ITR rules 2026: With the new Income-tax Act, 2025 and Income-tax Rules, 2026 now in effect, salaried individuals across India are beginning to see tangible changes in how their income is taxed, reported, and structured. While the overhaul does not drastically alter tax rates, it significantly reshapes compliance, exemptions, and salary components.

According to Harsh Bhuta, Managing Partner, Bhuta Shah & Co., the new framework marks a shift toward simplification on the surface, but with deeper integration of data and tighter reporting standards underneath.

Automated taxation

One of the most visible changes is the move to a single “tax year,” replacing the earlier dual concepts of “previous year” and “assessment year.” This has simplified understanding for taxpayers, especially salaried individuals filing returns.

At the same time, ITR forms are now more streamlined and increasingly auto-filled using AIS (Annual Information Statement) data. “Taxation is moving from a claim-based system to an information-based system,” Bhuta noted, highlighting how most income and transactions are now pre-captured in filings .

Higher rebate

Salaried individuals are also seeing the impact of an enhanced rebate under Section 87A. Income up to ₹12 lakh is effectively tax-free under the new regime, and this threshold extends to around ₹12.75 lakh after factoring in the standard deduction.

This has translated into higher in-hand income for many middle-income earners who have opted for the new regime.

Allowance and HRA benefits revised

For those continuing under the old tax regime, the changes are visible in salary structuring. HRA benefits now extend to more cities, including Bengaluru, Hyderabad, Pune, and Ahmedabad, allowing higher exemption limits.

Allowances have also been revised upward:

Children’s education allowance: ₹3,000 per month
Hostel allowance: ₹9,000 per month
Meal vouchers: ₹200 per meal
Gift exemption: ₹15,000

“These revisions partially align tax benefits with inflation and improve tax efficiency for salaried taxpayers who actively structure their income,” Bhuta explained .

Perquisites and EV benefits now clearer

Another change salaried individuals are noticing is in the taxation of perquisites. Company car valuation rules have been simplified, and electric vehicles are now taxed at concessional rates similar to small cars. This provides clarity and potential savings for employees receiving such benefits.

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Take-home pay vs savings

However, not all changes increase immediate income. The proposed wage code framework—mandating basic salary at 50% of CTC — is gradually influencing salary structures. This can reduce take-home pay while increasing provident fund contributions, effectively boosting long-term savings.

Choosing the right tax regime is now critical
The gap between the old and new tax regimes has widened further. The new regime is increasingly becoming the default for those with fewer deductions, while the old regime continues to benefit individuals with significant HRA, home loan interest, and Section 80C investments.

Bhuta emphasised that “the choice of regime is no longer optional in practice—it requires annual evaluation based on income structure and financial behaviour.”

Compliance has become stricter

Salaried taxpayers are also experiencing tighter compliance requirements. Rent claims now require landlord PAN details, loan deductions need supporting documentation, and high-value transactions are closely tracked through AIS and SFT reporting.

“Mismatches between reported income and system data can quickly trigger scrutiny. The system is designed to detect inconsistencies automatically,” Bhuta added.

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Overall, the new tax regime is redefining how salaried individuals interact with taxation. While the system is simpler to navigate, it demands greater accuracy, documentation, and proactive financial planning—making tax filing less about last-minute savings and more about disciplined financial management.

Published on: Apr 24, 2026 7:35 AM IST