New Income Tax: The central government is set to roll out a new income tax system in the country starting April 1, 2026. This new legislation will replace the current Income Tax Act of 1961. As per the draft Income Tax Rules 2026, the methods for calculating taxes will undergo a complete overhaul for middle-class taxpayers, private sector employees, and large corporations. These draft rules were open for public feedback until February 22, 2026. The aim of the new regulations is to establish a clear formula for assessing the value of benefits provided alongside salaries, such as company housing, vehicles, and gifts, ensuring transparency in tax calculations.
Tax experts indicate that these modifications are intended to streamline tax regulations. This will enhance convenience for investors, businesses, and everyday taxpayers. A report from BT Money Today quotes chartered accountant Suresh Surana, who noted that the Income Tax Act 2025 brings forth several important changes to the structure, concepts, and procedures of the direct tax system.
Single Tax Year
The new legislation introduces a concept known as the “tax year.” This will replace the previously used terms “previous year” and “assessment year.” According to Suresh Surana, this adjustment is designed to simplify the tax framework by using a single term to describe both the income earning period and the tax period. In summary, the new law will substitute the terms “financial year” and “assessment year” with the unified term “tax year.”
Different rules for a house taken on lease
When a company rents a home for its employee, different rules apply. In such cases, the taxable value will be the actual rent paid by the company or 10% of the employee’s salary, whichever is lower. This regulation is applicable to lease rentals in metropolitan areas.
Festival gift limit Rs 15,000
Gifts, vouchers, or tokens received from companies will now be tax-exempt only up to a total of Rs 15,000 annually. If the value of gifts surpasses ₹ 15,000 in a year, the entire amount will be subject to tax. Previously, this limit was significantly lower.
