The new Income Tax Bill, slated to take effect from April 1, 2026, aims to modernize and simplify India’s tax system. This new legislation introduces several key changes for taxpayers, from filing deadlines to pension and property taxation. Here are the eight crucial updates every ITR filer should be aware of:
1. No Penalty for Late Refunds: The new bill offers a significant relief by allowing taxpayers to claim their TDS refunds even if they file a belated or revised return. This means you can get your refund without facing a penalty for late filing.
2. Commuted Pension Tax Deduction: The bill makes the full amount of a commuted pension eligible for a complete tax deduction. This important change ensures that private sector employees and independent investors in approved pension funds receive the same tax relief as salaried employees.
3. Tax Exemption on Unified Pension Scheme: Payments from the National Pension System (NPS) Trust to subscribers of the Unified Pension Scheme are now largely tax-exempt. Specifically, up to 60% of the corpus received at retirement is tax-free, along with any lump sum payments as notified by the government.
4. House Property Deductions Remain Consistent: The standard deduction for income from house property stays at 30%. All existing tax benefits on home loan interest will continue to apply without any changes.
5. New ITR Filing Deadlines: The bill establishes clear due dates for ITR filing:
- July 31: For salaried individuals and others not requiring an audit.
- October 31: For companies, individuals, and partners subject to an audit.
- November 30: For those required to submit a report under Section 172.
6. Simplified Belated Returns: The deadline for filing a belated return has been clarified. You now have up to nine months from the end of the relevant tax year or the completion of the assessment year to submit it.
7. Who Needs to File an ITR: The bill outlines specific requirements for filing an ITR, including:
- All companies and firms.
- Individuals with income above the basic exemption limit.
- Anyone with business or capital losses to carry forward.
- Residents who hold foreign assets or have signing authority in foreign accounts.
- Resident beneficiaries of foreign assets.
8. “Tax Year” Replaces “Previous Year”: The new law discontinues the use of the terms “previous year” and “assessment year.” They will be replaced by the single, simplified term “tax year,” which refers to the 12-month period within a financial year.