New Income Tax Act will come into effect on April 1, 2026: FM Sitharaman

During herUnion Budget presentation on Sunday (February 1, 2026), Finance Minister Nirmala Sitharamaninformed that the new Income Tax, 2025,would come intoeffect in April this year, with the forms and rulesto be notified “shortly” provisioning “adequate time” for taxpayers to acquaint themselves with the requirements.

Ms. Sitharaman also told the House that the forms have been redesigned such that ordinary citizens would be able to comply without any difficulty.

Also read | Union Budget 2026 LIVE

The Finance Minister had proposed to overhaul the six-decade-old Income Tax Act of 1961 in her budget presentation last year.Theobjectivewas to make the direct tax law“concise, lucid, easy to read and understand”.It was referred to a thirty-one-member Select Committee of the Lok Sabha, whichsubmittedits report in July last year.After having incorporatedthe recommendations, asubsequentIncome Tax Bill received a final assent from the Rajya Sabha in August last year.

Direct tax experts opine, from the personal taxation front, the budget wasfocussed on easing compliance.

Also read | Union Budget 2026: what gets costlier, what gets cheaper?

Speaking toThe Hindu,Poorva Prakash,Partner at Deloitte India,observedthat the government had already introduced “substantial changes in tax rates” in the past years, thus, there was not much of an expectation on reduction. “The [anticipated] focus was moreon structural changes and reforms which would ease compliance,” sheobserved, adding, “The focus[of the budget] has been on that in terms of removing the glitches,trying torationalisepenalties and prosecutions etc.”

Ms. Prakash added,“One must waitand watch for reforms[to be notified rules], because they can go a long way in terms of compliance.”

Further,Akhil Chandna, Partner (Global People Solutions Leader) atGrant Thornton Bharattermed the budget as a “meaningful reform in tax administration. “The government [with the budget]wants to bring in stability by getting better compliances, build up confidence of domestic and global investors.”

Union Budget 2026 industry reactions: Follow the LIVE from February 1, 2026

However, he assessed,the budget could have utilised the opportunity to spur uptake of the new tax regime by increasing the standard deduction.He explained,“The people who are into business, theycan get aclaim for the expenditure they incur. However, that is not the same for salaried class. They would have wanted the standard deduction to increasebeyond₹75,000[to transition from the old tax regime which allows for certain exemptions and deduction].”

Boost for overseas transactions

Other than the income tax front, Finance Minister Nirmala Sitharaman also proposedthat the tax deducted at source (TDS) onthe saleof immovable property by a non-resident bededucted anddeposited through the resident buyer’sPermanentAccount Number (PAN)based challan instead ofthe Tax Deduction and Collection Account Number (TAN)at present.“Earlier, the buyer[of the property] had to get a TANand do all the compliances when dealing with NRIs, therefore, most of the time they were hesitant because getting a TAN is a cumbersome process,” he explained, terming it as a “welcome move”.

Ms. Prakash also pointed to Finance Minister Nirmala Sitharaman extending the time forrevised return filing from December 31^stto March 31^st.She explained the issue emanated from India’s financial calendar not being parallel to theinternationalcalendar year for financial compliance. “When they [the taxpayers] were trying toestimateforeign tax creditrelief, the timelines were not matching,” shestated, “Now, itcanalign. They would be able to[claim] foreign tax creditsthrough revised returns as soon as they have dataof theoverseas countries.”