Salaried Employee Tax Guide — FY 2025-26
A plain-language guide for salaried employees in India. Understand your Form-16, claim the right deductions, and know which ITR form to file.
Who this guide is for
If you received a salary in FY 2025-26 (April 2025 – March 2026) and got a Form-16 from your employer, this guide is for you. Most salaried employees file ITR-1 (the simplest form). If you also sold shares or property, you need ITR-2 — this guide explains the difference.
Step 1 — Get your Form-16
Form-16 is a TDS certificate your employer must give you by June 15 every year. It has two parts:
- Part A: TDS deducted and deposited by your employer (from their records with the government)
- Part B: Your salary breakup — basic, HRA, allowances, deductions your employer applied
New regime vs old regime — which is right for you?
FY 2025-26 uses the new tax regime by default. You can choose the old regime if it saves you more money.
| Income Range | Old Regime Rate | New Regime Rate |
|---|---|---|
| Up to ₹2.5 lakh | 0% | 0% |
| ₹2.5L – ₹4L | 5% | 0% |
| ₹4L – ₹5L | 5% | 5% |
| ₹5L – ₹8L | 20% | 5% |
| ₹8L – ₹10L | 20% | 10% |
| ₹10L – ₹12L | 30% | 10% |
| ₹12L – ₹15L | 30% | 15-20% |
| Above ₹15L | 30% | 20-30% |
Standard deduction — what is it?
Every salaried employee gets an automatic ₹75,000 deduction (new regime, FY 2025-26) or ₹50,000 (old regime) from their taxable salary. You do not need to submit any proof — it's automatic. Your Form-16 already reflects this.
Deductions available in the old regime
| Section | What it covers | Maximum |
|---|---|---|
| Standard Deduction | Automatic for all salaried | ₹50,000 |
| Section 80C | PF, PPF, LIC, ELSS, home loan principal, tuition | ₹1,50,000 |
| Section 80CCD(1B) | NPS voluntary contribution | ₹50,000 |
| HRA Exemption | Rent paid (if you live in rented accommodation) | Calculated formula |
| Section 80D | Health insurance for self and family | ₹25,000 (₹50K if senior) |
| Section 80D — Parents | Health insurance or medical bills for parents | ₹50,000 |
| Section 24(b) | Home loan interest on self-occupied property | ₹2,00,000 |
| Section 80E | Education loan interest | Actual amount, 8 years |
| Section 80TTA | Savings account interest | ₹10,000 |
HRA (House Rent Allowance) explained
If you live in a rented house and receive HRA from your employer, you may not pay tax on the entire HRA amount. The exempt portion is the lowest of:
- Actual HRA received from employer
- 50% of basic salary (metro cities: Delhi, Mumbai, Kolkata, Chennai) or 40% (all other cities)
- Rent paid minus 10% of basic salary
Which ITR form do you file?
| Your situation | ITR Form |
|---|---|
| Only salary + interest income, total income below ₹50L | ITR-1 |
| Salary + capital gains from stocks/property, or income above ₹50L | ITR-2 |
| Salary + business/freelance income | ITR-3 |
| Multiple employers, same year | ITR-2 |
Common mistakes salaried employees make
- Not filing if TDS was already deducted. TDS is not the same as filing. You must file ITR to confirm your income and get a refund if over-deducted.
- Using ITR-1 when you sold shares. Any stock sale — even at a loss — requires ITR-2, not ITR-1.
- Missing 80D deduction. Health insurance for yourself and parents can save ₹10,000 – ₹25,000 in tax. Many people forget to claim it.
- Not verifying pre-filled data on the portal. The IT portal pre-fills income from your employer — but it may miss capital gains. Always add them manually.
- Missing the filing deadline (July 31). Late filing attracts ₹5,000 penalty. If income is below ₹5 lakh, penalty is ₹1,000.
Sponsored · PolicyBazaar
Save ₹15,000–50,000 in tax with health insurance
80D deduction up to ₹75,000 for family + senior parents. Compare plans.
Sponsored — MyTax may earn a referral commission at no cost to you.
Check your own tax situation
MyTax calculates your actual tax based on what you earned. Upload your Form-16 or enter details manually — free, private, no data stored.
Check my tax