ITR Filing Guide for Salaried Employees in India 2026 — Step by Step

Published on: 18 April 2026 at 3:00 AM IST | By: Sunshine Accountancy & Co. Tax Team, Hyderabad

If you are a salaried employee in India, filing your Income Tax Return (ITR) is an annual obligation — and an opportunity to claim refunds if excess TDS has been deducted. This step-by-step guide covers everything a salaried individual needs to know about ITR filing for the assessment year 2027-28 (financial year 2026-27): which form to use, which documents you need, how to choose between the old and new tax regimes, and how to file online on the Income Tax Department portal.

This guide is written specifically for salaried professionals in India — whether you work in IT, banking, manufacturing, healthcare, or any other sector. If you have only salary income, one house property, and other sources like interest or dividends, this guide is for you.

Which ITR Form Should Salaried Employees Use?

The correct ITR form depends on your income sources and total income:

ITR-1 (Sahaj)

Use ITR-1 if ALL of the following apply to you:

• Your total income is up to ₹50 lakh.
• Income sources are limited to: salary/pension, one house property (not loss carried forward), other sources (interest, dividends up to ₹5,000).
• You are a resident individual (not NRI).
• You do NOT have capital gains from mutual funds, stocks, or property.
• You do NOT have income from more than one house property.
• You are NOT a director in a company or hold unlisted equity shares.

ITR-2

Use ITR-2 if any of the following apply:

• You have capital gains (from selling mutual funds, shares, property, gold, etc.).
• You have income from more than one house property.
• You have foreign income or foreign assets.
• Your total income exceeds ₹50 lakh.
• You are a director in a company or hold unlisted equity shares.
• You are an NRI with Indian income.

Most salaried employees with mutual fund or stock market investments will need ITR-2, not ITR-1.

What Documents Do You Need for ITR Filing?

Gather these documents before starting your ITR filing:

From Your Employer

• Form 16: The TDS certificate from your employer showing salary details and tax deducted. This is the single most important document for salaried ITR filing.
• Salary Slips: Monthly payslips showing basic salary, HRA, special allowance, LTA, and other components.

From the Income Tax Portal

• Annual Information Statement (AIS): Download from the IT portal under Services → AIS. This shows all transactions reported by banks, mutual funds, employers, and other entities.
• Form 26AS: Your tax credit statement showing all TDS deducted by your employer, banks, and other deductors. Access from Services → View Form 26AS.
• Tax Information Summary (TIS): The processed version of AIS with aggregated and categorised information.

Investment and Deduction Proofs

• Section 80C: PPF passbook, ELSS statement, life insurance premium receipt, tuition fee receipt, home loan principal certificate.
• Section 80D: Health insurance premium receipt (self, spouse, children, parents).
• Section 80CCD(1B): NPS Tier-I contribution receipt (for additional ₹50,000 deduction).
• Section 24(b): Home loan interest certificate from your bank.
• HRA Exemption: Rent receipts, landlord PAN (if rent exceeds ₹1 lakh/year), rental agreement.
• Section 80E: Education loan interest certificate.
• Section 80G: Donation receipts with 80G registration number.

Other Documents

• Bank statements for all accounts (savings, FD, RD interest).
• Broker/demat statement if you have capital gains (Zerodha, Groww, Angel One P&L report).
• Dividend statements from mutual funds and shares.
• Rental income agreement and property tax receipts (if you have house property income).

How to Choose Between Old and New Tax Regimes

This is the most important decision in your ITR filing. The wrong choice can cost you thousands in extra tax.

New Tax Regime (Default)

The new regime is the default from FY 2023-24 onwards. It offers lower slab rates but allows very few deductions:

• ₹0 – ₹4,00,000: Nil
• ₹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%

Standard deduction of ₹75,000 is available. NPS employer contribution under 80CCD(2) is allowed. Most other deductions (80C, 80D, HRA, LTA) are NOT available.

Old Tax Regime

The old regime has higher slab rates but allows all deductions and exemptions:

• ₹0 – ₹2,50,000: Nil
• ₹2,50,001 – ₹5,00,000: 5%
• ₹5,00,001 – ₹10,00,000: 20%
• Above ₹10,00,000: 30%

You can claim 80C (₹1.5 lakh), 80D (₹25,000-₹1 lakh), HRA exemption, LTA, home loan interest (₹2 lakh), NPS (₹50,000 under 80CCD(1B)), and all other deductions.

When to Choose Old Regime

The old regime is typically better if your total deductions and exemptions exceed approximately ₹3.75 lakh. This commonly happens when you have: HRA exemption (₹1-3 lakh depending on rent and salary), 80C investments (₹1.5 lakh), health insurance 80D (₹25,000-₹50,000), and home loan interest (up to ₹2 lakh). Use our free tax regime calculator to check your exact savings under both regimes.

How to File ITR Online — Step-by-Step Process

1. Log in to the IT Portal: Visit incometax.gov.in and log in with your PAN and password.
2. Go to e-File: Click e-File → Income Tax Returns → File Income Tax Return.
3. Select Assessment Year: Choose AY 2027-28 for FY 2026-27 income.
4. Choose Filing Mode: Select “Online” for filing directly on the portal.
5. Select ITR Form: The portal may pre-select ITR-1 or ITR-2 based on your data. Verify it matches your income sources.
6. Choose Tax Regime: Select old or new regime. You can switch at the time of filing (salaried employees can change their regime choice when filing ITR, regardless of what was declared to the employer).
7. Pre-fill Data: Click “Pre-fill” to auto-populate salary, TDS, interest, and other data from your AIS and 26AS.
8. Verify Pre-filled Data: Cross-check every figure against your Form 16 and bank statements. Correct any discrepancies.
9. Enter Deductions: Add all applicable deductions under Chapter VI-A (80C, 80D, 80E, 80G, etc.) if filing under the old regime.
10. Enter House Property Details: If you have rental income or home loan interest, enter the details in the House Property section.
11. Enter Capital Gains: If filing ITR-2, enter capital gains from mutual funds, stocks, property, etc.
12. Compute Tax: The portal calculates your total income, tax liability, and refund/tax due. Review the computation carefully.
13. Pay Tax Due: If additional tax is payable, generate a challan and pay before filing.
14. Submit and Verify: Submit the return and e-verify using Aadhaar OTP (fastest), net banking, or DSC. E-verification must be done within 30 days of filing.

How to Reconcile AIS With Your Form 16 and Bank Statements

AIS reconciliation is the most critical pre-filing step. The Income Tax Department uses AIS data to cross-verify your return. Any mismatch can trigger a notice. Here is how to reconcile:

1. Download AIS from the portal and open the PDF or CSV.
2. Check salary reported in AIS against Form 16 Part B. They should match.
3. Check interest income (savings, FD, RD) against your bank statements and certificates.
4. Check dividend income against your demat/broker statements.
5. Check any sale of securities reported against your actual trades.
6. If you find any incorrect entry in AIS, submit feedback on the portal marking it as “Information is not fully correct” or “Information relates to other person.” The submitted feedback is considered during processing.

Common ITR Filing Mistakes Salaried Employees Make

• Not Reporting All Bank Accounts: You must disclose all bank accounts (except dormant accounts) in your ITR. Missing even one account can trigger a notice.
• Ignoring AIS Data: If AIS shows income you have not reported (like FD interest or dividend), the department will flag it.
• Wrong ITR Form: Filing ITR-1 when you have capital gains results in a defective return notice under Section 139(9).
• Not Claiming All Deductions: Under the old regime, ensure you claim every eligible deduction — 80C, 80D, 80CCD(1B) for NPS, 80E for education loan, 80G for donations.
• Not E-Verifying: Filing is not complete until you e-verify. If you miss the 30-day window, your return is treated as not filed.
• Filing Under the Wrong Regime: If you declared the new regime to your employer but your deductions make the old regime better, you can still switch when filing ITR. Do not assume you are locked in.

What Happens After You File Your ITR?

After successful e-filing and e-verification:

• You receive an ITR-V acknowledgement at your registered email.
• The CPC (Centralised Processing Centre) in Bangalore processes your return — typically within 30-60 days.
• You receive an Intimation under Section 143(1) — either accepting your return as filed or making adjustments.
• If a refund is due, it is credited to your linked bank account within 30-45 days of processing.
• If there are discrepancies, you may receive a notice for clarification or additional information.

Need Professional Help With Your ITR Filing?

Sunshine Accountancy & Co. has been filing income tax returns for salaried professionals and business owners across Hyderabad since 1994. We handle AIS reconciliation, regime comparison, deduction optimisation, and e-filing — all for a fraction of the cost of a missed deduction. ITR-1 filing starts at ₹999.

Call us: +91 96763 13137 | Email: hello@sunshineaccountancy.com

Book a Free Tax Consultation

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