Resident-Specific Income Tax Benefits for AY 2026-27: Detailed Guide for Individuals and Indian Companies

Resident assessees and Indian companies are taxed on their global income under the Income Tax Act 1961. In recognition of this wider tax base, the law grants several targeted incentives, concessional regimes, deductions, and exemptions that are available only where the assessee is resident in India or is an Indian Company.

This guide consolidates and explains those resident-centric provisions as they stand after the Finance Act, 2026, applicable for Assessment Year 2026-27. The focus is on:

  • Presumptive income schemes for small businesses and professionals
  • Concessional corporate tax regimes
  • Special deductions for specified business outlays
  • Capital gains relief in reorganizations and specified instruments
  • Chapter VI-A deductions reserved for residents
  • TDS relaxation thresholds and declaration-based exemptions
  • Advance tax relief to senior citizens
  • Higher basic exemption limits and Section 87A rebates for residents
  • Special presumptive “tonnage tax” for qualifying shipping companies
  • Return filing relaxation for specified senior citizens under Section 194P

Below is a structured walk-through of these provisions, grouped activity-wise.

A. Business or Profession – Deductions and Concessional Schemes

1. Amortization of Preliminary Expenses – Section 35D

For Indian Company
Indian companies incurring eligible preliminary expenditure in connection with:

  • Setting up a new business, or
  • Extension of an existing undertaking

are allowed amortization as follows:

  • Eligible expenditure is capped at 5% of the cost of the project or capital employed, whichever is higher.
  • The allowable amount is spread over 5 consecutive previous years, beginning with the year in which the extension is completed or the new unit starts production/operations.

For Resident Non-Corporate Assessees
Resident non-corporate assessees (e.g., sole proprietors or partnership firms) also enjoy amortization under Section 35D with some distinction:

  • Deduction is restricted to 5% of the cost of the project.
  • Other conditions and the 5-year spread pattern remain similar.

2. Amortization of Amalgamation/Demerger Expenditure – Section 35DD

Indian companies incurring expenditure wholly and exclusively for amalgamation or demerger on or after 01.04.1999 can:

  • Claim the expenditure as a deduction in 5 equal annual installments.
  • The deduction starts from the previous year in which the amalgamation or demerger is effected.

3. Mineral Prospecting and Mining – Section 35E

Where an Indian Company or a resident non-corporate assessee is engaged in:

  • Prospecting for certain specified minerals, or
  • Development of mines or other related operations

and incurs qualifying expenditure exclusively for such activities, then:

  • The deductible amount is spread equally over up to 10 previous years, subject to statutory conditions.

4. Presumptive Taxation for Small Businesses – Section 44AD

Resident individuals, resident HUFs and resident partnership firms (other than LLPs) operating an eligible business can opt for presumptive taxation under Section 44AD, subject to turnover thresholds.

Key features:

  • Where gross receipts/turnover of eligible business do not exceed Rs. 2 crore, presumptive income is deemed to be 8% of such receipts/turnover.
  • For amounts received via account payee cheque, bank draft, electronic clearing system, or prescribed electronic modes, presumptive income is computed at a reduced rate of 6% of such non-cash receipts.
  • If cash receipts during the previous year do not exceed 5% of the total turnover or gross receipts, the upper turnover cap for this scheme is enhanced to Rs. 3,00,00,000 instead of Rs. 2,00,00,000.

5. Presumptive Taxation for Professionals – Section 44ADA

Resident individuals and resident partnership firms (other than LLPs) who practice any notified profession under section 44AA(1) (for example, doctors, lawyers, chartered accountants, architects, etc.) can adopt presumptive taxation under Section 44ADA.

Core parameters:

  • If gross receipts from the profession do not exceed Rs. 50 lakh, income is deemed to be 50% of gross receipts.
  • Where cash receipts in the previous year are not more than 5% of total gross receipts, the threshold limit for presumptive eligibility is enhanced to Rs. 75,00,000.

6. Concessional Tax Regimes for Domestic Companies and Co-operatives

(a) Domestic Manufacturing Companies – Section 115BA

A domestic manufacturing company that:

  1. Is set up and registered on or after 01.03.2016, and
  2. Is engaged in manufacture or production of any article or thing

may, subject to further statutory conditions, opt to be taxed at a concessional rate of 25% on its total income under Section 115BA.

(b) Optional 22% Tax Rate for Domestic Companies – Section 115BAA

Any Indian Company can forego specified deductions and incentives, compute total income accordingly, and pay tax at a concessional rate of 22% by exercising the option under Section 115BAA.

(c) 15% Rate for New Manufacturing Companies – Section 115BAB

A domestic manufacturing company may qualify for an ultra-concessional tax rate of 15% if:

  • It is incorporated on or after 01-10-2019;
  • It commences manufacture or production on or after 01-10-2019 but before 31-03-2024;
  • It is engaged in manufacture/production, and in research or distribution related to such products, or in generation of electricity; and
  • It computes income without certain specified deductions/exemptions.

Additional statutory safeguards and anti-abuse conditions apply.

(d) Concessional Regime for Resident Co-operative Societies – Section 115BAD

Resident co-operative societies can choose to be taxed at 22% under Section 115BAD when they:

  • Forgo certain incentives/deductions and compute income on a “clean” base, as prescribed.

(e) 15% Regime for New Manufacturing Co-operatives – Section 115BAE

Resident co-operative societies that:

  • Are registered on or after 01.04.2023, and
  • Commence manufacture or production of an article or thing on or before 31.03.2024,

may opt for a 15% tax rate under Section 115BAE, again subject to prohibition of specified deductions or incentives.

7. Tax on Carbon Credit Transfer – Section 115BBG

Any person earning income from transfer of carbon credits is taxed at a flat rate of 10% on such income under Section 115BBG.

B. Capital Gains – Resident-Focused Exemptions and Reliefs

1. Group and Corporate Restructuring Relief – Section 47

The following transfers are not regarded as “transfer” for capital gains purposes, thus no capital gain arises, subject to conditions: