Salaried employees form the single largest category of individual taxpayers in India — and yet, year after year, a significant number of them file their ITRs incorrectly, miss claiming legitimate deductions, or overlook income sources that their employer did not account for in Form 16. For AY 2026–27 (FY 2025–26), the filing process has changed in meaningful ways: the new tax regime is the default, the standard deduction for salaried taxpayers has been increased to ₹75,000, the ITR portal's pre-filled data now draws from both Form 16 and the AIS, and e-verification must be completed within 30 days. As a CA in Mumbai handling ITR filing for hundreds of salaried professionals every season, this guide walks you through the complete process — from gathering documents to clicking submit — so you can file ITR online for AY 2026–27 accurately and on time.

Step 1 — Gather All Required Documents

Start collecting these documents by May–June 2026. Do not wait until July — employers typically issue Form 16 by June 15, and reconciling discrepancies takes time.

Step 2 — Understand What Form 16 Contains

Form 16 is issued by your employer and is the primary document for salaried ITR filing. It has two parts:

Form 16 Part A

Part A is generated from the TRACES portal and shows TDS deducted by your employer quarter-by-quarter and deposited against your PAN. Cross-check the figures in Part A against Form 26AS — they must match. If there is a discrepancy (employer deducted but did not deposit TDS), contact your employer's payroll or finance team immediately to get it corrected via a revised TDS return before you file your ITR.

Form 16 Part B

Part B is the salary certificate showing the breakdown of your salary: gross salary, allowances (HRA, LTA, special allowance), perquisites, deductions claimed (80C, 80D, home loan interest), and the net taxable income reported by your employer. Part B is employer-generated and should reflect the investments and declarations you submitted via Form 12BB during the financial year.

Important: Form 16 only covers salary income and TDS deducted by your employer. It does not include your bank interest, mutual fund gains, property income, or freelance income. You must add all these sources separately when filing your ITR.

Step 3 — Download and Reconcile Your AIS

Log in to incometax.gov.in → e-File → Income Tax Returns → View AIS. Download the AIS for AY 2026–27. The AIS shows all income sources the IT Department has information about — including salary TDS, bank interest, dividends, MF redemptions, and property transactions. Cross-check every entry against your actual documents. Submit feedback on any incorrect entries before filing. For a complete guide, see our dedicated article on How to Read & Reconcile Your AIS.

Step 4 — Compare New Regime vs Old Regime

For AY 2026–27, the new regime is the default. Before you file ITR online, use the IT portal's built-in regime comparison tool (available on the filing page) or the manual calculation method:

Choose New Regime if:	Choose Old Regime if:
Gross salary ≤ ₹12.75 lakh (zero tax under Section 87A rebate)	You have a home loan with significant interest (Section 24b up to ₹2L)
No home loan or HRA claim	You live in rented accommodation and claim HRA exemption
Minimal Section 80C investments (below ₹1 lakh)	You have full ₹1.5L Section 80C investments (PPF, ELSS, LIC, EPF)
High income (above ₹25L) with limited deductions	You pay NPS contributions (additional ₹50,000 under 80CCD(1B))
You want simplicity and lower compliance	Total deductions exceed ₹3.5–4 lakh

For a full analysis with real salary examples, see our article on New Regime vs Old Regime for AY 2026–27.

Step 5 — Determine the Correct ITR Form

Most salaried employees with only salary income, interest income, and no capital gains file ITR-1 (Sahaj). However, you must use ITR-2 if any of the following apply:

• You redeemed mutual funds or sold equity shares during FY 2025–26 (capital gains)
• You own more than one house property
• You are a director in a company
• You hold unlisted shares
• You have foreign assets or foreign income (ESOPs from parent company abroad)
• Your total income exceeds ₹50 lakh
• You have agricultural income above ₹5,000

Step 6 — File Your ITR Online on the IT Portal

Special Scenarios for Salaried Employees

Changed Jobs During FY 2025–26

If you switched employers during the year, you have two Form 16s — one from each employer. The critical issue: your new employer may not have accounted for the salary already received from your previous employer when computing TDS. This often leads to short TDS deduction — and when you file your ITR, you discover additional tax is payable. To handle this correctly:

• Declare your previous employer's salary to your new employer via a declaration — your new employer then accounts for it in TDS computation for the remainder of the year
• When filing ITR, enter salary from both employers in Schedule S. The ITR-1 form for AY 2026–27 now has a dedicated row for salary from multiple employers
• Claim TDS from both employers in Schedule TDS
• If there is still a tax shortfall after claiming both TDS credits, pay the balance as self-assessment tax before filing your ITR

Received Arrears of Salary (Relief Under Section 89)

If your employer paid salary arrears relating to prior years — a delayed increment, revised pay scale, or court-ordered back pay — the arrears are taxable in the year of receipt. However, you can claim relief under Section 89 to reduce the tax impact by spreading the income across the years it relates to. File Form 10E on the IT portal before filing your ITR to claim this relief — if you claim Section 89 relief without filing Form 10E, the CPC disallows it and raises a demand.

Working From Home — No Special Deduction

A common query from salaried employees: can I claim home office expenses, internet bills, or electricity costs as a deduction? The answer for salaried taxpayers is no — the Income Tax Act does not allow salaried employees to deduct business expenses under either regime. The standard deduction of ₹75,000 (new regime) or ₹50,000 (old regime) is the only flat deduction available against salary income.

"For salaried taxpayers, the single biggest source of missed refunds is bank interest income not reported — the TDS is deducted but the gross interest is never declared, leading to excess TDS not being claimed back."

Key Deadlines for Salaried Employees — AY 2026–27

• June 15, 2026: Employer must issue Form 16. If not received, follow up with HR/payroll.
• July 31, 2026: Original ITR filing due date for salaried employees (non-audit cases).
• 30 days from filing: E-verification deadline — miss this and your return is invalid.
• December 31, 2026: Last date to file belated return (with ₹5,000 late fee under Section 234F).

Conclusion

Filing ITR for salaried employees for AY 2026–27 is straightforward when done systematically. Collect Form 16 from all employers, download and reconcile your AIS, compare both tax regimes, determine whether ITR-1 or ITR-2 applies to you, enter all income sources (not just salary), verify TDS credits, and e-verify within 30 days of filing. The July 31, 2026 deadline is firm — missing it costs you carry-forward benefits and triggers a late fee. If your income situation is straightforward and you are comfortable with the IT portal, you can file ITR online yourself using this guide. If you have multiple employers, capital gains, foreign assets, or freelance income alongside your salary, a CA in Mumbai ensures you file correctly and claim every deduction you are entitled to. Contact KC Shah & Associates for a seamless, error-free individual ITR filing experience.