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Tax Rules
Updated: 15th August 2026•Income-tax Act, 2025 (TY 2026-27)

Income Tax Statutory Rules: Income Tax Act 1961 Framework & Provisions

आयकर अधिनियम 1961 वैधानिक नियम एवं धाराएं

Comprehensive reference guide to the core statutory provisions of the Income Tax Act 1961: 5 heads of income under Section 14, standard deductions, Section 87A rebate, Section 115BAC New Tax Regime mechanics, and marginal relief calculations.

Written by: Author Profile
Direct Tax & CA Review Panel

Chartered Accountancy Review Panel • Senior Direct Tax Review Desk

Reviewed & Fact-Checked by: Technical Review Panel
Tax Law & Dispute Review Desk

Tax Litigation & Legal Review Panel • Tax Appeal & Procedure Review Desk

Published: 1st April 2026•Last Updated: 15th August 2026•Last Reviewed: 15th August 2026

Key Statutory Highlights (FY 2026-27 (AY 2027-28))

Section 14: Classification of income under 5 distinct heads (Salaries, House Property, Profits & Gains of Business/Profession, Capital Gains, Other Sources).
Section 115BAC: Default New Tax Regime with progressive slabs and ₹75,000 standard deduction.
Tax Rebate: Section 156 provides full tax rebate on taxable income up to ₹12,00,000 in FY 2026-27 New Regime (Section 87A provided rebate up to ₹7,00,000 in historical FY 2025-26).
Section 89(1): Tax relief for salary arrears or advance salary received in the current financial year via Form 10E.
Marginal Relief: Available to taxpayers whose taxable income marginally exceeds surcharge thresholds (₹50L, ₹1Cr, ₹2Cr).

Who is Eligible & When Does it Apply?

Applicability #1

All taxable entities (Individuals, HUFs, AOPs, BOIs, Firms, Companies).

Step-by-Step Procedure & Compliance Roadmap

1

Aggregate Income under 5 Statutory Heads

Compute gross receipts under each distinct statutory head.

2

Apply Intra-Head & Inter-Head Loss Set-Off

Set off business and capital losses as per Sections 70 to 74.

3

Deduct Chapter VI-A Deductions

Apply eligible statutory deductions under chosen regime.

Mandatory Documents Checklist

Official Finance Act statutory notification, CBDT Circulars, ITR Computation Sheet

Common Mistakes & Compliance Risks to Avoid

•Setting off speculative business losses against salary or normal business income (disallowed u/s 73).

Frequently Asked Questions

What is Marginal Relief under Income Tax?

Marginal relief ensures that the additional tax payable (including surcharge) on income exceeding ₹50 Lakh or ₹1 Crore does not exceed the amount of income that exceeds the threshold.

Interactive Tax Calculators
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Related Tax Knowledge
New Tax Regime GuideCurrent Tax Slabs
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🛡️ Educational Disclaimer: FinSetu India is an independent educational guidance and calculation platform. Content is published for general citizen awareness based on applicable laws as of FY 2026-27 (AY 2027-28). We do not provide personalized legal/tax advice or file returns directly. Verify current applicable rules on official portals or consult a qualified Chartered Accountant / Tax Lawyer.