New Income Tax Regime Commences April 1, 2026

Significant amendments to India's tax landscape are now effective from April 1, 2026. The long-standing Income Tax Act of 1961 has been replaced by the new Income Tax Act of 2025, aiming to introduce a more streamlined, simplified, and modern tax code with reduced compliance burdens and consolidated provisions. This transition ushers in a host of recast rules that taxpayers need to be aware of for effective financial planning and compliance.

Revised ITR Filing Deadlines Announced

One of the notable changes includes revised deadlines for Income Tax Return (ITR) filing. For salaried individuals submitting ITR-1 or ITR-2, the deadline remains July 31. However, non-audit cases filing ITR-3 and ITR-4 now have an extended deadline of August 31, providing self-employed individuals and professionals additional time to organize their financial documents.

Key Benefits and Expanded Exemptions

• Expanded HRA Exemptions: Taxpayers claiming House Rent Allowance (HRA) will see significant relief, with eligibility for an exemption of up to 50% of basic salary in certain cities, an increase from the previous 40%. This enhancement is expected to particularly benefit those residing in major metropolitan areas.
• Increased Meal Card Benefits: The new rules also bring increased tax benefits for meal cards, with exemptions potentially up to ₹200 per meal, applicable under both old and new regimes.
• Extended Time for Revised Returns: Taxpayers now have more flexibility to file revised returns, with the deadline extended to March 31, offering three additional months compared to the earlier December 31 deadline. This provides a crucial window to correct errors or update information.

It is important to note that while these new tax rules are applicable from Tax Year 2026-27 onwards, for Assessment Year 2026-27 (Financial Year 2025-26), the Income Tax Act, 1961 will still apply for income tax return (ITR) filings due on or before July 31, 2026. The new provisions will have a direct impact on tax planning and compliance for Tax Year 2026-27.