The basics of income tax

What is income tax?

Income tax is money you pay to the Government of India out of what you earn in a year — your salary or pension, interest from your bank, or other ordinary income. The government works out how much you owe using a set of rules: a starting amount that isn't taxed at all, then rising rates ("slabs") on the rest.

This site helps you understand those rules and work out your own tax. It is for individuals who are resident in India for tax purposes and want to understand their tax in plain language — you don't need any background in finance or accounting to follow it.

What is a "tax year"?

From 1 April 2026, income tax in India is governed by a new law, the Income Tax Act, 2025, which replaces the older Income Tax Act, 1961. The new law uses one term, "tax year": the year in which you earn the income. It replaces the old law's "previous year" and "assessment year". Tax year 2026-27 covers income earned from 1 April 2026 to 31 March 2027.

This site currently covers tax year 2026-27 (1 April 2026 to 31 March 2027). Whenever we mention a section of the law, we show both the new section number and the matching reference under the old law, so you can look either one up.

What is "total income"?

Your total income (sometimes called taxable income) is not the same as what you actually earned. It is what is left after the law lets you subtract certain amounts — such as the standard deduction (a fixed amount every salaried person can subtract from their salary, with no bills or proof needed). Most other deductions are only available under the old regime (explained on the new vs old regime page). Tax is charged on this smaller number, not on everything you earned.