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Module 1 — Income tax basics in plain English
Financial Year (FY) vs Assessment Year (AY)
These two terms confuse almost everyone, but the idea is simple:
- Financial Year (FY 2025-26): the year in which you earn your money — 1 April 2025 to 31 March 2026.
- Assessment Year (AY 2026-27): the year in which you file your return and are assessed on that income — 1 April 2026 to 31 March 2027.
So the return you file in 2026 for money earned during 2025-26 is the return "for AY 2026-27".
New tax regime vs old tax regime
Since the new regime is now the default, most people start there and only switch to the old regime if their deductions are large enough to beat it.
| New regime (default) | Old regime | |
|---|---|---|
| Basic exemption | Up to ₹4 lakh (nil slab), lower rates above | ₹2.5 lakh (₹3L / ₹5L for senior / super-senior) |
| Standard deduction (salary) | ₹75,000 | ₹50,000 |
| Common deductions | Most removed (no 80C, 80D, HRA); 80CCD(2) employer NPS still allowed | Full range — HRA, ₹1.5L under 80C, ₹25k–50k under 80D, home-loan interest up to ₹2L under Section 24 |
| Best for | Those with few deductions / simpler finances | Those with large deductions (rent, home loan, investments) |
Not sure which wins for you? Compare side by side in the new vs old regime guide or run the numbers in the ITR calculator.
Module 2 — The 5 heads of income
Indian tax law sorts every rupee you earn into one of five "heads". Your total (gross) income is the sum of all five.
1. Income from Salary
Basic pay, allowances and perquisites from an employer. Key reliefs: the HRA exemption under Section 10(13A), LTA, and the standard deduction of ₹75,000 (new regime).
2. Income from House Property
Self-occupied: annual value is nil, and you can deduct home-loan interest up to ₹2 lakh (old regime). Let-out: rent is taxable after a flat 30% standard maintenance deduction and full interest.
3. Profits & Gains of Business or Profession (PGBP)
Income from a business or profession. You either keep regular books of accounts, or opt for presumptive taxation — Section 44AD for small businesses (turnover up to ₹3 crore) or Section 44ADA for professionals/freelancers (receipts up to ₹75 lakh).
4. Capital Gains
- Listed equity / stocks: short-term (STCG) under Section 111A at 20%; long-term (LTCG) under Section 112A at 12.5% above the ₹1.25 lakh annual exemption.
- Real estate, gold, unlisted shares: different holding periods and rates apply; read the capital gains guide for indexation and slab treatment.
5. Income from Other Sources
Bank savings interest (with the 80TTA / 80TTB deduction), FD interest, dividends, lottery and quiz winnings (flat 30%), and Virtual Digital Assets / crypto — taxed at a flat 30% with no loss set-off.
Interactive: Gross Income Calculator
Add up income across the five heads to see your indicative gross total income. Runs entirely in your browser — nothing is sent anywhere.
Gross total income
Indicative gross income only — before Chapter VI-A deductions and before applying slab rates. Use the ITR calculator for the actual tax.
Module 3 — Interactive ITR form selector
Tick everything that applies to you for FY 2025-26. The tool suggests the ITR form you most likely need. It assumes you are a resident individual; firms, LLPs, companies and trusts use ITR-5/6/7.
Suggested ITR form
Select what applies
Tick the boxes on the left to see which form fits your situation.
This is guidance, not a filing. Confirm on the portal and see the full which ITR form comparison.
ITR-5, 6 and 7 — quick reference
| Form | Who files it |
|---|---|
| ITR-5 | Firms, LLPs, AOPs and BOIs (not individual returns). |
| ITR-6 | Companies other than those claiming exemption under Section 11. |
| ITR-7 | Trusts, charitable institutions and entities filing under Sections 139(4A)–(4D). |
Module 4 — ITR schedules dictionary
Each ITR form is a set of "schedules" — one block per type of income, deduction or disclosure. Filter the key ones below. For the full map of schedule vs form, see the ITR schedules guide.
Schedule FA — Foreign Assets
Reports foreign holdings: US stocks, RSUs/ESOPs, foreign bank accounts and overseas property.
Who: resident & ordinarily resident holding any foreign asset.
Skipping it can trigger severe penalties under the Black Money Act.
Schedule CG — Capital Gains
Breaks down purchase price, sale consideration and short- vs long-term gains.
Who: anyone who sold shares, mutual funds, property, gold or other capital assets.
Skipping it understates income and commonly triggers an AIS mismatch notice.
Schedule OS — Other Sources
Dividend income, savings and FD interest, winnings and crypto/VDA gains.
Who: almost every filer with bank interest or dividends.
Omitting interest/dividends is the most common cause of AIS mismatches.
Schedule VI-A — Deductions
Itemises Chapter VI-A deductions: 80C, 80D, 80G, 80TTA/80TTB, 80CCD(1B).
Who: old-regime filers claiming deductions.
Claiming without proof can lead to disallowance and an RMF refund hold.
Schedule CYLA & BFLA — Loss Set-off
Current-year loss adjustment (CYLA) and brought-forward loss adjustment (BFLA) against eligible income.
Who: those setting off stock-market or business losses.
Errors here can forfeit a legitimate loss set-off.
Schedule AL — Assets & Liabilities
Discloses assets and liabilities at year-end.
Who: mandatory if total taxable income exceeds ₹50 lakh.
Non-disclosure above the threshold makes the return defective.
Schedule CFL — Carry Forward of Losses
Tracks losses being carried forward to set off in future assessment years.
Who: filers with unabsorbed losses to carry forward.
Miss it and you may lose the right to carry the loss forward.
Schedule GST — Turnover Reconciliation
Reports turnover reconciled with GST return filings.
Who: business filers with GST-reported turnover.
Mismatches with GST data can invite scrutiny.
Module 5 — Frequently asked questions
What happens if I get a notice for missing Schedule FA in my return?
Not disclosing foreign assets in Schedule FA can attract penalties under the Black Money (Undisclosed Foreign Income and Assets) Act, which are far harsher than ordinary income-tax penalties. If you missed it, file a revised return disclosing the foreign assets and respond to any communication through the portal. See our guide to decoding tax notices.
Why did I receive a Risk Management Framework (RMF) refund hold notice?
The department's system paused your refund because a claim looks unusually large or does not match employer data — for example HRA, 80C or 80D higher than in Form 16. Verify your proofs and respond under e-Proceedings, or file a revised return under Section 139(5) if you over-claimed.
Can I switch between the old and new tax regimes every year?
Salaried individuals with no business income can generally choose the regime each year while filing. Taxpayers with business or professional income face restrictions on switching back to the new regime once they opt out, and may need to file Form 10-IEA.
How is crypto taxed in India for FY 2025-26?
Gains on Virtual Digital Assets are taxed at a flat 30% plus cess, with no deduction other than cost of acquisition and no set-off of losses against other income. A 1% TDS under Section 194S also applies to transfers above the prescribed threshold.
Ready to run your numbers?
Take what you learned here and compute your actual tax under both regimes.
Open the ITR Calculator → Which ITR form?