Stock Market New Rules from April 1, 2026: Following earlier announcements by Finance Minister Nirmala Sitharaman, the Income Tax Act 2025 has now come into effect, replacing the decades-old 1961 framework.

While the tax slabs and rates remain unchanged, the new law focuses on simplifying the system. One major change is the removal of the Financial Year (FY) and Assessment Year (AY) distinction. Instead, income earned from April 1 will now be calculated under a single, unified "Tax Year", making compliance easier for taxpayers.

RBI Defers Capital Market Exposure Rules Amid Volatility

At the same time, the Reserve Bank of India has postponed the implementation of its proposed rules on banks' exposure to capital markets to July 1. This delay comes as markets remain volatile due to the ongoing West Asia conflict. Until then, brokers can continue using bank guarantees backed by 50% margin, although the RBI has clarified that the core framework remains unchanged.

Lending Norms Eased to Support Market Participants

Alongside the deferment, the RBI has also relaxed certain lending norms after receiving feedback from the industry. Banks are now allowed to extend funding backed by 100% cash or cash-equivalent collateral, and restrictions on financing market makers have been removed.

Additionally, the definition of acquisition finance has been expanded to include mergers and amalgamations, though such funding will only be permitted for acquiring control in non-financial companies. These changes aim to make Indian banks more competitive globally.

Tighter Rules May Impact Trading Firms and Borrowers

However, even with some relaxations, the updated framework introduces tighter controls. These rules are expected to increase the cost of capital for proprietary trading firms and could reduce their profit margins.

The RBI has also closed a loophole that allowed brokers to divert short-term bank loans into trading activities. To strengthen oversight, new limits have been placed on loans against securities-capped at ₹10 lakh per individual and ₹25 lakh for IPO-related loans, with restrictions on borrowing from multiple lenders.

Higher STT to Raise Cost of F&O Trading

In parallel with regulatory changes, tax adjustments in the market will also take effect from April 1. As announced in the Union Budget 2026-27, the Securities Transaction Tax (STT) on futures and options (F&O) trading will increase.

The STT on futures will rise from 0.02% to 0.05%, while options premiums will be taxed at 0.15% instead of 0.10%. The tax on options exercise will also increase to 0.15%. Notably, these changes apply only to derivatives, leaving other segments unaffected.

New Tax Treatment for Share Buybacks

Moving further, the new tax regime also changes how share buybacks are taxed. From April 1 onwards (Tax Year 2026-27), income from buybacks will be treated as capital gains.

Earlier, such income was considered dividend income, along with a separate capital loss. Under the revised system, individual promoters will be taxed at 30%, while promoter companies will face a 22% tax rate.

Dividend and Mutual Fund Income Rules Tightened

Similarly, taxation rules for dividends and mutual fund earnings have also been revised under the new law. These incomes will now strictly fall under "income from other sources."