New Income Tax Rules 2026 Notification: 7 Changes That Will Impact Your Salary From April 1
Here is a summary of the 7 key changes to the Income Tax Rules effective from April 1, 2026:
1. New Tax Regime is Default
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Taxpayers will automatically be placed under the New Tax Regime.
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To use the Old Tax Regime, you must actively opt-out.
2. Higher Tax-Free Limit (New Regime)
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Zero tax on income up to ₹12 lakh (due to rebate).
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Standard deduction increased to ₹75,000.
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Effective tax-free salary: ₹12.75 lakh.
3. Old Regime Allowances Revised
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Children Education: ₹100 → ₹3,000/month.
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Hostel Expenditure: ₹300 → ₹9,000/month.
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Meal Vouchers: ₹50 → ₹200/meal.
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HRA: 50% exemption now applies to 8 major cities (Mumbai, Delhi, Bengaluru, etc.).
4. Perquisite Valuation Hiked
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Company car taxable value increased significantly:
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Small cars: ₹2,700 → ₹8,000/month.
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Large cars: ₹3,300 → ₹10,000/month.
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5. New Form Numbers & Stricter Compliance
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Form 16 → Form 130
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Form 15G/15H → Form 121
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Stock exchanges must retain transaction audit trails for 7 years.
6. Clarity on NRI Status & Capital Gains
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Shipping crew: Time on foreign voyages excluded from Indian stay (easier NRI status).
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Clearer rules for holding period of converted securities.
7. "Tax Year" Concept Introduced
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"Previous Year" and "Assessment Year" replaced with single "Tax Year" (e.g., 2026-27).
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Easier TDS refund claims even if return is filed late.