A comprehensive reference covering direct and indirect tax provisions for FY 2025-26 — presented in plain language with accurate figures, applicable sections, and practical context.
₹12.75L
Zero tax up to
5 tiers
GST rate slabs
12.5%
LTCG on equity
20+
Sections covered
Direct taxes are levied on income and profits and paid directly by the taxpayer to the government. This includes income tax, capital gains tax, and TDS provisions — all governed by the Income Tax Act, 1961 and administered by the Central Board of Direct Taxes (CBDT).
The New Regime is now the default for all taxpayers. It offers lower tax rates but does not permit most deductions (80C, HRA, LTA, etc.). Budget 2025 significantly enhanced this regime by raising the rebate threshold to ₹12 lakh, making it highly attractive for most salaried individuals.
| Income Range | Tax Rate |
|---|---|
| ₹0 – ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Section 87A Rebate
Zero tax for income up to ₹12,00,000 (resident individuals)
Standard Deduction
₹75,000 for salaried employees and pensioners
Health & Education Cess
4% on total tax payable (all taxpayers)
NPS Employer Contribution
Up to 14% of basic salary — deductible u/s 80CCD(2)
Pro Tip
Effective tax liability is nil for salaried individuals with gross income up to ₹12,75,000 (₹12L rebate + ₹75K standard deduction). This is the key benefit introduced in Budget 2025.
The Old Regime applies higher tax rates but permits a wide range of deductions under Chapter VI-A (80C, 80D, 80E, etc.), HRA, LTA, and home loan interest. It may be more beneficial for taxpayers with significant investments, insurance premiums, or housing loan obligations.
Individuals Below 60 Years
| Income Range | Tax Rate |
|---|---|
| ₹0 – ₹2,50,000 | 0% |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior Citizen (60–80 yrs)
₹3,00,000 exemption
Super Senior Citizen (80+ yrs)
₹5,00,000 exemption
Section 87A Rebate
Up to ₹5,00,000 income
Important
The Old Regime is now opt-in. Taxpayers must explicitly select it at the time of ITR filing. Those with business income must file Form 10-IEA before the due date.
Deductions under Chapter VI-A allow taxpayers to reduce their gross total income before computing tax liability. These are available exclusively under the Old Regime and require proper documentation and investment proof.
PPF, ELSS, LIC premium, EPF, NSC, home loan principal repayment, tuition fees
Health insurance premiums for self, spouse, children, and parents (higher limit for senior citizen parents)
NPS contributions — over and above the ₹1.5L limit under Section 80C
House Rent Allowance exemption for salaried employees paying rent. Requires rent receipts.
Interest on housing loan for self-occupied property. Higher deduction for let-out property.
Interest on education loan for higher studies — deductible for up to 8 consecutive years
Donations to approved charitable institutions and relief funds. Subject to qualifying limits.
Available to all salaried employees and pensioners. No documentation required.
Pro Tip
Maximum theoretical deduction under Old Regime: 80C (₹1.5L) + 80D (₹25K) + 80CCD(1B) (₹50K) + HRA + Home Loan Interest = potentially ₹3L+ in deductions. Consult a CA to optimise your tax position.
TDS is a mechanism under which the payer deducts tax at the time of making payment and deposits it with the government. The deductee can claim credit for TDS against their final tax liability while filing the ITR. Excess TDS results in a refund.
| Nature of Payment | Section | TDS Rate |
|---|---|---|
| Salary | 192 | As per applicable slab |
| Bank FD Interest | 194A | 10% |
| Rent — Individual/HUF | 194IB | 2% |
| Professional / Technical Fees | 194J | 10% |
| Commission / Brokerage | 194H | 5% |
| Dividend | 194 | 10% |
| Lottery / Game Show Winnings | 194B | 30% |
| Crypto / Virtual Digital Assets | 194S | 1% |
Note
Verify your TDS credits in Form 26AS or the Annual Information Statement (AIS) on the Income Tax e-filing portal (incometax.gov.in). Discrepancies should be resolved before filing your ITR.
Capital gains arise on transfer of capital assets such as equity shares, mutual funds, immovable property, and gold. The applicable tax rate depends on the holding period and nature of the asset. The Finance Act 2024 revised rates effective 23 July 2024.
Listed Equity Shares & Equity-Oriented Mutual Funds
STCG — Holding period < 12 months
Section 111A — STT paid transactions
LTCG — Holding period > 12 months
Section 112A — Gains exceeding ₹1,25,000
Immovable Property & Other Capital Assets
STCG — Holding period < 24 months
Added to total income; taxed at applicable slab rate
LTCG — Holding period > 24 months
Section 112 — Indexation benefit removed (FA 2024)
Virtual Digital Assets (Crypto)
30% flat on gains + 1% TDS u/s 194S. No deduction for losses.
LTCG Exemption — Section 54
Reinvest property gains in a new residential property to claim exemption
LTCG Equity — Annual Exemption
₹1,25,000 per year on equity LTCG is exempt from tax
Important
Finance Act 2024 removed the indexation benefit for property LTCG, effective 23 July 2024. The rate is now 12.5% without indexation. For properties acquired before 2001, the impact may be significant. Seek professional advice before any property transaction.
Advance tax is payable in four instalments during the financial year when the estimated tax liability exceeds ₹10,000. Failure to pay advance tax results in interest under Section 234B (1% per month on shortfall) and Section 234C (1% per month on deferred instalment). Salaried individuals whose entire income is subject to TDS are generally exempt.
15%
15 June
1st Instalment
45%
15 Sept
2nd Instalment
75%
15 Dec
3rd Instalment
100%
15 March
Final Payment
ITR Filing Deadline (Non-Audit Cases)
31 July of the Assessment Year
ITR Filing Deadline (Audit Cases)
31 October of the Assessment Year
Late Filing Fee — Section 234F
₹5,000 (reduced to ₹1,000 if total income ≤ ₹5,00,000)
Belated / Revised ITR Deadline
31 December of the Assessment Year
Note
For FY 2025-26 (AY 2026-27), the ITR filing deadline for non-audit cases is 31 July 2026. Filing on time avoids late fees, interest, and loss of certain carry-forward benefits.
Indirect taxes are embedded in the price of goods and services and collected by businesses on behalf of the government. GST, introduced in 2017, is the primary indirect tax in India, governed by the CGST Act, 2017 and administered by the Central Board of Indirect Taxes and Customs (CBIC).
GST is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services. It replaced a fragmented indirect tax structure (VAT, Service Tax, Central Excise, etc.) with a unified framework. Tax revenue accrues to the state where goods or services are consumed, not where they originate.
CGST
Central GST
Levied by the Centre on intra-state supply of goods and services.
SGST
State GST
Levied by the State on intra-state supply. Collected alongside CGST.
IGST
Integrated GST
Levied by the Centre on inter-state supply and imports. Revenue shared with states.
UTGST
Union Territory GST
Applicable in Union Territories without a legislature, in lieu of SGST.
Note
For intra-state transactions, CGST and SGST are levied in equal proportion (e.g., 18% GST = 9% CGST + 9% SGST). For inter-state transactions, IGST at the combined rate is levied and subsequently apportioned between Centre and State.
The GST Council periodically reviews and revises rate classifications. Essential commodities attract nil or lower rates, while luxury and demerit goods attract the highest rate plus an additional cess. The following represents the current rate structure:
Levied over and above 28% on luxury and demerit goods:
Note
Food delivery platforms (Zomato, Swiggy) are liable to collect and pay GST at 5% on restaurant services ordered through their platform, effective 1 January 2022. This is distinct from the rate applicable when dining directly at a restaurant.
GST registration is mandatory once aggregate turnover crosses the prescribed threshold. Certain categories of suppliers (e-commerce operators, inter-state suppliers) must register regardless of turnover. Voluntary registration is also permitted and may be beneficial for ITC claims.
Suppliers of Goods
₹40 Lakh/year
Reduced to ₹20L for special category states (North-East and hilly states)
Suppliers of Services
₹20 Lakh/year
Reduced to ₹10L for special category states
E-Commerce Sellers
No threshold
Mandatory from the first transaction, irrespective of turnover
Inter-State Suppliers
No threshold
Any inter-state supply of goods or services requires mandatory registration
Composition Scheme — Simplified Compliance for Small Businesses
Eligible for taxpayers with aggregate turnover below ₹1.5 Crore (goods) or ₹50 Lakh (services). Allows payment of tax at a flat rate on turnover with quarterly return filing. However, the taxpayer cannot collect GST from customers or avail Input Tax Credit.
1%
Manufacturers
1%
Traders
5%
Restaurants
Pro Tip
GST registration is completed online at gstin.gov.in. Processing typically takes 3–7 working days. Upon approval, a 15-digit GSTIN is issued, which must be quoted on all tax invoices.
Registered taxpayers are required to file periodic returns disclosing outward and inward supplies, tax liability, and ITC claims. Late filing attracts a late fee of ₹50 per day (₹20 per day for nil returns) plus interest at 18% per annum on unpaid tax.
| Return Form | Purpose | Due Date |
|---|---|---|
| GSTR-1 | Statement of outward supplies (sales) | 11th of following month (monthly) / 13th under QRMP scheme |
| GSTR-3B | Summary return with tax payment | 20th of following month (monthly) / 22nd–24th (quarterly) |
| GSTR-9 | Annual return — mandatory for turnover above ₹2 Crore | 31 December of the subsequent financial year |
| GSTR-9C | Reconciliation statement — mandatory for turnover above ₹5 Crore | 31 December of the subsequent financial year |
| CMP-08 | Quarterly statement for composition scheme taxpayers | 18th of the month following the quarter |
Input Tax Credit (ITC) — Mechanism & Restrictions
ITC allows registered taxpayers to offset the GST paid on inputs and input services against the GST liability on output supplies. This eliminates the cascading effect of tax-on-tax. ITC is available only when the supplier has filed their GSTR-1 and the credit appears in the recipient's GSTR-2B.
✓ ITC Eligible
Business purchases and inputs
Capital goods used for business
Input services for business purposes
✗ ITC Blocked (Section 17(5))
Personal consumption items
Food, beverages and outdoor catering
Club memberships and health services
Motor vehicles (with exceptions)
Important
Late fee for GSTR-3B: ₹50 per day (₹20 per day for nil returns). Interest on unpaid tax: 18% per annum. Timely filing is essential to avoid accumulation of penalties and to preserve ITC eligibility.
Certain indirect taxes were excluded from the GST framework, either due to constitutional constraints or policy considerations. These continue to be levied independently and can significantly impact transaction costs.
Customs Duty
Levied on import of goods into India. Comprises Basic Customs Duty (BCD), IGST on imports, and in certain cases, Anti-Dumping Duty or Safeguard Duty. Rates vary by HS code — electronics: 10–20%; luxury goods: up to 100% or more.
Excise Duty on Petroleum Products
Petrol and diesel remain outside GST. The Centre levies Central Excise Duty and states levy VAT on these products. The cumulative tax burden on fuel is substantial and varies by state, which is why pump prices differ across India.
Stamp Duty
A state-level tax on instruments such as property sale deeds, agreements, and bonds. Rates range from 3% to 8% of the property value depending on the state and type of transaction. Registration charges are levied separately.
Securities Transaction Tax (STT)
Levied on transactions in listed securities on recognised stock exchanges. Equity delivery: 0.1% (buy + sell). Intraday equity: 0.025% (sell side). Futures: 0.0125% (sell side). Options: 0.0625% on premium (sell side).
Important
On-road price of a vehicle includes GST (28% + cess up to 22%), road tax (state-specific, 4–20%), and registration charges. The effective tax incidence on a luxury vehicle can exceed 50% of the ex-showroom price.
Legal Disclaimer
This page is intended for general educational and informational purposes only. The content reflects Indian tax laws as of FY 2025-26 (AY 2026-27) and is based on publicly available legislative provisions. Tax laws are subject to frequent amendments — always consult a qualified Chartered Accountant or tax professional for advice specific to your circumstances. CATaxServices.in does not accept liability for any decisions made in reliance on this content.
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