Income Taxation and Its Impact on Salaried Individuals in India: A Critical Analysis with Reference to Assessment Year 2026-27

Author(s)	Mr. Syed Sadath, Ms. Hajra Begum
Country	India
Abstract	Abstract Income tax is the most valuable source of government revenue. It is a direct tax that still remains an important component of fiscal governance in India. One of the best organized and obedient section of taxpayers is salaried laborers as they have organized payrolls and tax deduction at source (TDS) systems. The Assessment Year (AY) 2026-27 that aligns to Financial Year (FY) 2025-26 illustrates the relevance of the new tax regime that was proposed by section 115BAC of the Income-tax Act, 1961. The current research provides an assessment of the income tax structure of the salaried taxpayers in the AY 2026-27 and strictly examines its impact on disposable income, saving habits, consumption, and distributive justice. The results show that the income tax has a significant role in the economic choice and financial stability of the salaried taxpayers. This paper summarizes that the recent reforms have eased the effective tax burdens on middle income earners and have made compliance easier though the long term shifts in savings behavior need more scrutiny.
Keywords	Income tax, salaried class, Section 115BAC, Section 87A, disposable income, fiscal policy, India, tax burden
Published In	Volume 8, Issue 2, March-April 2026
Published On	2026-03-05
DOI	https://doi.org/10.36948/ijfmr.2026.v08i02.70718

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