Income Tax Act 2025: Key Changes Every Taxpayer Must Know Before 1 April 2026

Finance influencer CA Sakchi Jain shares that starting 1 April 2026, India's tax system is set for one of its biggest structural transitions in decades. Most of these updates arise from the Income Tax Act, 2025, which replaces the 1961 Act. This isn't just another new‑financial‑year update; it's a complete shift in how tax rules are structured, interpreted, and applied. And while slab rates remain unchanged, the procedural and compliance changes are significant. The real challenge? Most taxpayers will only notice these updates when they begin filing returns, which is why staying informed now is essential.

1. New Law Comes Into Effect: Income Tax Act, 2025

The Income Tax Act, 2025, becomes fully operational from 1 April 2026, replacing the earlier law and introducing modernised language, simplified structures, and clearer intent. One major conceptual shift is the introduction of a single “Tax Year”, replacing the previous “financial year–assessment year” framework. Slab rates, however, continue unchanged under both old and concessional regimes, ensuring stability in personal taxation.

2. Compliance & Reporting Framework Overhauled

The new system simplifies tax compliance by reducing rules from 511 to 333 and forms from 399 to 190, removing redundant provisions and merging overlapping procedures. Several forms have been redesigned, PAN and TAN applications are now category‑specific, Forms 15G and 15H are merged into a single Form 121, and older declarations such as Form 60 are replaced with updated versions like Form 97 and Form 98.

3. Revised Return Filing Deadlines

To reduce rush and improve efficiency, return filing dates have been rationalised:

• 31 July: Individuals filing ITR‑1/ITR‑2
• 31 August: Non‑audit business/profession
• 31 October: Companies and audit cases
• 30 November: Special categories
  These apply from Tax Year 2026‑27 onwards.

4. Key Changes Affecting Your Money

Several everyday financial rules also change from April 2026:

• Higher STT on futures and options
• Share buyback profits taxed as capital gains
• No interest deduction for earning dividend income
• SGB redemption tax exemption only for original subscribers
  These shifts influence investment and financial planning significantly. 

5. Income Tax Rules, 2026 Formalised

The notified Income Tax Rules, 2026 update HRA norms, perquisite valuations, form formats, and digital‑first reporting, especially for non‑residents and cross‑border transactions.

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