Big Income Tax rules changes coming your way starting April 1: What changes, what stays same?

India’s tax framework is set for a structural reset from April 1, with the Finance Ministry notifying the draft Income Tax Rules, 2026, a move that will operationalise the new Income Tax Act, 2025 and replace the decades-old 1961 law.

The overhaul is aimed at reshaping how taxes are reported, processed and enforced, with a clear push towards digitisation, standardisation and tighter compliance.

The new rules follow the draft released by the Central Board of Direct Taxes (CBDT) earlier this year and are designed to strengthen data reporting, simplify cross-border taxation norms, and reduce disputes through clearer regulatory frameworks.

What changes in the New Income Tax Rules from April 1?

- Filing timelines and deductions

Budget 2026 has already extended the deadline for filing income tax returns (ITR-3 and ITR-4 for non-audit taxpayers) to August 31 from the end of the relevant tax year.

The standard deduction under the new tax regime stands at ₹75,000 for salaried individuals, while under the old regime it remains ₹50,000.

- Changes to PAN application

From April 1, 2026, applying for a new PAN card or updating an existing one will require more documents. Citizens are advised to complete any pending applications before this date to avoid the increased documentation requirements. This change was announced by CSC e-Governance Services India Limited.

What does not change in the New Income Tax Rules from April 1?

- No change in income tax slabs

Despite widespread speculation, the new rules do not alter income tax slabs under either the old or new regimes.

The government has clarified that slab changes are typically announced in the Union Budget, and no such revision was made in Budget 2026. The subsequent notification of both the Income Tax Act, 2025 and the Income Tax Rules, 2026 also makes no mention of any changes.

Current tax slabs remain in place

Under the old tax regime:

• Income up to ₹2.5 lakh: 0%

• Income up to ₹5 lakh: 5%

• Income up to ₹10 lakh: 20%

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• Income above ₹10 lakh: 30%

Under the new tax regime:

• Income up to ₹4 lakh: 0%

• Income up to ₹8 lakh: 5%

• Income up to ₹12 lakh: 10%

• Income up to ₹16 lakh: 15%

• Income up to ₹20 lakh: 20%

• Income up to ₹24 lakh: 25%

• Income above ₹24 lakh: 30%

- Who needs to pay tax

Under the new tax regime, individuals earning above ₹12 lakh, and salaried individuals above ₹12.75 lakh, are required to pay income tax based on applicable slabs.

Under the old regime, tax applies to incomes above ₹2.5 lakh, though deductions can be used to lower taxable income.

- New regime stays the default

The new tax regime continues to remain the default option, offering lower tax rates but fewer exemptions. Taxpayers with higher investments may still opt for the old regime to take advantage of deductions.

Overall, the new rules aim to tighten compliance, streamline processes, and improve transparency through enhanced digital tracking and reporting.