Why ITR Filing for FY 2025-26 Matters More Than Ever

The income tax return (ITR) filing season for FY 2025-26 — also called Assessment Year 2026-27 — brings with it a significant change that every taxpayer must know: the Finance Bill 2025 has proposed an extension of the due date for certain categories of taxpayers from 31 July to 31 August. More on that shortly.

For salaried employees, the ITR filing due date remains 31 July 2026. Missing this deadline means a late fee, loss of certain deductions, and inability to carry forward losses — some of which are gone permanently.

This guide covers everything you need — from understanding Form 16 to navigating Old Regime vs New Regime, from downloading AIS to filing step by step. It is written in plain language so that even a first-time filer can follow it confidently.

What is Form 16? Your TDS Certificate Explained

Form 16 is the TDS certificate issued by your employer under Section 203 of the Income Tax Act. It documents every rupee of tax deducted from your salary during the financial year. Think of it as the official proof that your employer has deposited tax on your behalf with the government.

Part A — The TRACES Certificate

Part A is downloaded directly by your employer from the TRACES portal (the government’s TDS portal). It contains your name and PAN, your employer’s name and TAN, and a quarter-by-quarter breakup of TDS deducted and deposited. This part is tamper-proof — it comes from the government’s server.

Part B — The Salary Breakup

Part B is prepared by the employer. It shows your gross salary, all allowances (HRA, LTA, and other exempt components), and every deduction you claimed — 80C, 80D, home loan interest, NPS, and so on. It concludes with net taxable salary and total tax deducted for the year.

How to Verify Your Form 16 — 5 Point Check

• PAN & TAN: Your PAN and employer’s TAN in Part A must match exactly. Even a single digit mismatch can cause a 26AS discrepancy.
• TDS Amount: Add up TDS from all your salary slips for the year. This total must match the TDS shown in Part A and in Form 26AS.
• Gross Salary: The gross salary in Part B should broadly match your CTC or offer letter figures.
• Deductions: Every investment proof you submitted (80C, 80D, etc.) must appear correctly in Part B.
• Regime Used: Check whether your employer deducted TDS under the Old Regime or New Regime. You can switch at the time of filing your return.

Critical Due Dates for FY 2025-26 — Mark Your Calendar

Screenshot or bookmark these dates right now. Missing any one of them has financial consequences.

AIS & Form 26AS — Download These Before Filing

Before you touch your ITR form, download and review two documents from the income tax portal: Form 26AS and the Annual Information Statement (AIS). Skipping this step is the single biggest mistake salaried employees make.

Form 26AS

Form 26AS is your consolidated tax statement — essentially a tax passbook. Access it at incometax.gov.in → My Account → View 26AS. It shows TDS deducted by all deductors (employer, bank, tenant), advance tax payments, self-assessment tax paid, and refunds received in prior years.

AIS — Annual Information Statement

AIS is the upgraded version. Access it at incometax.gov.in → Services → AIS. It contains a far more detailed picture: your salary, all interest income (savings, FD, RD), dividends, mutual fund transactions, property transactions, and more.

If any AIS entry is wrong: Go to incometax.gov.in → AIS → Submit Feedback → mark as “Incorrect” or “Duplicate.” Do this before filing your ITR to avoid complications.

New Tax Regime vs Old Tax Regime — AY 2026-27

The most discussed — and most confusing — question every filing season: which tax regime should you choose? Here is a complete side-by-side breakdown.

New Tax Regime — Section 115BAC

Old Tax Regime — Three Age Categories

The Old Regime has different slab structures depending on your age. This is a critical detail that many guides miss.

Old Regime also allows rebate u/s 87A (max ₹12,500 if income ≤ ₹5L) and a standard deduction of ₹50,000. Most importantly, deductions like 80C, 80D, HRA, home loan interest, and NPS are available only in the Old Regime.

When Should You Switch to Old Regime? Breakeven Analysis

The simple rule: if your total deductions exceed the breakeven amount for your income level, the Old Regime is likely better.

Month-by-Month Action Plan: April to July 2026

ITR filing is not a one-day activity — it is a four-month process. Here is exactly what to do each month.

April 2026 — Gather & Verify

Start in April itself. Do not wait for Form 16. Download Form 26AS and AIS. Collect all 12 salary slips (April 2025 to March 2026). Gather bank statements from all accounts. Collect 80C proofs (PPF passbook, ELSS statements, LIC receipts, EPF certificate, tuition fee receipts). Get health insurance premium receipts for 80D. If you have a home loan, request the FY 2025-26 repayment certificate from your bank showing principal and interest separately. HRA claimants should organize rent receipts — landlord PAN is mandatory if annual rent exceeds ₹1,00,000.

May 2026 — Reconcile & Calculate

Match your AIS entries against actual income. If any entry is wrong, submit feedback on the portal. Cross-check TDS in Form 26AS against your salary slips — a discrepancy means your employer has not deposited tax, which is a serious issue. Calculate total interest income: savings bank interest (deductible up to ₹10,000 under 80TTA in Old Regime), and FD interest (fully taxable — this is the most missed item). If you sold any mutual funds or stocks, get the Capital Gains Statement from your broker. Calculate dividend income from AIS. Do your Old vs New Regime calculation this month — do not leave it for July. If you changed jobs, collect Form 16 from both employers.

June 2026 — Get Form 16 & Final Prep

Follow up with HR for Form 16 — the legal deadline is 15 June. Once received, verify Part A against Form 26AS and Part B against your investment proofs. Collect Form 16A from banks (for FD TDS). If you sold property or received rent, collect Form 16B or 16C. Finalize your regime decision. If Form 16 is not received by 20 June, do not wait — file using salary slips, Form 26AS, and AIS.

July 2026 — File Your ITR

Log in to incometax.gov.in. Verify the pre-filled data carefully — do not blindly submit. Select the correct ITR form. Enter all income and deductions. Pay any remaining self-assessment tax via Challan 280 before submitting. Submit the return and e-verify within 30 days (Aadhaar OTP is the fastest method). Download the ITR-V acknowledgement and save it permanently.

Which ITR Form Should You File?

Filing the wrong form results in a “defective return” and an immediate notice to re-file. Here is how to choose correctly.

Key Deductions Under Old Regime — Quick Reference

These deductions are not available in the New Tax Regime, except 80CCD(2) and 80CCH. If you are filing under the Old Regime, make sure you claim every applicable deduction.

Penalties & Interest for Missing the ITR Deadline

The financial cost of missing the deadline goes well beyond the late filing fee. Here is the complete picture.

Benefits Lost Permanently if Filed Late

• Loss carry-forward: Business losses, capital losses, and speculative losses cannot be carried forward to the next year if ITR is filed after the due date.
• Refund interest loss: Filing on time gives you refund interest from 1 April. Late filing means you only get interest from the actual filing date — losing several months of interest.
• Deductions u/s 80-IA, 10AA: Certain specific business deductions are denied if the return is not filed within the due date under Section 139(1).

Income Tax Refund — How Long Does It Take?

ITR refunds are processed by the Centralised Processing Centre (CPC) in Bengaluru after e-verification. The typical timeline after e-verification is 2 to 4 weeks if there are no discrepancies.

7 Common Mistakes That Trigger Income Tax Notices

These are the most frequent reasons salaried employees receive income tax notices. Avoid even one of them.

1. 1

   Not Checking AIS Before Filing

   The income tax department receives information about your income from multiple sources. If your AIS shows ₹50,000 in FD interest and your ITR does not, a notice is practically guaranteed. Always reconcile your ITR against AIS before submitting.

2. 2

   Not Declaring FD Interest Income

   Banks deduct 10% TDS on FD interest, but your actual tax rate may be 20% or 30%. The full FD interest must be declared as income — the TDS already deducted is adjusted, but the remaining tax must be paid by you.

3. 3

   Ignoring Previous Employer’s Form 16

   If you changed jobs during FY 2025-26, income from both employers must be clubbed together. Filing only the current employer’s figures results in under-reporting of income — a direct trigger for an income tax notice.

4. 4

   Choosing the Wrong ITR Form

   Sold even one unit of a mutual fund or stock during the year? ITR-1 is invalid. You must file ITR-2. Filing the wrong form leads to a defective return notice — and the clock starts ticking from the moment you file.

5. 5

   Filing Without E-Verification

   An ITR that is filed but not e-verified is not considered filed at all. You have 30 days from the date of filing to e-verify. Aadhaar OTP is the fastest and easiest method.

6. 6

   Defaulting to New Regime Without Calculation

   Many people choose the New Regime simply because it is the default. But if you have a home loan, HRA, 80C investments, and parents’ health insurance, the Old Regime often saves significantly more tax. Always calculate under both before deciding.

7. 7

   Not Declaring Dividend Income

   Since FY 2020-21, dividends from stocks and mutual funds are fully taxable in the hands of the investor. The AIS will show this information. Not declaring it is a matching mismatch and will attract a notice.

ITR Due Date Amendment — Finance Bill 2025

This is the most significant procedural change for FY 2025-26. The Finance Bill 2025 proposes an amendment to Section 139(1) of the Income Tax Act, effective from 1 March 2026 for AY 2026-27.

Who Gets the 31 August Extension?

• Taxpayers with business or profession income whose accounts are not required to be audited
• Partners of firms whose accounts are not required to be audited (and their spouses, if Section 10 applies)
• Trusts not required to get an audit — also extended per Explanation-2 to Section 139(1)

Who Does NOT Get the Extension?

• Individuals filing ITR-1 or ITR-2 (salaried employees) — your due date remains 31 July 2026
• Companies — their date remains 31 October
• Audit-required businesses — their date remains 31 October

Advance Tax — Who Needs to Pay?

Many salaried employees assume advance tax does not apply to them. This is not always correct. If your estimated tax liability for FY 2025-26 — after all TDS credits — exceeds ₹10,000, advance tax must be paid.

Who Needs to Check for Advance Tax

• Employees with freelance or consulting income in addition to salary
• Those with rental income (residential or commercial property)
• Those with capital gains from shares, mutual funds, or property
• Those with FD or other interest income where TDS was not deducted or was deducted at a lower rate
• Those receiving significant dividend income

Advance Tax Instalments for FY 2025-26

Your Complete ITR Filing Checklist — FY 2025-26

Click each item to mark it as done. Or download the PDF checklist for a printable version.