Income Tax Guide for Salaried Employees (AY 2026-27)

By the MyTaxLocker Team · Updated 25 June 2026

If you draw a salary, your income tax is mostly already worked out for you — in your Form 16 and in the TDS your employer deposited. This guide walks through every piece of a salaried return for Assessment Year 2026-27 (income earned in FY 2025-26), and links to the detail where you need it.

Start with your Form 16

Form 16 is the TDS certificate your employer issues for salary. Part A certifies the tax deducted and deposited; Part B is the salary-and-tax computation. Almost everything you need for a salaried return lives here. If you changed jobs during the year, collect a Form 16 from each employer. Our walkthrough — how to read your Form 16 — explains every box in plain English.

Salary components

Your gross salary is made up of several parts, and they're treated differently for tax:

• Basic salary — fully taxable, and the figure HRA and several other limits are computed against.
• House Rent Allowance (HRA) — partly exempt under the Old regime if you pay rent. See HRA exemption explained.
• Allowances and perquisites — LTA, special allowances and benefits, taxable unless specifically exempt.
• Standard deduction and a small set of exemptions covered in standard deduction & salary exemptions.

The standard deduction

Every salaried taxpayer gets a flat standard deduction off salary income — no proof, no investment needed. For AY 2026-27 it's ₹75,000 under the New regime and ₹50,000 under the Old regime. It's applied automatically; you don't claim it line by line.

Deductions: 80C, 80D and more

Under the Old regime you can reduce taxable income with Chapter VI-A deductions — life insurance, EPF/PPF, ELSS and tuition fees under 80C (up to ₹1,50,000); health insurance under 80D; the extra NPS deduction under 80CCD(1B); and others. Read 80C & 80D deductions and NPS tax benefits (80CCD), then size up your 80C room with the 80C calculator. Most of these are available only under the Old regime, which is why the regime choice matters so much.

Old vs New regime

The New regime has lower slab rates but almost no deductions; the Old regime has higher rates but lets you claim HRA, 80C, 80D and home-loan interest. There's no universally right answer — it turns on how much you can deduct. Read Old vs New tax regime: how to decide and the AY 2026-27 slabs, then run your own numbers in the income tax calculator or the Old vs New regime calculator.

TDS and reconciliation — Form 26AS / AIS

The tax your employer deducted should appear in your Form 26AS and your Annual Information Statement (AIS) on the income-tax portal. Before you prepare your return, make sure the TDS in Part A of Form 16 ties out with both. The AIS also flags other income — bank interest, dividends, mutual-fund transactions — that you should report. See Form 26AS vs AIS: why they must match.

Which form — usually ITR-1

Most salaried people file ITR-1 (Sahaj): residents with total income up to ₹50 lakh from salary, one house property, other sources and agricultural income up to ₹5,000. Step outside those limits — capital gains, a second house, foreign assets, business income — and you'll need another form. Our ITR-1 guide and ITR-1 vs ITR-4 help you confirm.

Due dates and e-verification

Note the filing due dates for AY 2026-27 so you don't slip into a belated or revised return. After you upload your return on the portal, it isn't complete until you e-verify it — see how to e-verify your ITR. You can then track your refund status. For the end-to-end portal walkthrough, read how to file your ITR online.

How MyTaxLocker helps

MyTaxLocker reads Part A and Part B of your Form 16 on your device, fills every step for you to review, computes your tax under both regimes, and prepares a ready-to-upload ITR JSON. You then upload that JSON to the official Income Tax e-Filing portal yourself — the app does not file or submit anything on your behalf.

Frequently asked questions

Which ITR form do salaried employees use?

Most salaried employees use ITR-1 (Sahaj): residents with total income up to ₹50 lakh from salary, one house property, other sources (such as interest) and agricultural income up to ₹5,000. If you have capital gains, more than one house property, foreign income or assets, business income, or total income above ₹50 lakh, you cannot use ITR-1 and must use another form such as ITR-2.

Old or New regime — which is better for salaried employees?

It depends on your deductions. The New regime has lower slab rates and a ₹75,000 standard deduction but very few other deductions. The Old regime has higher rates but lets you claim HRA, 80C, 80D, home-loan interest and more, plus a ₹50,000 standard deduction. If your eligible deductions are large, the Old regime can work out lower; if they are small, the New regime usually wins. Compare both with the calculator before you decide. This is illustrative, not tax advice.

Is Form 16 enough to prepare my return?

For a straightforward salaried return, Form 16 has most of what you need — salary breakup, exemptions, deductions accounted for by payroll, and the TDS deducted. But you should still add any deductions you made directly that payroll did not capture, report other income such as bank interest, and reconcile the TDS against your Form 26AS and AIS. MyTaxLocker reads your Form 16 on your device and lets you review and add the rest.