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Tag: Income Tax Guide

  • ITR-2 Filing Guide for FY 2025-26: Step-by-Step Process, 26AS/AIS Reconciliation, and Old vs New Regime Tax Examples

    1) What is ITR-2 and who should file it

    ITR-2 is meant for individuals and Hindu Undivided Families (HUFs) who do not have income from business or profession but have any of the following:

    • Capital gains (short-term or long-term)
    • Income from more than one house property
    • Foreign income or assets
    • Being a director in a company
    • Investments in unlisted equity shares

    If your only income is salary/pension, one house property, and total income ≤ ₹50 lakh, you may be eligible for ITR-1 instead — otherwise, use ITR-2.

    2) Documents to collect before filing

    • PAN & Aadhaar (linked)
    • Bank account details (IFSC, account number)
    • Form 16 from your employer
    • Form 16A / TDS certificates (from banks, others)
    • Form 26AS (TDS/TCS summary)
    • AIS (Annual Information Statement) and TIS
    • Bank statements (for savings interest)
    • Home loan interest certificate (if applicable)
    • Broker contract notes / capital gains statement
    • Investment proofs for deductions (80C, 80D, etc.)

    3) Important deadlines

    • For FY 2025-26 (AY 2026-27), the last date for filing (non-audit) is 15 September 2026.
    • Belated return can be filed till 31 December 2026 but with a penalty.

    4) How income is reported in ITR-2

    • Salary → Schedule S
    • House Property → Schedule HP
    • Capital Gains → Schedule CG
    • Other Income → “Income from Other Sources” section
    • Deductions → Schedule VI-A
    • Taxes Paid / TDS → Tax Paid and Verification section

    5) Step-by-step filing process (online)

    1. Login to Income Tax e-filing portal
    2. Go to: e-File → Income Tax Returns → File Income Tax Return
    3. Select Assessment Year 2026-27 and choose ITR-2
    4. Select Prepare and Submit Online (prefilled data) or Upload JSON (offline utility)
    5. Review pre-filled data (salary, TDS, bank interest, etc.)
    6. Fill missing details:
      • Salary from Form 16
      • House property income/loss
      • Capital gains with purchase/sale dates and cost
      • Other income (bank interest, etc.)
      • Deductions under Chapter VI-A
    7. Verify TDS and taxes paid with Form 26AS/AIS
    8. Validate the form
    9. Submit and e-verify instantly (Aadhaar OTP, Netbanking, DSC, etc.)

    6) How to use Form 26AS & AIS

    Form 26AS shows all tax credits in your PAN — TDS from employer/bank, TCS, advance tax, and self-assessment tax.
    AIS shows a wider range of financial transactions — stock trades, interest income, property purchases, mutual fund investments, etc.

    Steps to reconcile:

    1. Download Form 26AS from the e-filing portal (redirects to TRACES)
    2. Download AIS/TIS from the portal
    3. Cross-check:
      • Salary TDS in Form 16 = Salary TDS in 26AS
      • Bank interest TDS = TDS in 26AS
      • Capital gains transactions in AIS match broker reports
    4. If mismatch — contact deductor to revise TDS statement or give feedback in AIS

    7) Example calculation — FY 2025-26 (Old Regime)

    Rahul has:

    • Salary: ₹12,00,000 (TDS ₹90,000)
    • Let-out property: rent ₹2,40,000, municipal tax ₹24,000, loan interest ₹1,20,000
    • Bank interest: ₹30,000 (TDS ₹3,000)
    • LTCG (listed shares after 23 Jul 2024): ₹1,50,000
    • Deduction 80C: ₹1,50,000

    House property income:
    Gross rent 2,40,000 − Municipal tax 24,000 = 2,16,000
    Less 30% standard deduction: 64,800 → 1,51,200
    Less interest: 1,20,000 → 31,200 taxable

    Total income before CG:
    Salary after standard deduction: 12,00,000 − 50,000 = 11,50,000

    • House property: 31,200
    • Bank interest: 30,000
      = 12,11,200
      Less 80C: 1,50,000 → 10,61,200

    Capital gains:
    LTCG 1,50,000 − Exemption 1,25,000 = 25,000 taxable @ 12.5% = ₹3,125

    Tax:
    Other income 10,61,200 under old slabs = ₹1,30,860
    Capital gains tax = ₹3,125
    Total = ₹1,33,985
    Cess @ 4% = ₹5,359 → ₹1,39,344
    Less TDS ₹93,000 → Pay ₹46,344

    8) Income-wise tax comparison (Old vs New Regime) — FY 2025-26

    Assumptions:

    • Salaried individual, resident, age < 60
    • No capital gains, only standard deduction (₹50,000) in both regimes
    • No other deductions in New Regime except standard deduction
    • Old Regime includes 80C = ₹1.5 lakh deduction
    Total Income (₹)Old Regime Tax (₹)New Regime Tax (₹)
    5,00,0000 (Rebate u/s 87A)0 (Rebate u/s 87A)
    10,00,0001,02,96075,400
    15,00,0002,58,9601,56,000
    20,00,0004,41,6002,88,400

    Incomes above ₹7 lakh in New Regime do not get full rebate — tax savings depend on deductions you can claim in Old Regime.

    9) Common mistakes to avoid

    • Relying fully on pre-filled data without verifying
    • Ignoring AIS entries — they may contain transactions you forgot to report
    • Not splitting capital gains before/after 23 July 2024 for correct tax rate
    • Missing e-verification — your return will be invalid without it
    • Filing in the wrong form (ITR-1 instead of ITR-2)

    Disclaimer

    This guide is for educational purposes only and is based on current tax rules applicable for FY 2025-26 (AY 2026-27). Tax laws can change, and individual circumstances vary. Always verify figures with your own documents and consult a qualified tax professional before filing.

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  • ITR Filing AY 2025-26: Step-by-Step Guide with Tax Regime Comparison

    Let’s understand Income Tax Return (ITR) Filing for Assessment Year (AY) 2025-26 (FY 2024-25) in detail with examples for salaried individuals at different income levels: ₹5L, ₹10L, ₹12L, ₹16L, and ₹20L.

    ✅ Basic Concepts:

    🔸 AY 2025-26 = Financial Year 2024-25

    Income earned from 1st April 2024 to 31st March 2025 is filed as ITR in AY 2025-26.

    🔸 Income Tax Regimes

    There are two regimes:

    1. Old Tax Regime – You can claim deductions like:
      • Standard Deduction (₹50,000)
      • HRA
      • 80C (₹1.5L for LIC, PPF, PF, etc.)
      • 80D (Medical Insurance)
      • 24(b) (Home Loan Interest)
      • LTA, etc.
    2. New Tax Regime (default from FY 2023-24)
      • Lower tax rates
      • Fewer deductions allowed
      • ₹50,000 standard deduction allowed from FY 2023-24 onwards.

    🧾 Tax Slabs (FY 2024-25):

    🔹 New Regime (Default):

    Income RangeTax Rate
    Up to ₹3,00,000Nil
    ₹3,00,001 – ₹6,00,0005%
    ₹6,00,001 – ₹9,00,00010%
    ₹9,00,001 – ₹12,00,00015%
    ₹12,00,001 – ₹15,00,00020%
    Above ₹15,00,00030%
    • Rebate under Section 87A up to income of ₹7L ⇒ No tax (after rebate).
    • Standard deduction of ₹50,000 is available.

    🔹 Old Regime:

    Income RangeTax Rate
    Up to ₹2,50,000Nil
    ₹2,50,001 – ₹5,00,0005%
    ₹5,00,001 – ₹10,00,00020%
    Above ₹10,00,00030%
    • Full deductions allowed.
    • Rebate under Section 87A available if income ≤ ₹5L ⇒ Zero tax.

    📊 Examples: Salaried Individuals

    👤 1. Salary = ₹5,00,000

    📌 Old Regime:

    • Gross Income: ₹5,00,000
    • Less: Standard Deduction = ₹50,000
    • Net Taxable: ₹4,50,000
    • Tax before rebate = 5% of ₹2,00,000 = ₹10,000
    • 87A rebate = ₹10,000 ⇒ Tax = ₹0

    ✅ Best regime: Old Regime (same as new in this case)

    👤 2. Salary = ₹10,00,000

    A) 📌 New Regime

    • Salary = ₹10,00,000
    • Less Standard Deduction = ₹50,000
    • Taxable = ₹9,50,000

    Tax Calculation:

    SlabTax
    0–3L₹0
    3–6L (3L) @ 5%₹15,000
    6–9L (3L) @ 10%₹30,000
    9–9.5L (0.5L) @ 15%₹7,500
    Total₹52,500
    Add 4% Cess₹2,100
    Total Tax = ₹54,600

    B) 📌 Old Regime

    Assuming:

    • 80C = ₹1.5L (PF, LIC, ELSS)
    • 80D = ₹25,000 (Health Insurance)
    • HRA/Other = ₹25,000
    • Std Deduction = ₹50,000
      Total Deductions = ₹2.5L
    • Gross: ₹10L
    • Taxable = ₹7.5L

    Tax Calculation:

    • Up to ₹2.5L = Nil
    • ₹2.5L – ₹5L = 5% = ₹12,500
    • ₹5L – ₹7.5L = 20% = ₹50,000
    • Total = ₹62,500 + 4% cess = ₹65,000

    👉 New Regime wins (₹54,600 < ₹65,000)

    👤 3. Salary = ₹12,00,000

    A) 📌 New Regime

    • Salary = ₹12L
    • Std Deduction = ₹50K
    • Taxable = ₹11.5L

    Tax Calculation:

    SlabTax
    0–3L₹0
    3–6L @5%₹15,000
    6–9L @10%₹30,000
    9–11.5L @15%₹37,500
    Total₹82,500
    +4% Cess₹3,300
    Total Tax = ₹85,800

    B) 📌 Old Regime

    Assuming:

    • 80C = ₹1.5L
    • 80D = ₹25,000
    • HRA & Others = ₹25,000
    • Std Deduction = ₹50K
      Total deductions = ₹2.5L

    Taxable = ₹9.5L

    Tax:

    • Up to ₹2.5L = 0
    • ₹2.5L–5L = ₹12,500
    • ₹5L–10L = ₹90,000
      Total = ₹1,02,500 + 4% = ₹1,06,600

    ✅ New Regime wins again.

    👤 4. Salary = ₹16,00,000

    A) 📌 New Regime

    • Salary = ₹16L – 50K = ₹15.5L
    SlabTax
    0–3L₹0
    3–6L @5%₹15,000
    6–9L @10%₹30,000
    9–12L @15%₹45,000
    12–15L @20%₹60,000
    15–15.5L @30%₹15,000
    Total = ₹1,65,000 + 4% = ₹1,71,600

    B) 📌 Old Regime (with full deductions = ₹2.5L)

    Taxable = ₹13.5L

    Tax:

    • Up to 2.5L = 0
    • 2.5L–5L = ₹12,500
    • 5L–10L = ₹1L
    • 10L–13.5L = ₹1.05L
      Total = ₹2.17L + 4% = ₹2,25,680

    ✅ New Regime wins again.

    👤 5. Salary = ₹20,00,000

    A) 📌 New Regime

    • Salary = ₹20L – 50K = ₹19.5L

    Tax Calculation:

    • 0–3L = 0
    • 3–6L = 15K
    • 6–9L = 30K
    • 9–12L = 45K
    • 12–15L = 60K
    • 15–19.5L = 30% of 4.5L = ₹1.35L
      Total = ₹3L
      Cess = ₹12,000
      Total = ₹3,12,000

    B) 📌 Old Regime

    Taxable = ₹17.5L (after deductions)

    • 2.5–5L = ₹12.5K
    • 5–10L = ₹1L
    • 10–17.5L = ₹2.25L
      = ₹3.375L
    • 4% = ₹3,50,000 approx

    ✅ New Regime better again

    ✅ Summary Table: New vs Old Tax

    SalaryOld Regime (with ₹2.5L deductions)New Regime (₹50k std. ded.)Winner
    ₹5L₹0₹0Same
    ₹10L₹65,000₹54,600New Regime
    ₹12L₹1,06,600₹85,800New Regime
    ₹16L₹2,25,680₹1,71,600New Regime
    ₹20L₹3,50,000₹3,12,000New Regime

    📝 Tips to Save Tax Under Old Regime

    1. Invest ₹1.5L under 80C – PPF, ELSS, PF, LIC, etc.
    2. Buy Health Insurance – Save under 80D.
    3. Home Loan – Claim interest under 24(b) and principal under 80C.
    4. NPS Contribution – ₹50K extra under 80CCD(1B).
    5. Leave Travel Allowance, HRA exemption.

    🧠 Final Advice:

    SituationRecommended Regime
    No major investmentsNew Regime
    Have loans, insurance, PF, ELSS, etc.Old Regime
    Income under ₹7L (new regime)New Regime (zero tax)

    You can compare both regimes while filing ITR – use the income tax calculator on the Income Tax e-filing Portal or consult a CA for optimization.

    ITR filing process for AY 2025–26

    Let’s recreate the full step-by-step ITR filing process for AY 2025–26 (FY 2024–25) for a salaried person earning ₹14,00,000 — this time comparing both Old and New Tax Regimes side-by-side — so you can clearly decide which one to choose while filing.

    🧑‍💼 Example Profile – Ravi Kumar

    ParticularDetails
    NameRavi Kumar
    Age35 (Non-senior)
    Annual Salary₹14,00,000
    Deductions (Old Regime)80C = ₹1.5L, 80D = ₹25K, Std Ded = ₹50K (Total = ₹2.25L)
    Deductions (New Regime)Only Std Deduction = ₹50,000 (limited)

    ⚖️ Tax Comparison: Old Regime vs New Regime

    🔹 Old Regime Calculation

    ParticularAmount
    Gross Salary₹14,00,000
    Less: Standard Deduction₹50,000
    Less: 80C (LIC/PF/ELSS)₹1,50,000
    Less: 80D (Health Insurance)₹25,000
    Taxable Income₹11,75,000

    Tax Computation:

    • ₹2.5L – ₹5L @ 5% = ₹12,500
    • ₹5L – ₹10L @ 20% = ₹1,00,000
    • ₹10L – ₹11.75L @ 30% = ₹52,500
      Total = ₹1,65,000
    • 4% Cess = ₹6,600
      ✅ Total Tax = ₹1,71,600

    🔹 New Regime Calculation

    ParticularAmount
    Gross Salary₹14,00,000
    Less: Standard Deduction₹50,000
    Taxable Income₹13,50,000

    Tax Computation:

    • ₹0 – ₹3L = Nil
    • ₹3L – ₹6L @ 5% = ₹15,000
    • ₹6L – ₹9L @ 10% = ₹30,000
    • ₹9L – ₹12L @ 15% = ₹45,000
    • ₹12L – ₹13.5L @ 20% = ₹30,000
      Total = ₹1,20,000
    • 4% Cess = ₹4,800
      ✅ Total Tax = ₹1,24,800

    💡 Which Regime is Better?

    RegimeTotal Tax Payable
    Old₹1,71,600
    New₹1,24,800 ✅

    🟢 New Regime saves ₹46,800 in this case.

    🧾 Step-by-Step: ITR Filing for ₹14L Salary (with regime selection)

    🔷 Step 1: Visit the Income Tax Portal

    👉 https://www.incometax.gov.in

    🔷 Step 2: Login

    • Use your PAN as User ID
    • OTP verification via mobile/email
    • Dashboard shows your PAN and quick actions

    🔷 Step 3: Click e-File > Income Tax Return > File ITR

    🔷 Step 4: Select Details

    OptionSelection
    Assessment Year2025–26
    Mode of FilingOnline
    StatusIndividual
    ITR FormITR-1 (Sahaj)

    🔷 Step 5: Choose Tax Regime

    ✅ Portal will ask: “Choose Tax Regime”
    You can:

    • Choose New Regime if you don’t want to claim deductions
    • Choose Old Regime if you have PF, LIC, etc.

    Tip: Compare tax computation shown in preview to decide.

    🔷 Step 6: Income Details – Auto-Filled from Form 16

    Check:

    • Employer Name, PAN, TAN
    • Gross Salary
    • TDS deducted

    If not auto-filled, use Form 16 manually.

    🔷 Step 7: Enter Deductions (if Old Regime is selected)

    Fill:

    • 80C (LIC, PF) = ₹1,50,000
    • 80D = ₹25,000
    • Standard Deduction = ₹50,000 (auto)

    🔺 Skip this step if you chose New Regime — only ₹50K is auto-applied.

    🔷 Step 8: Review Tax Computation

    Portal will show:

    • Gross Income
    • Deductions (if any)
    • Taxable Income
    • TDS already deducted by employer
    • Tax Payable / Refund

    👉 If any tax remains: Use e-Pay Tax and enter Challan No.

    🔷 Step 9: Bank & Verification

    • Confirm your pre-validated bank account (for refund)
    • Choose e-Verify Now (via Aadhaar OTP, Net Banking, etc.)

    🔷 Step 10: Submit and Done ✅

    Your ITR is now filed.

    You’ll receive:

    • Email confirmation
    • ITR-V Acknowledgment (PDF)
    • Option to download computation summary

    📁 Important Notes

    ItemInfo
    Deadline31 July 2025
    ITR Form for SalaryITR-1 (Sahaj)
    Refund TimelineUsually within 10–45 days
    Supporting DocumentsDon’t upload, but keep safe
    Can you switch regime next year?✅ Yes, for salaried

    📌 Summary – Filing ITR for ₹14L Salary

    StepOld RegimeNew Regime
    Deduction Used₹2.25L (80C, 80D, Std)Only ₹50K (Std Deduction)
    Taxable Income₹11,75,000₹13,50,000
    Tax Payable₹1,71,600₹1,24,800 ✅
    Recommended❌ Not beneficial unless higher deductions✅ Better for Ravi

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