Mumbai: From April 1, 2026, India will follow a new tax law called the Income Tax Act, 2025, replacing the 1961 law. The aim is to make tax rules simpler, clearer, and easier to follow for everyone—salaried people, investors, and businesses.
One major change is the use of a single term 'Tax Year', replacing Financial Year (FY) and Assessment Year (AY). This makes tax filing less confusing, especially for first-time taxpayers.
Revised ITR Filing Deadlines
The government has extended deadlines to give more time:
ITR-1 & ITR-2 (salaried individuals): July 31
ITR-3 & ITR-4 (non-audit cases): August 31
Also, taxpayers can now file revised returns until March 31, instead of December 31 earlier. However, late filing after December may involve extra fees.
Stricter Rules For HRA Claims
Claiming House Rent Allowance (HRA) will now need more proof:
- Landlord’s PAN details required
- Proper rent receipts needed
More cities are now treated as metros for higher exemption. These include:
- Bengaluru
- Hyderabad
- Pune
- Ahmedabad
Residents in these cities can claim up to 50% of salary as HRA exemption, similar to Delhi, Mumbai, Chennai, and Kolkata.
Higher Limits On Allowances
The government has increased tax-free benefits:
Meal benefits: Rs 200 per meal (earlier Rs 50)
Gift vouchers: Rs 15,000 per year
For children under the old tax regime:
Education allowance: Rs 3,000/month per child
Hostel allowance: Rs 9,000/month
This means higher tax savings for families.
Changes In Investment Taxes
Some important updates for investors:
- Securities Transaction Tax (STT) has increased, making derivatives trading costlier
- Buybacks will now be taxed as capital gains, not dividends
Sovereign Gold Bonds (SGBs):
- Tax-free redemption only for original buyers
- Secondary market buyers must pay capital gains tax
These changes affect how profits from investments are taxed.
Simpler TDS And Lower TCS
Tax compliance has been made easier:
A single declaration can help avoid TDS on multiple incomes
Property buyers dealing with NRIs can use PAN instead of TAN
For foreign spending:
- TCS reduced to 2% on travel
- Education & medical remittances abroad: also 2%
This reduces upfront tax burden on overseas expenses.
New PAN Rules And Compliance
PAN rules are now stricter:
Aadhaar alone is not enough to apply for PAN
Proper forms must be submitted based on applicant type
PAN is now mandatory for:
- Large cash deposits
- Property purchases
High-value transactions
Relief For Accident Compensation
In a taxpayer-friendly move, interest on compensation from Motor Accident Claims Tribunal will now be fully tax-free, with no TDS deduction.
