New Income Tax Act 2025 Kicks In From April 2026: What Actually Changes for You

What's actually new here

Starting April 1, 2026, India's income tax law operates under a new statute: the Income Tax Act, 2025, which replaces the Income Tax Act, 1961 that had governed (and been amended into) the system for 65 years. This is primarily a restructuring and modernisation of the law's language and framework, procedural and technical defaults are being decriminalised, among other changes, rather than a wholesale change to how much tax you pay. Proceedings relating to years before Tax Year 2026-27 continue to be governed by the old 1961 Act.

Tax slabs: unchanged

If you were expecting new slab rates in this budget cycle, there aren't any; the government kept existing income tax slabs unchanged under both the old and new regimes. Under the new regime, the zero-tax threshold for salaried individuals remains at ₹12.75 lakh, inclusive of the standard deduction. If you were already filing under the new regime, your actual tax liability this year is governed by the same slabs as before; what's changed is the underlying law's structure, not the arithmetic.

Changes that do affect your wallet

• Cheaper foreign remittances. Tax Collected at Source (TCS) on overseas tour packages and education-related remittances was cut from 20% to 2%. If you're sending money abroad for a child's education or booking an international package tour, this meaningfully reduces the upfront cash you need to set aside (TCS is adjustable against your final tax liability, but a lower rate still eases cash flow at the time of payment).
• Costlier F&O trading. A proposed increase in Securities Transaction Tax on equity derivatives raises the cost of futures and options trading. If you trade F&O, factor this into your cost calculations; it's a direct hit to trading economics, not a marginal one.
• Full exemption on MACT interest. Interest received from Motor Accident Claims Tribunal awards is now fully tax-exempt, which matters if you or a family member has received or is pursuing such a claim.
• More time to revise returns. Revised return filing timelines have been extended, giving taxpayers more room to correct errors without penalty exposure.

What's still pending

As of this writing, the detailed rules and the redesigned Income Tax Return (ITR) forms under the new Act were still awaiting formal notification. This matters practically: if you're planning your tax filing around specific provisions of the new Act, check the Central Board of Direct Taxes (CBDT) website for the final notified rules and forms before acting, since secondary commentary (including this article) is working from the Finance Bill and early analysis rather than the fully notified text.

One claim circulating in some coverage, that residents of Hyderabad, Pune, Ahmedabad and Bangalore may claim HRA exemption up to 50% of basic salary (the rate previously reserved for metro cities) from April 2026, comes from a single secondary source we couldn't independently verify against official text. If this applies to you, confirm directly with the official provisions or a tax professional before relying on it for your tax planning.

What you should actually do

For most salaried taxpayers, the practical to-do list this cycle is short: your slab-level tax planning doesn't need to change, since slabs are the same. If you send money abroad for education or travel, the lower TCS is good news for your cash flow. If you trade F&O, update your cost assumptions for the higher STT. And if you're relying on a specific provision of the new Act for a planning decision, wait for the formally notified rules rather than acting on preliminary commentary.

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