New Income Tax Rules From April 1, Full List Of Key Changes Including Deadlines, STT Hike & TCS Cuts Explained

New Delhi: India will introduce a new direct tax system from April 1, 2026, as the Income Tax Act, 2025 replaces the old 1961 law. The aim is to make tax rules simpler, reduce confusion, and improve compliance. Experts say the focus is on clarity and fewer legal disputes.

Single 'Tax Year' System

One major change is the introduction of a single 'tax year'. Earlier, taxpayers had to deal with both a financial year and an assessment year. Now, this will be replaced by one system, making it easier to understand and file returns correctly.

Revised ITR Filing Deadlines

The government has also updated return filing deadlines:

July 31 – Individuals filing simple returns (ITR-1, ITR-2)

August 31 – Business or professional income (no audit required)

October 31 – Companies and audit cases

November 30 – Special cases

These new timelines will apply from the 2026–27 tax year.

More Time to Revise Returns

Taxpayers will now get 12 months to revise their returns, compared to 9 months earlier. However, a fee will be charged if corrections are made after 9 months. Lower penalties will apply for income up to Rs 5 lakh, and higher charges for income above that.

STT on Derivatives Increased

The Securities Transaction Tax (STT) on derivatives will go up:

Options sale: 0.10 percent to 0.15 percent

Exercised options: 0.125 percent to 0.15 percent

Futures: 0.02 percent to 0.05 percent

This means trading in derivatives may become slightly more expensive.

TCS Rates Reduced for Some Transactions

Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) will be reduced:

Education and medical remittances above Rs 10 lakh: 5 percent to 2 percent

Overseas tour packages: 2 percent uniform rate

Other remittances: remain at 20 percent

This will reduce tax burden in some cases.

Buyback Income to Be Taxed

Income from share buybacks will now be taxed as capital gains in the hands of investors. Promoters will be taxed at 30 percent (individuals) and 22 percent (companies) under the new rules.

Changes in Gold Bond Taxation

Tax benefits on Sovereign Gold Bonds (SGBs) will only apply if bought at the original issue price. Bonds purchased from the market will now attract capital gains tax.

Relief Measures for Taxpayers

Some relief has also been introduced:

- Compensation interest from Motor Accident Claims Tribunal will be fully tax-free

- No TDS will be deducted on such income

- Employer transport benefits (home to office) will not be taxed

Simplified PAN-Based TDS System

The process for TDS on property purchase from non-residents will be simplified. Buyers can now use PAN-based challans, removing the need to obtain a TAN.

Pension Tax Rules Tightened

Tax exemption on pensions for armed forces will now apply only to those discharged due to physical disability. Regular retirement pensions will not qualify for exemption.

Possible Changes in Allowances and Reporting

Draft rules may increase allowances:

Education allowance: up to Rs 3,000 per month per child

Hostel allowance: up to Rs 9,000 per month per child

PAN may also be required for high-value transactions like cash spending above Rs 10 lakh, vehicle purchases above Rs 5 lakh, and property deals above Rs 20 lakh.