New Delhi: Did you know that a new tax act is set to come into force starting from the very first day of the new financial year? The new tax legislation is expected to be quite significant. In this regard, the Central Board of Direct Taxes (CBDT) issued a notification on Friday regarding the rules under the Income Tax Act, 2025. The new rules also include provisions for enhanced tax benefits on House Rent Allowance (HRA) for salaried employees.
The new regulations make it mandatory for landlords to disclose details regarding their relationship with their tenants. These new rules may also be referred to as the Income Tax Act, 2026. They are scheduled to come into effect on April 1, 2026. In fact, on August 12, 2025, the Central Government approved a new Income Tax Bill aimed at replacing the nearly six-decade-old legislation—specifically, the Act of 1961. This new bill does not introduce any new tax rates; rather, its primary objective is to simplify the language of the law.
What has been reduced?
To make the complex income tax laws more accessible, the government has drafted the Act using simpler terminology. Consequently, matters related to income tax legislation can now be understood in plain language. The new Act also involves the removal of obsolete and unnecessary provisions from the previous legislation.
The 819 sections of the Income Tax Act, 1961, have been reduced to 536, while the number of chapters has been cut from 47 to 23. Additionally, a decision has been taken to reduce the total word count in the new Income Tax Bill from 512,000 to 260,000. To enhance clarity and to replace the cumbersome text of the 1961 Act, 39 new tables and 40 new formulas have been introduced for the first time.
What are the benefits?
Furthermore, the new regulations include provisions for stricter rules concerning capital gains, stock market transactions, and the taxation of non-residents. The system for other disclosures has also been simplified. The notification introduces over 150 official forms. Find Out What Benefits Tenants Will Receive
For your information, the new income tax rules retain the proposed framework regarding the House Rent Allowance (HRA) exemption applicable to salaried taxpayers. Under the new income tax regulations, specific cities—Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad, and Bengaluru—will be eligible for a higher exemption limit of 50 per cent of the salary.
