Assessment Year 2026-27 brings a significantly changed tax landscape for Delhi residents and businesses. The new Income Tax Bill 2025 is expected to come into force, the new tax regime has been further rationalised, and several TDS and capital gains provisions have been restructured. This guide consolidates what Delhi taxpayers need to know to file accurately and on time.
Our Chartered Accountant practice in New Delhi works with individuals, HUFs, partnership firms, companies, and trusts across Delhi and the broader NCR region. Whether you are a salaried employee in South Delhi, a professional running a practice in CP, or a business owner in East or West Delhi, this guide addresses the key decisions and deadlines you face in AY 2026-27.
In This Guide
Which ITR Form Should You File?
The choice of ITR form is the first and most fundamental decision in the filing process. Filing the wrong form can invalidate your return.
| ITR Form | Who Should File | Common Delhi Profiles |
|---|---|---|
| ITR-1 (Sahaj) | Salaried individuals, one house property, other income up to ₹5,000, total income up to ₹50 lakhs | Government employees, corporate employees in Delhi NCR |
| ITR-2 | Individuals/HUF with capital gains, multiple properties, or foreign assets/income | Delhi residents selling property or shares, NRI-returned residents |
| ITR-3 | Individuals/HUF with business or professional income | Doctors, lawyers, CAs, consultants, traders with proprietorship |
| ITR-4 (Sugam) | Presumptive taxation (Section 44AD/44ADA/44AE) | Small traders, transporters, professionals with income below ₹50 lakhs |
| ITR-5 | Partnership firms, LLPs, AOPs, BOIs | Delhi law firms, CA practices, trading partnerships |
| ITR-6 | Companies (other than those claiming exemption under Section 11) | All Delhi-registered private and public companies |
New vs Old Tax Regime — The Delhi Professional's Choice
The new tax regime is now the default for all taxpayers. If you wish to opt for the old regime (which allows deductions under Chapter VI-A including 80C, 80D, HRA, and LTA), you must explicitly opt out of the new regime when filing your return.
For salaried employees in Delhi, this choice must now be communicated to your employer at the start of the year — it affects how your TDS is calculated throughout the year, not just at the time of filing.
The Break-Even Analysis
For most Delhi professionals, the old regime remains beneficial if your eligible deductions exceed approximately ₹3.75 lakhs — this includes 80C (₹1.5 lakhs), 80D (health insurance), NPS (80CCD), HRA (if renting), and home loan interest (Section 24). If you own a home in Delhi on a loan, are paying rent, and have maximised your 80C investments, the old regime will almost certainly be more favourable. Run the numbers with your CA before committing.
Key Deductions Available in AY 2026-27
Under the old tax regime, the following deductions remain available to Delhi taxpayers:
- Section 80C (₹1.5 lakhs) — PPF, ELSS, life insurance premiums, home loan principal repayment, children's school fees, NSC, 5-year FDs
- Section 80D — Health insurance premiums: ₹25,000 for self/family, ₹50,000 if parents are senior citizens
- Section 80CCD(1B) — Additional ₹50,000 for NPS contributions, over and above the 80C limit
- HRA exemption — For salaried employees renting in Delhi, calculated as minimum of: actual HRA received; 50% of basic salary (Delhi is classified as a metro city); actual rent paid minus 10% of basic salary
- Section 24(b) — Home loan interest up to ₹2 lakhs for self-occupied property. Given Delhi's high property values and correspondingly large home loans, this deduction is significant for many residents
- Section 80TTA/80TTB — Interest on savings accounts up to ₹10,000 (80TTA) or ₹50,000 for senior citizens (80TTB)
Capital Gains — Property and Shares
Delhi has one of the highest volumes of property transactions in India, and the capital gains tax implications of property sales are among the most common issues our New Delhi practice handles.
Post-Budget 2024 Changes
The indexation benefit for long-term capital gains on property sold after 23 July 2024 has been modified. The new LTCG rate of 12.5% applies without indexation, while sellers can alternatively choose to compute under the old 20% with indexation method for properties purchased before 23 July 2024. The better option depends on your specific purchase date, cost, and sale value — this calculation should be done by a qualified CA before you conclude any property transaction in Delhi.
For equity shares and equity mutual funds, LTCG above ₹1.25 lakhs (for FY 2025-26) is taxable at 12.5% without indexation. STCG is taxable at 20%.
Filing Deadlines and Penalties
| Category | Due Date (AY 2026-27) | Penalty for Late Filing |
|---|---|---|
| Individuals, HUFs not requiring audit | 31 July 2026 | ₹5,000 (₹1,000 if income below ₹5 lakhs) |
| Businesses requiring tax audit | 31 October 2026 | ₹5,000 + interest under Section 234A |
| Businesses requiring transfer pricing report | 30 November 2026 | ₹5,000 + interest |
| Revised/Belated return | 31 December 2026 | Fees already levied; further interest continues |
Common Errors in Delhi Tax Returns
Our practice in Pushp Vihar, New Delhi regularly assists clients in correcting errors made in prior year returns or in avoiding common mistakes. The most frequent issues we encounter:
- Not reporting all income — Interest on savings accounts, dividends (taxable above ₹5,000 in the old regime), rental income from a second property, or freelance/consulting income is often omitted
- Incorrect HRA calculation — Particularly common for Delhi residents who pay high rent but have not kept receipts, or whose landlord's PAN is not correctly reported
- Not reporting foreign assets — Delhi-based professionals with overseas bank accounts, foreign securities, or overseas property must disclose these in Schedule FA, even if no foreign income arises
- Not reconciling Form 26AS and AIS — The Annual Information Statement now captures a very wide range of financial transactions. Anything in your AIS that isn't reported in your return will flag for scrutiny
- Wrong bank account for refund — Simple but common. Always verify that the bank account details in your return are correct and the account is active and pre-validated on the income tax portal
If you need assistance with income tax filing in Delhi for AY 2026-27, our team at Shahi & Co. is available for consultations at our Pushp Vihar office or remotely for clients across Delhi NCR and the rest of India.
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