New Income Tax Act 2026: Key Highlights, Changes & Implementation

The new Union budget was presented on 1 Feb, 2026 by Finance Minister Smt. Nirmala Sitharaman. India's 60-year-old Income Tax Act of 1961 will now become a thing of history. The "New Income Tax Act 2025 is introduced, which will be implemented w.e.f 01.04.2026.

Main Goals of the New Act

1. Simplification: The rigidity of the old act was removed in the new act with lucid language that an ordinary citizen can understand.

2. Organised Structure: The number of sections is reduced from the old act so that there shall be no ambiguities and long-standing litigation.

3. Technology-friendly: New forms and the rules were redesigned that will make tax filing paperless, according to the digitalization era.

Key Highlights of the New Act

• Tax slap will remain the same- The tax slap will not change in the new act. Tax slap and rating will remain the same. The government is concentrating on moving taxpayers towards a "new tax regime”.
• Updated returns- In the new act, the taxpayer has the liberty to file an updated return even after the reassessment process is started, but they have to pay 10% additional tax.
• Extended Deadlines for revised return- Revised return filing date is extended. It is 31 March instead of 31 dec.
• Relief to Accident Victims- The compensation provided by the Motor Accident Claim Tribunal shall be tax-free and fully exempted.
• Lower TCS Rates- the tax on remittances sent abroad for study and medical treatment shall be reduced from 5% to 2 %.

Conclusion

This new law is a major step towards a 'Developed India'. It aims to make the tax filing process an easy duty, not a punishment.