Income Tax Rule 2026: How Will New Changes Affect Taxpayers

From April 2026, India's tax system is set to see a major change. From 1 April 2026, new rules related to income tax will be implemented across the country. The government will replace the old Income Tax Act of 1961 with the new Income Tax Act, 2025. 

The main aim is to make tax rules easy so that common people can understand and pay taxes without trouble.

The government has stated that the basic structure of the new law will remain the same, but the language and procedures will be simplified. This is expected to reduce tax-related disputes.

New Income Tax Rule

The new Income Tax Act will come into effect from April 1, 2026. Its aim is to make tax laws simpler for individuals and businesses. The government wants to reduce tax litigation and disputes and enable taxpayers to comply with the rules without fear.

No Tax On Income Up To Rs 12 Lakhs

The tax relief announced in the 2025 budget will continue in 2026. Under the new tax regime, there will be no tax on annual income up to Rs 12 lakhs. 

This system will not have exemptions and deductions, but the tax slabs have been set at lower rates. Income between Rs 4 lakhs and Rs 8 lakhs will be taxed at 5%, while income above Rs 24 lakhs will be taxed at 30%.

Higher Taxes On Cigarettes 

In 2026, the government is planning to impose additional taxes on some selected products. Excise duty on cigarettes will be increased, and a new cess will be levied on pan masala. 

These taxes will be in addition to the existing GST. The aim is to increase government revenue from these products.

No Major Changes In GST Rates

There will be no major changes in GST rates in 2026. This will be the first full year of the new GST system, which was implemented in September 2025. Under this reform, taxes were reduced on approximately 375 goods and services. Currently, most goods attract 5% or 18% GST. Higher taxes on products like tobacco will remain as before.

Focus On Customs Reforms

After GST and income tax, the government's focus will be on customs reforms. In the 2025-26 budget, the customs tariff slabs have been reduced to eight. 

Work is also underway to implement faceless assessment and digital processes. The aim is to make imports and exports easier, faster, and more transparent.

How It Will Affect Taxpayers

The new tax rules will make the tax system easier for common people to understand. Disputes will be reduced, and digital tax filing will save both time and money. The 2026 tax system is a major step towards a simpler and more transparent system for taxpayers.