Income Tax AY 2026-27: Even if your salary income is below Rs 12.75 lakh, you still need to pay tax for these incomes

The Income Tax Return (ITR) filing due date for AY 2026-2027 for students, pensioners, salaried and other taxpayers who are not liable for tax audit is July 31, 2026.

Moreover, if a salaried employee gets up to Rs 12.75 lakh annual salary, then thanks to enhanced Section 87A tax rebate and standard deduction, no tax needs to be paid. However, to claim the enhanced Section 87A tax rebate, salaried individuals need to file ITR as without ITR, Section 87A tax rebate is not available. Do note that only salaried employees get the benefit of standard deduction.

However, this Section 87A rebate is not applicable for special rate income like capital gains, VDA, speculative incomes (lottery, horse racing, etc). On these special rate incomes you need to pay the tax at specified rate.


Do note that AY 2026-2027 (FY 2025-2026) is not the same as Tax Year 2026-2027. For Tax Year 2026-2027, the ITR filing due date is July 31, 2027.

Chartered Accountant Mayank Mohanka, founder, Taxaaraam. com said to ET Wealth Online that even if an individual's income is below the basic exemption limit, there are certain transactions which if undertaken, ITR needs to be filed.

Mohanka says: "Prima-facie there is no requirement to file ITR per plain reading of Section 139(1)(b) of the Income Tax Act, 1961. However, proviso to this section provides the exception cases wherein even if income is below the basic exemption limit, return filing is still required. Specified exception as per the proviso are incurring of electricity expenses of Rs 1 lakh or more during the previous year, foreign travel expenditure of more than 2 lakhs, credit card payment in cash above a specified limit etc."

Here are some incomes on which you need to pay tax even if your salary income is less than Rs 12.75 lakh:

Capital gains

Since capital gain income is taxed at special rates, Section 87A tax rebate is not available here and thus you need to pay the appropriate tax at the specified special rate.

Long term capital gain income from listed equity shares, real estate, mutual funds, etc are taxed at special rates. So on these incomes, you can’t get Section 87A tax rebate benefits and thus need to pay the specified tax rates. Moreover, since Budget 2025, Section 87A tax rebate is not available on short term capital gains also.

Table showing the capital gain rates:

Types of asset	Holding period for long term capital asset	Long term capital gains (LTCG)	Short term capital gains (STCG)
Listed equity shares	12 months	Gains up to Rs 1.25 lakh exempt; balance taxable at 12.5% without indexation	20%**
Listed equity mutual funds	12 months	Gains up to Rs 1.25 lakh exempt; balance taxable at 12.5% without indexation	20%***
Listed tax-free bonds	12 months	12.5%, indexation benefit not available (interest from notified tax-free bonds is exempt from tax)	Tax at slab rates
Listed debentures	12 months	12.5%, indexation benefit not available (interest from notified tax-free bonds is exempt from tax)	Tax at slab rates
Debt mutual funds (more than 65% in debt and money market instruments)	24 months	If acquired prior to April 1, 2023: 12.5% without indexation Acquired on or after April 1, 2023: Tax at applicable slab rates, indexation benefit not available	If acquired prior to April 1, 2023: 12.5% without indexation Acquired on or after April 1, 2023: Tax at applicable slab rates, indexation benefit not available
Unlisted shares	24 months	12.5% without indexation	Tax at slab rates
Unlisted debentures and unlisted bonds	24 months	Tax at applicable slab rates, indexation benefit not available	Tax at applicable slab rates, indexation benefit not available
Immovable property	24 months	Acquired before July 23, 2024: 20% with indexation or 12.5% without indexation Acquired on or after July 23, 2024: 12.5% without indexation	Tax at slab rates

Source: CA Suresh Surana

**If STT of 0.1% each is paid by seller and buyer in both cases

***If STT of 0.001% is paid by seller; STT rates mentioned above are for delivery based transactions only

Exemption available if STT paid on sale and also on purchase, in case of equity shares acquired on or after October 1, 2004 (subject to certain exceptions notified)

Virtual digital asset (VDA) taxation

For crypto income, you need to file schedule VDA in the ITR and pay tax at 30% rate plus cess and surcharge. For VDA income, you can only take the benefit of its cost of acquisition and no other expense. For VDA income, you don’t get the benefit of basic exemption limits also.

Lottery winnings and other speculative incomes

Like the VDA taxation framework, speculative incomes like lottery, horse racing, etc are taxed at flat 30%.