Before you start your income tax planning for FY 2026-27, it’s important to be aware of a crucial update: For the financial year 2026-27, Finance Minister Nirmala Sitharaman has not made any changes to the existing income tax slabs under the revised tax regime. This means the slab rates will remain the same, but the actual tax impact may vary for each taxpayer due to rebates, standard deductions, and compliance rules. In this article, we will understand the latest income tax slabs, applicable rates, and the real impact of the calculations in a straightforward and easy-to-understand manner.
What Is an Income Tax Slab?
An income tax slab means that your total taxable income is divided into different segments (ranges), and a different tax rate is applied to each segment. This is called a progressive tax system – meaning that as income increases, the marginal tax rate also increases. The objective is to ensure that lower-income individuals bear a lower tax burden, while higher-income groups pay proportionally more tax.
Tax System Comparison
Tax System Type
How it works
The situation in India
Slab-based Tax
Different tax rates apply to different income ranges.
Applicable to Individuals/HUF
Flat Tax
A single rate applies to the entire taxable income.
Not applicable to individual tax.
Special Rate Tax
A different fixed rate applies to certain income levels.
Capital gains, lottery, crypto etc.
Income Tax Slab for FY 2026-27 — New Tax Regime
Taxable Income (₹)
Tax Rate
Up to ₹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%
The tax slab structure has not been changed in Budget 2026, but emphasis has been placed on keeping the new tax regime simple and compliance-friendly. This regime is now the default option.
New Tax Regime (FY 2026–27) — Key Features & Benefits
The new tax regime for FY 2026–27 includes a slab structure along with some practical features that directly benefit salaried and pensioner taxpayers.
Feature
What are the rules?
Practical Benefit
Section 87A Rebate
A rebate of up to ₹60,000 is available on taxable income up to ₹12,00,000.
Effectively, the tax on income up to ₹12 lakh can be zero.
Standard Deduction
₹75,000 for salaried employees and pensioners.
For salaried individuals, the effective tax-free level can reach up to ₹12.75 lakh.
Marginal Relief
Available for incomes slightly above ₹12 lakh.
Relief from a sudden tax jump when income increases slightly.
Surcharge Cap
Under the new regime, the maximum surcharge is 25% (for income above ₹2 crore).
Lower surcharge cap for high-income taxpayers
Uniform Slabs
The same slab rates apply to all age groups.
There is no separate tax slab or confusion for senior/super senior citizens.
Old Tax Regime – Slab Rates
The Old Tax Regime continues in FY 2026–27, and there have been no changes to the slab rates. A key feature of this regime is that the slab limits vary depending on the taxpayer’s age, and several deductions and exemptions can be claimed. If an individual has significant deductions such as those under Section 80C, HRA, and home loan interest, the old regime can prove beneficial in many cases.
Old Regime Slabs – Individuals (< 60 years), NRI, HUF
Taxable Income (₹)
Tax Rate
Up to ₹2,50,000
Nil
₹2,50,001 – ₹5,00,000
5%
₹5,00,001 – ₹10,00,000
20%
Above ₹10,00,000
30%
Old Regime Slabs – Senior Citizens (60–79 years)
Taxable Income (₹)
Tax Rate
Up to ₹3,00,000
Nil
₹3,00,001 – ₹5,00,000
5%
₹5,00,001 – ₹10,00,000
20%
Above ₹10,00,000
30%
Old Regime Slabs – Super Senior Citizens (80 years or older)
Taxable Income (₹)
Tax Rate
Up to ₹5,00,000
Nil
₹5,00,001 – ₹10,00,000
20%
Above ₹10,00,000
30%
Old Tax Regime – Main Benefits (Deduction Based System)
Benefit
Limit / Rule
Standard Deduction
₹50,000 (salaried & pensioners)
Section 87A Rebate
₹12,500 (for income up to ₹5 lakh)
Section 80C
Up to ₹1.5 lakh
Section 80D
Health insurance deduction
HRA / LTA
Allowed
Home Loan Interest (Sec 24)
Up to ₹2 lakh
Education Loan (80E)
Interest deduction
New vs Old Tax Regime Comparison (FY 2026–27)
Taxpayers have two options available in FY 2026–27: the New Tax Regime and the Old Tax Regime. Choosing the right regime directly impacts your final tax bill. The new regime offers lower slab rates and a higher rebate, but deductions are limited. The old regime has comparatively higher rates, but a longer list of deductions and exemptions is available.
Old vs New Tax Regime
Parameter
New Tax Regime
Old Tax Regime
Tax Slabs Structure
More slabs, gradual rate increase
Fewer slabs, rapid rate increase.
Basic Exemption Limit
₹4,00,000 (same for all age groups)
Age-based – ₹2.5L / ₹3L / ₹5L
Standard Deduction
₹75,000 (salaried & pensioners)
₹50,000
Section 87A Rebate
₹60,000 (up to ₹12L income)
₹12,500 (income up to ₹5 lakh)
Section 80C Deduction
Not allowed
Up to ₹1.5L is allowed.
Section 80D (Health Insurance)
Not allowed
Allowed
HRA Exemption
Not allowed
Allowed
LTA Exemption
Not allowed
Allowed
Home Loan Interest (Sec 24)
Not allowed
Up to ₹2L
Education Loan Interest (80E)
Not allowed
Allowed
Other Chapter VI-A Deductions
Mostly not allowed
Widely allowed
Maximum Surcharge Rate
25% (high income cases)
37% (high income cases)
Marginal Relief
Available (₹12L crossing cases)
Available (high surcharge bands)
Slab by Age
Same for all
Age-wise different
Documentation Need
Low
High (proof required)
Filing Complexity
Simple
Detailed
Default Option
Yes (AY 2024-25 onward)
Detailed
Surcharge & Cess on Income Tax Slab FY 2026–27
Even after calculating tax based on the income tax slabs, the final payable tax doesn’t end there. High-income taxpayers are subject to a surcharge, and a 4% Health and Education Cess is added to the tax liability of all taxpayers.
Surcharge Rates
Total Income (₹)
Surcharge Rate (New Regime)
Up to ₹50 lakh
No surcharge
₹50 lakh – ₹1 crore
10%
₹1 crore – ₹2 crore
15%
₹2 crore – ₹5 crore
25%
Above ₹5 crore
25% (capped in new regime)
New vs Old Regime – Maximum Surcharge Comparison
Maximum Surcharge Rate
Maximum Surcharge Rate
New Tax Regime
25%
Old Tax Regime
37%
Income Tax Changes Effective from 1 April 2026 – Budget 2026–27
1. New Tax Regime Continues
Rule
Updated Position (From 1 April 2026)
New tax regime
Continue & strengthened
Tax-free income (new regime)
Effective zero tax up to ₹12,00,000
Salaried effective zero level
₹12.75 lakh (after a standard deduction of ₹75,000)
Slab rates
No change announced
Objective
Stability + simplicity
2. Section 87A Rebate – Continued Relief
Provision
Updated Rule
Section 87A rebate
Continue
Maximum rebate
₹60,000
Eligible income
Up to ₹12 lakh
Result
Zero tax liability possible
3. Standard Deduction & Senior Citizen Relief
Category
Deduction Rule
Salaried / Pensioners
₹75,000 standard deduction continue
Senior citizen deduction limit
₹50,000 ₹1,00,000 increased
Impact
Lower taxable income
3. Interest Income Exemptions – Continue
Section
Limit
Section 80TTA
₹50,000 (individuals)
Section 80TTA
₹1,00,000 (senior citizens)
Applies to
Interest income
4.Compliance Simplification – New Tax Framework
Area
Change
New Income Tax Act
Income Tax Act 2025 applicable from 1 April 2026
Rules
Draft Income Tax Rules 2026 introduced
Total rules
511 – 333
Total forms
399 – 190
Form design
Simplified & user-friendly
Goal
Easy filing & less confusion
5. Filing & Procedure Relaxations
Compliance Area
Update
ITR filing last date
ITR-1/2: 31 July
Non-audit business/trust
31 August
Revised return
Allowed till 31 March
15G/15H filing
Depository route allowed
Lower/Nil TDS certificate
Online process
6. TDS / TCS Rationalisation
Area
New Rule
Foreign travel TCS
Reduced to 2%
LRS education/medical TCS
Reduced to 2%
Certain TDS/TCS rules
Rationalised
7. Special Exemptions Introduced
Category
Tax Treatment
MACT compensation interest
Fully exempt
Disability pension (forces)
Exempt
Land acquisition (RFCTLARR)
Exempt
8. Capital Market & Investment Tax Changes
Area
Update
Share buyback
Taxed as capital gains
STT – Futures
0.02% – 0.05%
STT – Options
0.15%
SGB exemption
Only if held till maturity & original issue
Conclusion
The tax structure for FY 2026-27 is stable, but who will actually benefit depends entirely on your income pattern and deductions. The new regime is simpler, while the old regime might still be useful for those with significant deductions. Choosing a regime without comparing them could be a mistake. Calculating your tax liability before the end of the financial year is the smartest move.
Stay ahead in the market with Pocketful! Get daily financial updates, zero brokerage on delivery, and powerful advanced tools for F&O trading.
S.NO.
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When a company shares profits with its investors, it’s called a “dividend.” But the tax on this dividend has always been a bit confusing for many. Dividend Distribution Tax is a tax that companies previously paid to the government before distributing dividends to investors. This tax reduced investors’ actual earnings. Later, the government made changes to the tax system to make it simpler and more transparent. In this blog, we’ll understand what dividend distribution tax is, how it works, and its impact on investors.
What Is Dividend Distribution Tax (DDT)?
When a company distributes a portion of its profits to its investors, it’s called a dividend. However, before this dividend could reach investors, a tax had to be paid called the Dividend Distribution Tax (DDT). This meant that even after paying taxes on its earnings, the company had to pay another tax to the government before distributing the dividend. This kept the tax burden directly on the company, but the impact fell on investors’ pockets.
How was DDT implemented?
Dividend Distribution Tax was implemented under Section 115-O of the Income Tax Act, 1961. Under this rule, whenever a company decided to pay a dividend to its shareholders, it had to first deposit this tax with the government. The company had to make this payment within 14 days. This means that the company could not transfer the dividend until the tax was paid. This system made tax collection easier for the government, but imposed an additional financial responsibility on companies.
Key Features of DDT
Legal Basis : DDT was implemented under Section 115-O of the Income Tax Act, 1961.
Tax Payer : This tax was paid by companies or mutual funds, not investors.
Applicable Area : Only domestic companies and mutual funds distributing dividends.
Payment Deadline : Taxes were required to be paid within 14 days of the declaration or payment of dividends.
Indirect Impact : Investors were not required to pay taxes directly, but received the dividend amount only after tax deductions.
Main Objective : Simplify tax collection and stabilize government revenues.
Whenever a company wanted to pay a dividend to its shareholders, it first had to determine how much tax it would have to pay to the government on that amount. Corporate Dividend Tax was calculated using the “Gross-up Method.
Example : Suppose a company declared a dividend of ₹100,000. According to the tax calculation, the investor should receive ₹100,000 after the company pays taxes on this amount. Therefore, the tax calculation was as follows
Description
Calculation
Amount (₹)
Dividend declared (receivable by the investor)
–
1,00,000
Tax Rate
–
15%
Grossed-up Base
1,00,000 ÷ (1 − 0.15)
1,17,647
Dividend Distribution Tax (DDT)
1,17,647 − 1,00,000
17,647
total company expenses
Dividend declared + DDT
1,17,647
Dividend Distribution Tax Rate in India – Historical Timeline
Dividend Distribution Tax (DDT) was first introduced in India in 1997. At that time, the tax rate was set at 10%. Its purpose was to simplify the tax process on dividend income so that the tax could be collected directly at the company level.
Evolution of Rates
Year/Period
Nature of Change
1997–2000
First time application rate 10%
2000–2002
DDT abolished
2003–2006
DDT reintroduced, rate increased
2007–2015
Rate increased to 15% (surcharge and cess exclusive)
The Abolition of Dividend Distribution Tax in 2020
The government has implemented a major reform of the dividend tax system, completely eliminating the Dividend Distribution Tax (DDT). Previously, this tax was paid by companies, leading to double taxation once on company profits and again when dividends were distributed. It was removed to reduce this burden and make the tax structure more equitable.
How does the new system work?
Companies no longer have to pay any tax when they pay dividends.
Instead, the dividend received by an investor is considered part of their total income.
It is now taxed according to the investor’s income tax slab rate.
This change reduced the tax burden on companies and shifted the tax responsibility to the investor.
The company used to pay tax (Dividend Distribution Tax)
Now the investor pays tax as per his income tax slab
Tax rate structure
Effective rate
Slab rates vary according to income
Tax deduction process
The company used to pay DDT before paying a dividend.
TDS is deducted on dividends above ₹5,000
double taxation
Yes, indirect impact on both the company and investors
No, tax is now levied only on the investor’s income
Impact on foreign investors
Disadvantageous because tax credits could not be claimed
Beneficial, now tax credits can be claimed easily
Impact on the company’s cash position
Tax burden on the company, which reduced cash flow
Reduced tax burden, dividend policy becomes more flexible
Transparency of the system
Limited, as the tax would stop at the company level
More transparent, as taxes are directly reflected in investor income
Conclusion
Previously, the dividend tax system was a bit complicated. Companies paid the tax, while investors’ earnings were also reduced. When the government removed this, the entire structure became simpler and more transparent. Now, the tax is levied where the income is earned, in the hands of the investor. This reduced pressure on companies and provided greater clarity to investors. Overall, this change proved to be a correct and necessary step for the market.
S.NO.
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Whenever we receive a salary or buy something, a question often comes to mind – what is tax? Why does the government take money from us and where is it used? Simply put, the definition of tax is that it is a contribution made by the government to run essential services like roads, hospitals, education, and security. So, if you ask what do you mean by tax, the answer will be it is a shared responsibility in which every citizen is a partner. In this blog, we will understand the concept of tax in detail and learn about the different types of tax systems in India.
What Do You Mean by Tax?
Simply put, tax is a mandatory fee that the government collects from citizens and companies to provide essential services and development work for the country. It’s not a voluntary contribution, but a legally mandated contribution. Therefore, when we ask “define tax” or “tax definition,” the answer is: it’s the government’s legitimate right to raise funds for the public good. In simple terms, what is tax means that we all collectively contribute money to the government to maintain roads, hospitals, education, security, and welfare programs. This is the concept of taxing every citizen’s participation in nation-building.
Example : Suppose you shopped online for ₹1,000. A 5% GST is levied, or ₹50. This ₹50 will go to the government and will later be used for roads, hospitals, or government programs. Similarly, the income tax deducted from your salary also helps run the country.
The story of the tax system in India is very old. Here I will explain it in simple language, with up-to-date information, so you can understand how the tax concept evolved.
Historical Evolution of Tax in India
Ancient Period: Principles and Beginnings
In ancient Indian texts such as the Arthashastra, Chanakya held that the king has the right to impose taxes and that taxes should be determined according to a person’s economic status (income and expenditure).
Manu Smriti also contains a similar idea that taxes should be based on justice and efficiency.
Colonial Period (British Raj): Formal Taxes and Reforms
Modern income tax was first introduced in India by Sir James Wilson in 1860, specifically to meet government expenses after the 1857 Revolution.
In 1886, a new income tax law was introduced, categorizing income and setting tax rates.
Land revenue systems such as Permanent Settlement, Ryotwari, and Mahalwari were introduced. These systems shared land tax and produce tax between farmers and landowners, but often burdened farmers.
Post-Independence and Modern Reforms
The Income Tax Act, 1961, provided a systematic and permanent legal framework for the entire income tax system, which remains in use today with frequent amendments.
In 2017, India implemented the Goods & Services Tax (GST)—a major transformational scheme that eliminated many indirect taxes and aimed to simplify the tax system.
Recently, (with the cooperation of all states and the central government), several GST slabs have been revised to simplify and make tax rates simpler.
Thus, the history of taxes has evolved from “primitive justice,” through formal laws under British rule, and today’s digital and simplified system. This journey demonstrates that tax definition is not simply a sliver of the pie, but a balance between the economy, society, and government.
Types of Taxes in India
The tax system in India is divided into two broad categories: Direct Taxes and Indirect Taxes. Below are the main types of both in simple terms.
Direct Taxes
These are taxes that you or your company pay directly, not through intermediaries based on income, profits, etc.
Income Tax : Applies to individuals and families’ income (salary, business, other sources). India has income tax slabs no or no tax on low income earners, and higher rates on high income earners.
Corporate Tax : Is levied on the profits of companies. If the company is registered in India, its global income is taxed. Recently, some companies have the option of special rates.
Capital Gains Tax : This tax is levied when you sell an asset (such as shares, land, mutual funds) and realize a profit on the sale. It can be both short-term and long-term, depending on how long you held the asset.
Securities Transaction Tax (STT) : Securities Transaction Tax (STT): A tax levied on the purchase and sale of securities in the stock market. For example, if you sell shares on a stock exchange, STT is levied on that trade.
Indirect Taxes
These are taxes that are included in the price of goods or services and are ultimately borne by the consumer through higher prices for goods/services.
Goods and Services Tax (GST) : Implemented in India from July 2017, This is a comprehensive indirect tax on goods and services. It replaced multiple central and state taxes such as Service Tax, VAT, Excise Duty, Central Sales Tax, Luxury Tax, and more. GST has different slabs—0%, 5%, , 18%—depending on the type of goods or services.
Customs Duty : When goods are imported into or exported from India, customs duty is levied on them. Special rates apply on imports, depending on the HSN classification of the item.
Excise Duty: Levied on domestically manufactured goods. Before the implementation of GST, excise duty was very high; but now GST has replaced it in most cases.
Stamp Duty: Tax levied on documents, property transfers, legal papers, etc. It is levied at varying rates by state governments/local bodies.
New GST Structure in India (Implementation from 2025)
The biggest complaint about GST was that the rates were too complicated. The government addressed this and simplified the rules in 2025. Now, most goods and services fall under just three rates 0%, 5%, and 18%.
For example, everyday food and essential medicines are now completely GST-free. Commonly used items, such as clothing and some services, have been placed at 5%. Mobile phones, televisions, and restaurant meals are placed in the 18% slab. The government has further tightened the tax on products like luxury cars and tobacco, raising it to 40%. This change has made consumer bills easier to understand and reduced paperwork for small businesses.
Read more on GST 2.0 reforms and market impactClick Here.
Key Features of the Indian Tax System
In India, taxes are collected at two levels – the central government and the state governments, both of which play their roles.
Most taxes here are based on self-assessment, meaning people calculate their income and pay taxes themselves.
Most work is now done online. Whether filing returns or paying taxes, everything can be done from home.
The government makes periodic improvements to simplify the rules. The recently introduced GST 2.0 is a major step in this direction.
India’s tax system is constantly improving, but there are still many problems that cannot be ignored.
The primary problem is the low number of taxpayers. The population is in the billions, but only a handful file returns. The reason is clear: most people are engaged in informal work, where it’s difficult to track income.
The second issue is GST. While it’s fine for large businesses, small shopkeepers and traders find it a burden to file returns and deal with the paperwork every month. The government has made changes, but it still needs to be simplified.
The third challenge is that the government still derives most of its revenue from indirect taxes. This results in everyone, rich and poor, having to pay taxes on everyday items, which doesn’t always seem fair.
To move forward, the system must be simplified further and both trust and awareness among the public must be increased. Only then will the tax base be strengthened and the country’s financial foundation strengthened.
People often think of taxes as a mere burden, but the reality is that they are the biggest source of the country’s economy. From roads to hospitals and education, every facility is funded in part by our taxes. Therefore, it is important to understand the definition of tax and its various forms. Filing returns on time and following the rules is not only our responsibility but also our contribution to nation-building.
S.NO.
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Many people are still wondering why their money hasn’t arrived even after filing and e-verifying their ITR for AY 2025-26. If your income tax return is not received or shows an amount not received, there’s no need to worry. Income tax refunds are being delayed in many cases this year because the department has tightened data matching and verification. In this article, we’ll understand the real reasons behind the delay and how you can track and resolve it.
What is the ITR Refund Process?
When more money is deducted or deposited during the year than your tax liability, the government refunds that excess amount. This is called an Income Tax Refund. This entire process is handled by the Income Tax Department’s Central Processing Centre (CPC), and ultimately, the money is credited directly to your bank account.
Steps in the ITR Refund Process (AY 2025-26)
1. ITR Filing
First, you must fill in your income and tax information correctly in the ITR form. This determines whether you will receive a refund.
2. E-Verification
After filing, it’s necessary to e-verify your return. This can be done using Aadhaar OTP, net banking, or another digital method. Without verification, the return will not proceed.
3. CPC Processing
After e-verification, the return goes to the CPC, where your details are matched with Form 26AS, AIS, and TDS data. If everything matches, the return is processed smoothly.
4. Refund Determination
The department then determines the refund amount you are entitled to. If you don’t have any past tax dues, the full amount is approved. Otherwise, the amount is adjusted against the outstanding amount.
5. Refund Credit to Bank Account
Once approved, the refund is sent directly to the bank account you pre-validated on the portal. If the bank details are incorrect or the account is closed, the money will be returned, and you will need to submit a new request.
6. Timeline
Refunds are often processed within 30 to 45 days after e-verification. But if the case is a little complex or the amount is large, the department conducts additional investigation and it may take more time.
Major Reasons for Income Tax Refund Delay
Reason
Why does it happen?
Solution
Data Mismatch (ITR vs Form 26AS/AIS/TDS)
If the income or TDS declared by you does not match with AIS or Form 26AS, the return is withheld.
Before filing ITR, cross-check 26AS and AIS, in case of mismatch, get the correction done from the deductor.
PAN–Aadhaar Linking Issue
If PAN and Aadhaar are not linked or details are different (name, DOB etc.), the return process gets stopped.
Go to the Income Tax portal and link PAN-Aadhaar and correct the mismatch details.
Incorrect or Unvalidated Bank Account
If the account number, IFSC is wrong or the bank account is not pre-validated, the refund fails.
Pre-validate on the bank account portal and fill in the correct IFSC/Account details.
Not doing E-Verification
If the return is not verified after filing, CPC will not start the process.
Immediately after filing the ITR, e-verify it using Aadhaar OTP or Netbanking.
High Refund Claim / Scrutiny
If there is a large refund amount or unusual deductions, Dept. Extra investigates.
Keep all proofs ready, make only genuine claims and reply on time when you receive a notice.
Outstanding Tax Dues / Old Notices
If tax of previous years is pending, then refund can be adjusted from the same.
Clear the pending demand or file rectification/response if it is wrong.
Portal Glitches / Heavy Load
Due to excessive filing on the last date, the portal becomes slow or gives errors.
If possible, do early filing and use the grievance redressal option in case of errors.
How to Check Your ITR Refund Status
The Most Trusted Method — e-Filing (Login)
Login to incometax.gov.in with your PAN/Aadhaar and password.
Go to Menu → e-File → Income Tax Returns → View Filed Returns.
Select your Assessment Year and open View Details / Refund-Demand Status in that row — this is where the complete return status (Submitted → Processed → Refund Determined → Sent to Banker → Paid/Failed/Adjusted) and dates will be displayed.
Without Login – Quick Check (Acknowledgement/ITR Receipt)
If you have an Acknowledgement number, you can instantly get the status by entering your PAN and OTP on the “Know your refund status (without login)” page of e-filing – this is the easiest way to check if you just need a quick check.
Cross-Check – Form-26AS / TRACES / NSDL
If the portal shows “Refund Issued” but the money hasn’t arrived at the bank, first check your Form-26AS – if you see a ‘Paid’ entry there, the department has sent the money. You can also check your refund history and the date of disbursement by entering your PAN + AY in the NSDL refund tool.
Common statuses – what they mean and what to do immediately
Status
What does it mean?
What to do immediately?
Refund Sent to Banker
CPC has sent the refund; the money has now gone to the bank for processing.
Please allow 7–10 working days. If it hasn’t arrived after 10–15 days, please confirm with your bank branch.
Refund Paid
The department has made the payment and ‘Paid’ is visible in Form-26AS.
Check your Form 26AS and bank statements. If the entry is in both, but not in your account, ask your bank.
Refund Failed
The bank rejected the payment (wrong/closed account or name mismatch).
Correct the bank details on e-Filing and submit a re-issue request from Services → Refund Re-issue (pre-validate the bank account first).
Refund Adjusted
The Dept. has adjusted your refund against the old tax demand/dues.
Check View Demand / Outstanding in e-Filing; respond to the notice or make rectification if you do not agree.
What to Do If Income Tax Return Amount Not Received
If you haven’t received your AY 2025-26 refund, do the following immediately:
Login to the Income Tax portal and check your status under Refunds/My Account.
Verify that your ITR is correct and e-verified.
Bank details (Account no., IFSC, name) are correct pre-validate them.
Contact the e-Filing helpline or CPC for assistance to keep your PAN, AY, and acknowledgment handy.
If the issue remains unresolved, file a grievance (complaint) on the portal and follow up.
What’s New in AY 2025-26 Compared to Earlier Years
Every year, there are some changes to the ITR filing and refund process, but this year, in AY 2025-26, some things are clearly visible that are directly impacting the refund timeline.
1. Strict AIS and TDS Matching
This year, the department is comparing your ITR details with the Annual Information Statement (AIS) and TDS records more carefully than ever before. Even a small mismatch can subject the return to manual scrutiny and delay the refund.
2. Curb Erroneous Claims
In previous years, several major erroneous exemption and deduction claims were detected. Consequently, the department is now conducting extra scrutiny on high-value refunds or unusual claims. As a result, even genuine taxpayers are having to wait a bit longer.
3. New Questions in ITR Forms
Some new disclosures have been added to ITR-2 and ITR-3 this year, such as reporting capital gains in different time periods. These changes are not minor, so processing is taking a little longer.
4. Impact of Old Cases
If your ITRs from previous years are still pending or your tax dues are not clear, a new refund will not be processed immediately. The department first settles old cases and then releases a new refund.
5. Technical Issues with the Portal
The Income Tax portal has experienced some updates and glitches this year as well. Furthermore, the extended filing deadlines have resulted in many people filing returns simultaneously, which has slowed down processing speeds.
Tips to Avoid Refund Delays in Future
1. Don’t file your return late
Most people wait for the deadline, and then the portal becomes crowded. This leads to minor mistakes. Try to file your return on time, but not so early that AIS and TDS are not updated. It is best to file after the second half of June.
2. PAN and Aadhaar must be correctly linked
These days, PAN-Aadhaar linking is essential. If it is not linked, the PAN becomes inactive and the refund will automatically be stopped. Sometimes, problems arise due to name or date of birth mismatches, so check the details beforehand.
3. Checking your bank account is essential
Refunds always come to the account that is active and pre-validated. Sometimes, people enter old or closed accounts, resulting in a refund failure. Be sure to cross-check the account number and IFSC code before filing your ITR.
4. Don’t Ignore Notices
If the Income Tax Department sends a notice, delaying it can result in a refund being delayed. Whether it’s a defective return or a clarification, it’s important to respond promptly.
5. Clear Old Dues First
If there are pending ITRs or tax dues from previous years, the new refund will be adjusted. Therefore, clearing old files is as important as filing new returns.
Conclusion
If your income tax return hasn’t been received, don’t panic. Refund delays are common this year, but most problems stem from minor errors—like the wrong bank account, PAN-Aadhaar linking errors, or verification delays. If all of this is correct, you’ll receive your money after a short wait. Just keep your return clean and fill in the details carefully to avoid delays next time.
S.NO.
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Once a major problem related to startup funding, called angel tax, is now a thing of the past. In the July 2024 budget, the government decided to completely abolish this tax, which came into effect from April 1, 2025. Earlier this tax was levied when a startup raised funds by selling shares at a price higher than its value.
In this blog, we’re going to explore what the angel tax was, how it impacted startups, and why its complete abolition from April 1, 2025, marks a significant turning point for the Indian startup ecosystem.
What is Angel Tax?
Angel tax is a tax that was levied on unlisted companies (especially startups) when they sell their shares at a price higher than their Fair Market Value (FMV). The excess amount was considered “income from other sources” and was taxed at around 30.9%
Rate of Angel Tax
About 30.9% tax was levied on the amount received above the FMV. Apart from the base tax, it also included cess and surcharge.
Why was it called the “Angel” tax?
Because this tax specifically impacted investors called “angel investors”—people who invested in startups at an early stage.
When did it start?
This initiative was introduced by the Government of India in the 2012 Finance Budget (Finance Act 2012) and was implemented by April 2013
Is it still in effect?
No, its complete abolition was announced in the July 2024 budget, and has been implemented with effect from 1 April 2025.
The reason behind the introduction of Angel Tax was:
Introduction to curb black money : Angel tax was first introduced in 2012 with the aim of curbing the investment of black money in the name of startups. At that time, many companies used to issue shares at a premium much higher than their real value, which increased the possibility of tax evasion and money laundering.
Legal aspects : To implement this tax, the government added section 56(2)(viib) to the Income Tax Act. This means that if a private company raises money by selling shares at a price higher than their actual value, then that extra amount will be considered as income and will be taxed. According to the government, this was necessary so that those who raise funds through illegal means could be controlled.
Impact on startups : Although its purpose was to increase transparency tax revenues, many genuine startups and angel investors suffered from it. There were obstacles in funding and investors also started hesitating. This was the reason why the government decided to abolish it in 2024.
Who Has to Pay Angel Tax? (Applicability Criteria)
The scope of angel tax was initially quite limited, but it affected all unlisted companies that raised funds by issuing shares at a price higher than their FMV. In most cases, these were startups that raised money from angel investors for initial investment.
If a startup was not recognized by DPIIT, and sold shares at a price higher than FMV, it would have to face this tax. However, recognized startups were exempted from this tax with certain conditions.
Calculation of Angel Tax with Example
Angel tax was calculated based on the difference between the Fair Market Value (FMV) of the shares and the price at which they were actually sold. If a startup sold shares whose FMV was supposed to be ₹100 at ₹150, the difference of ₹50 was considered as “additional income” and was taxed.
Example : Suppose a startup sold 1,000 shares at ₹150 per share while their FMV was ₹100.
Total amount = ₹1,50,000
Value as per FMV = ₹1,00,000
Excess amount = ₹50,000 (taxable)
How was FMV determined?
As per Income Tax Rule 11UA, startups could determine FMV in two valid ways:
NAV (Net Asset Value): The value was determined based on the company’s assets and liabilities.
DCF (Discounted Cash Flow): The company’s estimated future cash flow was discounted to today’s value.
Safe Harbour Rule : Rule 11UA provided that if the premium is up to 10% more than the FMV, the difference will not be considered taxable. This helped avoid tax disputes on small valuation mistakes.
The impact of Angel Tax on Indian startups can be summarized in the following points below:
Raising funding became difficult : When angel tax was implemented, many startups had trouble raising investment. Investors were afraid that if they invested above the Fair Market Value, they might receive a notice from the tax department.
Investors’ hesitation : Angel investors had to bear the risk of tax at the initial stage. Due to this, many people started shying away from investing in new startups, due to which innovative ideas were not able to get the necessary funds.
Some big examples : In 2015–16, the bank accounts of TravelKhana (Duronto Technologies) were frozen and an amount of ₹33 lakh was seized by the tax department. Similarly, a company named Babygogo lost an amount of about ₹72 lakh due to tax disputes. These incidents were an indication that Angel Tax not only stopped funding but also affected the day-to-day financial activities of startups.
Angel tax had inadvertently made the investment environment in India negative, thereby slowing down the startup ecosystem.
On July 23, 2024, Finance Minister Nirmala Sitharaman announced in the Union Budget 2024‑25 that Angel Tax is being abolished for all investors.
It has been fully implemented from April 1, 2025.
What is its effect?
Now DPIIT recognized startups will not face any angel tax for neither domestic nor foreign investors.
This relieved both startups and angel investors of tax hassles and legal uncertainty.
The DPIIT secretary confirmed in January 2025 that the decision had led to a rise in “reverse flipping” startups now setting up headquarters in India rather than overseas.
Angel Tax is gone and this has strengthened India’s startup ecosystem and the investment environment has become even more positive after Budget 2025.
The decision to abolish angel tax in 2025 has proved to be a big positive step for the Indian startup ecosystem. This has not only increased investor confidence but has also made it easier for companies working on new ideas to get funding. The tax uncertainty that startups have been facing for a long time has now been relieved. These changes taken by the government show that India is now more prepared to encourage innovation and startups here will find a strong, stable and reliable environment in the years to come.
S.NO.
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