New Delhi: The Central Government is set to implement a new Income Tax Act, which promises to be highly significant in many respects. The government will bring this into effect on April 1, 2026, replacing the existing legislation—the Income Tax Act of 1961—which is over six decades old. Once the new Income Tax Act comes into force, processes are expected to become considerably simpler.
In addition to improved compliance, individuals are also likely to find significant relief from tax-related litigation. The implication is clear: April 1 is going to be a momentous day for taxpayers, all of whom are eagerly awaiting the implementation of the new Income Tax Act. While there have been no changes to tax slabs or rates, several amendments have been introduced that will specifically impact salaried individuals, investors, and business professionals.
Key Changes Expected in the New Financial Year
Instead of separate ‘Financial Years’ and ‘Assessment Years,’ there will now be a single ‘Income Tax Year.’ This change is expected to reduce confusion among taxpayers and simplify the process of tax calculation. Furthermore, the deadline for filing standard Income Tax Returns (ITRs) will now be July 31. For ITRs related to business or professional income (ITR-3 and ITR-4), the deadline will be August 31.
Moreover, under the new Act, the deadline for cases or companies requiring a tax audit will be October 31. In certain special cases, the deadline will extend up to November 30. A decision has also been taken to extend the time limit for filing revised returns. Specifically, revised returns may now be filed—subject to the payment of certain fees—for a period of 12 months (one year) from the end of the relevant tax year.
Changes Regarding House Rent Allowance (HRA): What You Need to Know
According to the provisions of the new Income Tax Act, the tax exemption available on House Rent Allowance (HRA) has been enhanced for salaried individuals. However, the accompanying regulations have also been made more stringent. Consequently, to avail of this exemption, it will now be mandatory to disclose the relationship between the landlord and the tenant.
Additionally, under the new rules, employees residing in Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, and Ahmedabad will be eligible for an HRA exemption of up to 50 per cent of their salary. For other cities, this limit will remain at 40 per cent.