The new financial year 2026 is starting from today. In such a situation, due to the announcement made in the budget, many income tax rules are changing from today. This includes rules like tax exemption up to Rs 12 lakh to new income tax slab and TDS.
New Income Tax Rules: The new financial year 2026 is starting from today. In such a situation, due to the announcement made in the budget, many income tax rules are changing from today. This includes rules ranging from tax exemption up to Rs 12 lakh to new income tax slab and TDS. One of the important changes in this is to increase the income limit for getting exemption under section 87A for individuals choosing the new income tax system.
Tax exemption up to Rs 12 lakh
This limit has been increased from Rs 7 lakh to Rs 12 lakh, which means that individuals with an annual income of up to Rs 12 lakh will no longer be required to pay income tax. Earlier, an annual income of Rs 12 lakh was taxed at Rs 80 thousand. But now not a single rupee will have to be paid as tax. However, individuals will still have to file income tax returns to comply.
New income tax slab
The new rules also revise the structure of tax slabs under the new income tax system. Now tax liabilities have been fixed in seven slabs, ranging from 0 to Rs 24 lakh and above, with the tax-free limit increasing from the earlier Rs 3 lakh to Rs 4 lakh. Now the highest tax rate will apply to those earning more than Rs 24 lakh, which was earlier Rs 15 lakh.
These changes are aimed at simplifying tax calculations and providing clarity on tax liabilities, particularly benefiting middle-income earners. Importantly, these amendments do not impact corporate tax rates or the old income tax regime, thereby providing stability for businesses.
Rs 0-4 lakh – Nil
Rs 4-8 lakh – 5%
Rs 8-12 lakh – 10%
Rs 12-16 lakh – 15%
Rs 16-20 lakh – 20%
Rs 20-24 lakh – 25%
Above Rs 24 lakh – 30%
Standard Deduction
Along with tax exemption up to Rs 12 lakh, standard deduction has also been kept, under which salaried taxpayers can avail tax exemption of Rs 75000 more. That is, under the new income tax, now one can avail tax exemption up to Rs 12.75 lakh annually.
Changes in TDS
Apart from this, adjustments have also been made in the limit of TDS on bank interest and dividend. 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 been doubled to Rs 10,000.
Similarly, the exemption limit on rental income has been increased to Rs 6 lakh per annum, which has reduced the burden for landlords and can boost the rental market in urban areas.
Change in TCS rule
Now exemption of up to Rs 10 lakh has been given instead of Rs 7 lakh without TCS. If you send money abroad for children’s education, family expenses or any other reason, then now there is a relief news for you. Earlier TCS had to be paid 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 now you will not need to deduct 0.1% TCS on sales of more than Rs 50 lakh.
Updated Tax Returns
The Union Budget has extended the time limit for filing updated tax returns (ITR-U) from 12 months to 48 months of the relevant assessment year, giving taxpayers a more extended period to comply with tax obligations without incurring heavy penalties. The move is expected to ease concerns of taxpayers about inadvertent delays in filing returns.
In addition, start-ups that are started before 1 April 2030 can benefit from a 100% deduction on profits for three out of ten years, which is an effort to encourage entrepreneurship and innovation within the Indian economy. Income Tax Bill, Finance Bill and other tax related regulations have been introduced, which are coming into effect from 1 April 2025.
