Personal Taxation

Tax Basics

2026 is an unusual year for Indian taxpayers — two Income Tax Acts are simultaneously relevant. The return due in 2026 (for FY 2025-26) is filed entirely under the familiar Income Tax Act, 1961, while the brand-new Income Tax Act, 2025 took effect from 1st April 2026, governing income from FY 2026-27 (“Tax Year 2026-27”) onwards — reorganising the law into 23 simplified chapters and renumbering sections, while largely preserving tax rates and the new-vs-old regime structure. This guide also covers the foundational vocabulary every taxpayer needs: the new regime’s ₹12–12.75 lakh zero-tax zone for FY 2025-26 vs the old regime’s ₹5 lakh threshold, how tax residency (Resident/NR/RNOR) determines whether your global or only India income is taxed, the five heads of income, the crucial difference between exemptions and deductions, and the six-step flow from Gross Total Income to your final tax payable or refund.