India. The Income Tax Department collects it and runs the e-filing portal; the Central Board of Direct Taxes (CBDT) under the Ministry of Finance makes the rules and issues circulars. Rates for each year come from the Finance Act passed with the Budget.
Two Acts, two ways of naming the year
| Point | Income earned in FY 2025-26 | Income earned in tax year 2026-27 |
|---|---|---|
| Law that applies | Income-tax Act, 1961 | Income-tax Act, 2025 |
| Period | 1 April to 31 March, called the previous year | 1 April to 31 March, called the tax year |
| Return filed in | AY 2026-27 | After tax year 2026-27 ends |
| Return section | Section 139 | Section 263 |
| TDS sections | 192, 194A to 194T and others | 392 for salary, the table in 393 for most others, 394 for TCS |
| Salary TDS certificate | Form 16 | Form 130 |
The new Act took effect on 1 April 2026. Slab rates did not change with it. People still search the old section numbers, so the site uses them in headings and explains the new home of each rule.
Income tax slabs in India for FY 2025-26
| Taxable income slab | Tax rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
| Taxable income slab | Below 60 | 60 to 79 | 80 and above |
|---|---|---|---|
| Up to ₹2,50,000 | 0% | 0% | 0% |
| ₹2,50,001 to ₹3,00,000 | 5% | 0% | 0% |
| ₹3,00,001 to ₹5,00,000 | 5% | 5% | 0% |
| ₹5,00,001 to ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
The new regime applies unless you choose the old one. It gives a ₹75,000 standard deduction on salary and a rebate of up to ₹60,000, so taxable income up to ₹12 lakh pays nothing. Under the old regime you keep deductions like 80C and HRA, a ₹50,000 standard deduction and a rebate of up to ₹12,500 up to ₹5 lakh. Compare both with the regime calculator.
How the tax is worked out, step by step
Every calculation follows the same order: add income under each head, subtract allowed deductions, apply the slab rates, take off the rebate if eligible, add surcharge if income is above ₹50 lakh, then add 4% cess.
Salaried employee, new regime, FY 2025-26. Gross salary ₹16,00,000.
After taking off the ₹75,000 standard deduction, taxable income comes to ₹15,25,000.
Tax: 5% on ₹4 lakh to ₹8 lakh = ₹20,000. 10% on ₹8 lakh to ₹12 lakh = ₹40,000. 15% on ₹3,25,000 above ₹12 lakh = ₹48,750. Total ₹1,08,750.
The rebate does not apply, as income is above ₹12 lakh. No surcharge. Cess at 4% = ₹4,350.
Tax for the year: ₹1,13,100, most of which the employer collects as monthly TDS.
To run your own figures, use the income tax calculator, which works as an ITR calculator for salary and other income.
How the government collects it during the year
| Route | Who pays | Key rule |
|---|---|---|
| TDS | The payer deducts from salary, interest, rent, fees | Payer deposits it monthly through Challan 281, due on the 7th (30 April for March deductions) |
| TCS | The seller collects on certain sales | Shown in Form 26AS of the buyer |
| Advance tax | You, if tax left after TDS is ₹10,000 or more | 15%, 45%, 75% and 100% by 15 June, 15 September, 15 December and 15 March |
| Self-assessment tax | You, for any balance | Paid before filing the return |
For income tax e payment, including TDS e payment by a business, open e-Pay Tax, which sits within the e-filing portal. A business that deducts tax needs a TAN; the TAN full form in income tax is Tax Deduction and Collection Account Number. TDS on remuneration to partners, such as salary, commission or interest from a firm, is 10% above ₹20,000 under 194T for FY 2025-26.
Income tax returns and the e-filing portal
An income tax return (ITR) reports your income, deductions and tax paid for a year. It is how you claim a refund of excess TDS and how losses get carried forward. You e file income tax returns only on the government portal: the income tax e-filing portal. Acts, rules and circulars are on the department's information site.
| Who | Due date |
|---|---|
| Individuals without business income | 31 July |
| Business or profession, no audit | 31 August |
| Tax audit cases | 21 November, as extended by CBDT |
| Belated return | 31 December |
A late return costs a fee of ₹5,000, or ₹1,000 when total income does not exceed ₹5 lakh. Before filing, check your figures against the AIS and Form 26AS.
Every topic hub on this site
Each hub below explains one part of the system and links its detailed pages.
| Page | Question it answers |
|---|---|
| Income tax slab (home) | Which slab your income falls in, both regimes, with the slab finder |
| New regime slabs | The default regime: 0% to 30% bands and the ₹12 lakh rebate |
| What is ITR | What a return is, who files it and what it records |
| Which ITR form | ITR-1 to ITR-7 and how to pick the right one |
| How to file ITR | The online filing steps from login to e-verification |
| ITR due dates | Last dates for original, belated and revised returns |
| Refund status | Tracking a refund and reading each status message |
| Form 16 | The salary TDS certificate and its new number, Form 130 |
| What is TDS | Tax cut at source: who deducts, deposits and reports it |
| TDS rate chart | Every TDS section with its rate and threshold |
| Other TDS sections | The less common sections, from 194N to 194T |
| Advance tax | Paying tax in four instalments during the year |
| Deductions list | 80C, 80D, home loan interest and the other deductions |
| Capital gains tax | Tax on selling shares, funds, property and gold |
| Income tax notices | What each notice means and how to reply |
| Income Tax Act, 1961 | The old law, still used for FY 2025-26 income |
| Income Tax Act, 2025 | The new law from 1 April 2026 and its section map |
Words you will meet on every tax page
- PAN: your permanent tax ID, needed for filing and quoted to anyone deducting TDS. Without it, TDS is generally 20%.
- Gross total income: income from all heads before deductions.
- Taxable income: what remains after deductions; slabs apply to this.
- Rebate: a reduction in tax for resident individuals with income below a limit, under 87A, now section 156.
- Surcharge: extra tax above ₹50 lakh of income, from 10% upward; capped at 25% in the new regime.
- AIS: the statement of your income and transactions that the department already holds.
Beginner mistakes and how to avoid them
| Mistake | Better approach |
|---|---|
| Thinking nil tax means no return | Check the filing rules under section 139(1); many must file anyway |
| Ignoring interest income from savings and deposits | Declare it under other sources; it shows in your AIS |
| Quoting the wrong year | Use AY 2026-27 for income of FY 2025-26 |
| Using websites that look official | File and pay only on the incometax.gov.in portal |
| Assuming TDS settles everything | Compare TDS with the tax on your total income and pay any gap |
Business Tax Slab gives general explanations of Indian income tax, not personal advice. Figures change with each Budget; before relying on them, cross-check each figure using the official portal, or raise it with your chartered accountant.
Sources we checked
- Income-tax Act, 1961, sections 4, 115BAC and 139
- Income-tax Act, 2025, sections 156, 263 and 393
- Finance Act, 2025, First Schedule
- e-filing portal help: Income Tax Returns FAQs
Frequently asked questions
What is the meaning of income tax in simple words?
Income tax is a share of your yearly income that you pay to the central government. The more you earn, the higher the rate on the top part of your income, under the slab system.
What are the income tax rates for FY 2025-26 in the new regime?
Nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% for each ₹4 lakh band, and 30% above ₹24 lakh. With the rebate, no tax is due on taxable income up to ₹12 lakh. The same slabs apply for tax year 2026-27.
Which income tax regime should I choose?
The new regime is the default and suits people with few deductions. The old regime can work out cheaper if you claim large deductions like 80C, 80D, HRA and interest on a home loan. Work out both on your own figures before you choose.
Is the income tax e-filing portal the only place to file a return?
Returns are filed with the department through its e-filing portal, either directly or through software that connects to it. Always check the web address before entering your PAN or password.
What changed with the new income tax law?
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Section numbers and some form numbers changed and the year is now called the tax year, but the slab rates stayed the same.