Several key Income Tax Rules changes in India’s direct tax system will take effect on April 1, 2026. The Income-tax Act, 2025, will replace the six-decade-old Income-tax Act, 1961. The new law uses simpler language, and the proposals announced in the Union Budget 2026 will stay the same.
Tax experts say the changes aim to make compliance easier, clarify timelines, and adjust specific tax rules that affect investors, businesses, and individuals. “The Income-tax Act, 2025, introduces structural, conceptual, and procedural changes across the direct tax framework,” said chartered accountant Suresh Surana.
‘Tax Year’ Concept Introduced in Income Tax Rules
One of the main changes under the Income-tax Act, 2025, is the introduction of the ‘Tax Year’ concept. This will replace the earlier distinction between the ‘previous year’ and the ‘assessment year’ in the Income-tax Act, 1961. Surana explained that this change aims to simplify the tax framework by unifying the income-earning and taxation periods under one term.
Due Dates for Filing ITR Changed
Another important Income Tax Rules change involves the deadlines for filing income tax returns. The government has proposed extending the deadline for taxpayers engaged in business or profession whose accounts are not subject to audit, as well as partners of such firms and certain trusts.
Under the updated system, the due date for these taxpayers shift from July 31 to August 31. However, individuals filing simple returns like ITR-1 and ITR-2 still need to meet the July 31 deadline.
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