Big Changes In Income Tax Rules From 2026, Know How It Will Impact Taxpayers

From April 1, 2026, new rules related to income will be launched across the country. The government will also replace the old Income Tax Act of 1961 with the new Income Tax Act, 2025.

The reason behind this action is to make tax rules more transparent and simple. So, that common people can easily understand and pay taxes without any chaos.

Government stated that the structure of the new law will be same but the language and procedures will be more simpler.

No Tax on Income Up to Rs 12 Lakhs

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

However, this system will not include 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

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 imposed on pan masala.

No big change in GST rates

There will be no major changes in GST rates in 2026. This will be the first full year after the new GST structure introduced in September 2025. Under the new system, taxes on about 375 goods and services were reduced. At present, most items fall under either 5% or 18% GST. Products like tobacco will continue to attract higher taxes as before.

Government’s focus on customs reforms

After GST and income tax reforms, the government is now focusing on improving customs rules. In the 2025-26 Budget, the number of customs duty slabs was reduced to eight to make the system simpler. The government is also working on faceless assessments and fully digital customs processes. This will make importing and exporting goods faster, easier, and more transparent.

How these changes will help common people

These tax changes aim to make the tax system simpler and easier to understand for ordinary taxpayers. Fewer disputes are expected because of clearer rules and digital processes. Online and faceless systems will save time, reduce paperwork, and lower costs. Overall, the 2026 tax reforms are a big step towards a more transparent, efficient, and taxpayer-friendly system.