The new FY 2026 is starting today. In such a situation, due to the announcement made in the budget, many rules of income tax are changing from today. This includes rules ranging from tax exemption up to Rs 12 lakh to new income tax slab and TDS. A significant change of this is to increase the income limit for individuals who choose new income tax system under Section 87A.
Tax discount up to Rs 12 lakh
This limit has been increased from Rs 7 lakh to Rs 12 lakh, which means that people with income up to Rs 12 lakh annually will no longer need to make income tax payments. Earlier, there was a tax of 80 thousand rupees on the annual income of 12 lakh rupees. But now not a single rupee tax will have to be paid. However, people will have to file income tax returns to comply with now.
New income tax slab
The new rules also modify the structure of tax slabs under the new income tax system. Now tax liabilities have been fixed in seven slabs, which are from 0 to 24 lakh rupees and above, in which the tax-free limit has increased from the earlier of 3 lakh rupees to 4 lakh rupees. Now the highest tax rate will be applicable to those with more than Rs 24 lakh, which was earlier Rs 15 lakh.
The purpose of these changes is to simplify tax calculation and present clearness on tax liabilities, especially to benefit medium income. The important thing is that these amendments do not affect corporate tax rates or old income tax system, causing stability for businesses.
- 0-4 lakh rupees – zero
- 4-8 lakh rupees – 5%
- 8-12 lakh rupees – 10%
- 12-16 lakh rupees – 15%
- 16-20 lakh rupees – 20%
- 20-24 lakh rupees – 25%
- Above 24 lakh rupees – 30%
Standard Didlation
Along with tax exemption up to 12 lakhs, standard Didlation has also been kept, under which taxpayers receiving salary can avail Rs 75000 and tax exemption. That is, under the new income tax, now you can avail annual tax exemption up to Rs 12.75 lakh.
Changes in TDS
Apart from this, TDS limit has also been adjusted on bank interest and dividends. For senior citizens, the TDS limit on bank interest has been increased from Rs 50,000 to Rs 1 lakh, while for others it increases to Rs 50,000. Apart from this, the TDS limit for dividend income has doubled to Rs 10,000.
Similarly, the exemption limit on rental income has been increased to Rs 6 lakh annually, which has reduced the burden for landlords and can promote the rental market in urban areas.
Changes in TCS Rules
Now a discount of up to Rs 10 lakh has been given instead of 7 lakhs without TCS. If you send money abroad for children’s education, family expenses or any other reason, then there is relief news for you. Earlier, TCS had to be given on sending an amount of more than Rs 7 lakh, but now this limit has been increased to Rs 10 lakh. If you do business and your sales are big, then you will not need to deduct 0.1% TCS on sales of more than Rs 50 lakh.
Updated tax returns
The deadline for filing updated tax returns (ITR-U) in the Union Budget has been extended from 12 months to 48 months of the year to 48 months, which will give taxpayers a more extended period to follow tax obligations without imposing heavy fines. This step is expected to reduce the concern about the delay in the unknown delay in filing the returns of taxpayers.
In addition, the start-ups initiated before 1 April 2030 can get a profit of 100% deduction in profit for three years out of ten, which is an attempt to encourage entrepreneurship and innovation within the Indian economy. Income tax bills, finance bills and other tax rules have been introduced, which are being implemented from 1 April 2025.