Indian income tax is levied on your total income from five heads: salary, house property, business or profession, capital gains and other sources. Your residential status decides what income is taxable, you choose between the new (default) and old tax regimes, tax is collected through TDS and advance tax, and you file an annual return. The Income-tax Act, 2025 applies from the tax year starting 1 April 2026.
The five heads of income
| Head | Examples |
|---|---|
| Salary | Wages, allowances, perquisites |
| House property | Rent from buildings |
| Business or profession | Trading, freelancing, consulting |
| Capital gains | Sale of shares, property, gold |
| Other sources | Interest, dividends, gifts |
Residential status
Residents are taxed on worldwide income; non-residents only on income earned or received in India. Status depends on days spent in India.
Old vs new regime
The new regime has lower rates and fewer deductions and is the default. The old regime allows deductions such as 80C, HRA and home loan interest.
Short on time? Leegal can handle Income Tax Basics for Beginners for you, end to end.
Get expert help →How tax is paid
- TDS deducted by employers, banks and payers
- Advance tax in instalments when liability after TDS is significant
- Self-assessment tax before filing
Filing your return
File the correct ITR form by the due date, e-verify it, and keep records of income and deductions.
Frequently asked questions
Who must pay advance tax?
Taxpayers whose tax liability after TDS is Rs 10,000 or more in a year, with exemptions for certain senior citizens without business income.
What is the new Income-tax Act, 2025?
A simplified replacement of the 1961 Act, using the concept of a tax year, effective from 1 April 2026.
Is agricultural income taxable?
Agricultural income is exempt but may be considered for rate purposes in certain cases.
What is AIS?
The Annual Information Statement lists income and transactions reported about you to the tax department.
Let Leegal handle your Income Tax Basics for Beginners
Documentation, filing and follow-up by a dedicated expert, so you can focus on running your business.
- Dedicated point of contact
- Transparent pricing
- Pan-India service