Income Tax Changes From 1st April 2026 - Top 12 New Income Tax Rules

The Budget 2026 introduced significant amendments to the Income Tax Act to ensure compliance with the tax provisions. Some of these amendments include SGB taxation rules, reduced TCS rates and extended filing due dates for ITR-3 & ITR-4 in certain cases. 

The following changes will come into effect from 1st April 2026 and will be applicable for FY 2026-27 onwards:

1. The New Income Tax Act, 2025

Announced in the previous budget, the Income Tax Act 2025 will be effective from 1st April 2026 and will be applicable for FY 2026-27 onwards. The new Income Tax Act will replace the existing Income Tax Act, 1961, entirely with simplified language and the removal of redundant provisions. It aims to simplify taxation, ensure easier compliance and reduce legal disputes. 

2. Income Tax Slabs FY 2026-27

Are tax slabs changed in 2026? No, there have been no changes in the income tax slabs for FY 2026-27, and the existing slabs will continue. 

The new tax regime slabs for FY 2026-27 are as follows:

Taxpayers opting for the new tax regime will be eligible for a tax rebate of up to Rs. 60,000 under Section 87A, making income up to Rs. 12 lakh effectively tax-free.

3. Introduction of Tax Year

The words “Financial Year” and “Assessment Year” will be replaced by a new term called the “Tax Year” as per the Income Tax Act, 2025, to ensure uniformity and easy understanding.  

4. ITR Filing Due Date Changes

Effective from April 2026, the due date to file ITR-3 and ITR-4 for non-audit taxpayers has been extended to 31st August from the end of the relevant tax year. This due date is also applicable for FY 2025-26 (AY 2026-27). 

However, the due date for ITR-1 and ITR-2 remains the same, i.e., 31st July from the end of the relevant tax year. The due date for the tax audit also remains unchanged at 31st October. 

5. Tax Collected at Source (TCS) Changes

Similar to the previous budget, Budget 2026 rationalised TCS rates aimed at easing compliance, reducing refund delays and confusions. 

The following TCS rates will be effective from April 2026:

• The TCS rate on sale of alcoholic liquor for human consumption, sale of scrap, and sale of minerals were increased to 2% from the existing 1%. 
• TCS rate on sale of tendu leaves and remittance under LRS for education and medical treatment has been reduced to 2% from the existing 5%.
• TCS on remittance under LRS for overseas tour package has been reduced to a single flat rate of 2% without threshold from the existing dual rate of 5% & 20%.

6. Revised Return Due Date Changes

The due date to file a revised return was extended to 12 months from the end of the relevant tax year from the existing 9 months. Therefore, the new due date for filing revised returns is 31st March. Taxpayers are also required to pay an additional fee to file revised return after 31st December.

The due date for filing belated returns remains the same.

7. Securities Transaction Tax (STT) Changes

One of the major changes in Budget 2026 was the increase in Securities Transaction Tax rates. The STT rates were increased from the existing rates, resulting in higher transaction cost for F&O traders. 

The following STT rates will come into effect from April 2026:

8. Buyback Taxation

Any amount received as a result of buyback of shares were treated as deemed dividends and taxed at applicable slab rates. With effect from 1st April 2026, amounts received as a result of buyback of shares will be taxed as capital gains. 

In case of individual promoters buying back shares, the effective tax rate will be 30% and 22% when the promoters are companies. 

9. Sovereign Gold Bonds Exemption Changes

Capital gains exemption on redemption of sovereign gold bonds on maturity will only be applicable for investors who bought such bonds during their initial issue and not from secondary markets. Gains from sovereign gold bonds bought from secondary markets will be taxed as capital gains.

10. Tax Deduction at Source (TDS) Changes

Buyers buying an immovable property from an NRI can deduct TDS under Section 194IA by obtaining a PAN based challan. Earlier such buyers were supposed to obtain TAN registration to fulfill TDS requirements.

11. Removing Interest Deduction on Dividends

Earlier taxpayers were allowed deduction against their dividend income for interest expenditure incurred for such income. However, from April 2026, such interest deduction will no longer be allowed against dividend income and income from units of mutual funds. 

12. Draft Income Tax Rules 2026

The draft income tax rules 2026, if passed, shall also be effective from 1st April 2026. These draft rules have enhanced the deduction limits under the old tax regime and introduced new forms in accordance with Income Tax Act 2025. Some of the significant changes in the draft rules are as follows:

• Increase in education allowance deduction to Rs. 3,000 per month per child
• Increase in hostel allowance to Rs. 9,000 per month per child
• Increase in threshold for PAN quoting requirements for various transactions. 

Conclusion

Similar to Income Tax changes in 2025, there has been significant changes in 2026 as well. As FY 2025-26 comes to an end, a taxpayer must be familiar with all the recent changes in order to plan taxes for FY 2026-27 to ensure maximum tax savings and reduced tax liability.