Very important news for those filing Income Tax Returns
New Delhi, Mar 16: With effect from April 1, the Tax system in the country will change and there will be direct impact on the common man.
Several significant amendments have been made in the Income Tax Act in the General Budget for Financial Year 2026-27.
Here are the seven key changes that will be effected under the new Tax Rules.
- New Income Tax Act will replace the old Income Tax Act, which has been in effect since 1961. While the Income Tax slabs remain unchanged, the new Act focuses on simplifying the language and eliminating legal complexities.
2. Changes in ITR Filing Dates:
Taxpayers will now have more time to file their ITRs as the deadline for ITR-3 and ITR-4 will be August 31. So, far the deadline is July 31 every year. This option will be available to taxpayers who are not audited.
The deadline for filing ITR-1 and ITR-2 will continue to be July 31.
The tax audit deadline also remains unchanged at October 31.
3. Changes for Filing Revised Returns
If you wish to make any corrections to your filed ITR, you will have more time as the deadline for filing revised returns will be March 31 against December 31. However, if you file revised returns after December 31, you will have to pay additional fee.
The deadline for filing belated returns remains unchanged.
4. Changes in TCS Rates
Several significant changes will be effective to the Tax Collected at Source (TCS) rates, which directly impact your finances. The TCS on liquor sales will now be 2%, up from 1%. The TCS on scrap sales has also been increased to 2%, up from 1% previously. The sale of minerals such as coal, lignite, and iron ore will also now attract a 2% TCS. However, the TCS on the sale of tendu leaves has been reduced to 2%, up from 5% previously.
5. Relief on Foreign Travel
If you’re planning an international trip, this is good news. The government has simplified the TCS on foreign travel packages under the LRS. Now, the tax rate will be 2%, regardless of the amount sent. Previously, it was levied at two different rates: 5% and 20%. TCS on remittances abroad for education and medical treatment has also been reduced to 2%, from 5% previously.
6. Stock Market Traders
The government has increased the Securities Transaction Tax. The STT on futures has been increased from 0.02% to 0.05%. The STT on options has been increased from 0.1% to 0.15%. This means that trading in the derivatives market will now become more expensive.
7. Changes Regarding Share Buybacks and Dividends
A new tax will now apply to share buybacks by companies. From April 1, 2026, proceeds from share buybacks will be subject to capital gains tax. Previously, this was taxed as a deemed dividend. Promoter shareholders will have to pay differential buyback taxes at different rates. Corporate promoters will pay this tax at 22%, and non-corporate promoters at 30%.
There has also been a major change to dividend income. You will no longer be able to claim any deduction on the interest expense incurred to earn dividends. Previously, a deduction of up to 20% was available on the interest on loans taken to earn dividend income, but this feature has now been discontinued. This means you will now be taxed on the entire dividend amount according to your tax slab.
