As India enters the financial year 2026-27 from April 1, several important financial and tax-related changes are set to come into effect, impacting salaried individuals, businesses, and investors alike.
A major highlight is the introduction of the new Income Tax Act, 2025, which replaces the decades-old Income Tax Act, 1961. The new law aims to simplify tax provisions, reduce complexities, and improve compliance.
Key Changes You Should Know
1. Revised ITR Deadlines
The deadline for filing income tax returns remains July 31 for salaried individuals. However, non-audit cases, including self-employed professionals, will now have time until August 31 to file returns.
2. Higher Cost for Derivative Trading
Trading in futures and options will become more expensive due to an increase in Securities Transaction Tax (STT).
3. Stricter HRA Rules
Employees claiming House Rent Allowance (HRA) must now provide their landlord's PAN and valid rent proof. More cities like Bengaluru, Hyderabad, Pune, and Ahmedabad have been classified as metro cities for higher HRA benefits.
4. Changes in Employee Benefits
The tax-free meal allowance has been increased to ₹200 per meal. The exemption limit for gift vouchers has been raised to ₹15,000 annually, along with higher children's allowances under the old tax regime.
5. Company Car Taxation Revised
The taxable value of company-provided vehicles will increase based on engine capacity and additional driver-related benefits.
6. Buyback Taxation Shift
Income from stock buybacks will now be taxed as capital gains instead of deemed dividends, altering the tax burden for investors.
7. Sovereign Gold Bond Rules Updated
Tax exemption on redemption will now apply only to bonds purchased during the original issue, not those bought from the secondary market.
8. Dividend & Mutual Fund Taxation
Income from dividends and mutual funds will be calculated without allowing deductions for interest expenses on borrowed funds.
9. Easier Compliance Measures
Investors can now submit a single declaration to avoid TDS across multiple income sources. Property buyers dealing with NRIs can use PAN instead of TAN for TDS deductions.
10. Lower TCS on Foreign Expenses
Tax collected at source (TCS) on foreign travel has been reduced to 2%, with similar relief for education and medical expenses abroad.
11. Extended Window for Revised Returns
Taxpayers can now file revised returns until March 31 of the assessment year, although additional charges may apply after December 31.
12. PAN Rules Tightened
Aadhaar-only applications will no longer be accepted. PAN will be mandatory for several high-value transactions such as property purchases, large cash deposits, vehicle buying, and hotel payments.
13. Relief on Compensation Income
Interest earned on motor accident compensation will now be fully tax-exempt with no TDS deduction.
These changes are expected to streamline taxation, improve transparency, and bring both relief and additional compliance responsibilities for taxpayers.