Tax Rules to Change from April 1, 2026: Here's How it Will Affect Your Pocket

Income Tax Rule 2025: A new tax system will be implemented in India from April 1, 2026. The income tax law will be simplified, customs duties will be reformed, and digital processes will be promoted. This will reduce tax disputes and provide significant relief to ordinary taxpayers.

Income Tax Rule 2025: Major changes are coming to income tax rules in the country from April 1, 2026. The central government will repeal the Income Tax Act, 1961, and replace it with a new Income Tax Act, 2025. The aim is to simplify tax laws so that ordinary citizens can understand and pay their taxes on time without any difficulty. The government says that the structure of the new law will remain the same, but its language and procedures will be simplified, reducing tax disputes and court cases.

New Income Tax Act 2025

The new Income Tax Act will be implemented across the country from April 1, 2026. Its main objective is to make the tax system simple, transparent, and fear-free. The government wants individual taxpayers and businesses to be able to comply with the rules without any hassle and reduce tax-related disputes.

No Tax on Annual Income Up to Rs. 12 Lakh

The major tax relief provided in the 2025 budget will continue in 2026. Under the new tax regime, there will be no income tax on annual income up to Rs. 12 lakh. However, this system will not offer exemptions and deductions, but the tax slabs have been kept lower than before.

New Tax Slabs (Indicative)

Income between Rs. 4 lakh and Rs. 8 lakh: 5% tax
Tax rates will increase progressively for higher income brackets
Income above Rs. 24 lakh: 30% tax
Cigarettes and Pan Masala will become more expensive
In 2026, the government is preparing to impose additional taxes on some selected products. Excise duty on cigarettes will be increased.

A new cess will be levied on paan masala.

These taxes will be in addition to the already applicable GST. The government aims to generate more revenue from these products and discourage their consumption.
No major changes in GST rates

No major changes in GST rates are expected in 2026. This will be the first full year of the new GST framework implemented in September 2025. Under this reform, taxes were reduced on approximately 375 goods and services. Currently, most goods fall under the 5% or 18% GST bracket.

High taxes on products like tobacco will continue as before.

Government's focus on Customs Duty reforms

After changes in GST and income tax, the government's next major focus is on customs reforms. In the 2025-26 budget, the number of customs tariff slabs has been reduced to 8.  Simultaneously, rapid progress is being made in implementing faceless assessment and digital customs procedures, making import-export processes faster, simpler, and more transparent.

What will be the impact on common taxpayers?

The new tax rules are expected to benefit common people in several ways. Tax laws will be easier to understand, the number of tax disputes and notices will decrease, and the entire process being digital will save both time and money. Overall, the 2026 tax system is considered a major and significant step towards a simpler, modern, and transparent tax regime for India.

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