Income Tax New Rules: If you file income tax returns, this news is extremely useful for you. Starting today, the entire tax system in the country has changed, which will directly impact the common man’s pocket. Let’s learn about these 7 important changes.
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Income Tax New Rules: If you also file income tax returns, this news is extremely useful for you. Effective April 1, 2026, the entire tax system in the country has changed. In the 2026 General Budget, the central government has made several important amendments to income tax laws, which will directly impact the common man’s pocket. These changes aim to simplify the tax filing process, but there are some changes that could increase your expenses. Let’s learn about these seven important changes.
New Income Tax Act to be implemented
The old Income Tax Act, which has been in effect since 1961, is now history. The completely new Income Tax Act, 2025, will come into effect today. However, it is a relief that the government has not yet made any changes to the income tax slabs, and the old ones will remain in place. The new law focuses on simplifying the language and eliminating legal complexities.
Major Changes in ITR Filing Dates
Taxpayers will now have more time to file their ITRs. The government has extended the deadline for filing ITR-3 and ITR-4 to August 31st. Previously, this date was July 31st. This option will be available to taxpayers who are not audited. The deadline for filing ITR-1 and ITR-2 remains July 31st. The tax audit date has also remained unchanged and will remain until October 31st.
New System for Filing Revised Returns
If you wish to make any corrections to your filed ITR, you now have more time. The government has extended the deadline for filing revised returns from December 31st to March 31st. However, it’s important to note that if you file a revised return after December 31st, you will incur an additional fee. However, the deadline for filing belated returns remains unchanged.
4. Several Important Changes in TCS Rates
The government has made several significant changes to the Tax Collected at Source rates, which directly impact your finances. The TCS on liquor sales will now be 2%, up from 1%. The TCS on scrap sales has also been increased to 2%, up from 1% previously. The sale of minerals such as coal, lignite, and iron ore will also now attract a 2% TCS. However, the TCS on the sale of tendu leaves has been reduced to 2%, down from 5% previously.
5. TCS Relief on Foreign Travel
If you’re planning a trip abroad, this is good news. The government has simplified the TCS on foreign travel packages under the LRS. Now, the tax rate will be 2%, regardless of the amount sent. Previously, it was levied at two different rates: 5% and 20%. TCS on remittances abroad for education and medical treatment has also been reduced to 2%, from 5% previously.
6. Shock to Stock Market Traders
Bad news for those trading in futures and options. The government has increased the Securities Transaction Tax. The STT on futures has been increased from 0.02% to 0.05%. The STT on options has been increased from 0.1% to 0.15%. This means that trading in the derivatives market will now become more expensive.
7. Major Changes to Share Buybacks and Dividends
A new tax has now been implemented on share buybacks by companies. From today, capital gains tax will be levied on proceeds from share buybacks. Previously, this was taxed as a deemed dividend. Promoter shareholders will have to pay differential buyback taxes at different rates. Corporate promoters will pay this tax at 22%, and non-corporate promoters at 30%.
There has also been a major change to dividend income. You will no longer be able to claim any deduction on the interest expense incurred to earn dividends. Previously, up to 20% of the interest on loans taken to earn dividend income was eligible for deduction, but this feature has now been discontinued. This means you will now be taxed on the entire dividend amount according to your tax slab.
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